Upside Breakaway Gaps on SP500 and Dow Futures Charts
STOCK INDEX FUTURES
Late afternoon gains yesterday were linked to news that Federal Reserve Governor Lael Brainard said “fiscal support will remain vital” to the economic rebound.
In addition, Dallas Federal Reserve President Robert Kaplan yesterday said U.S. economic growth will accelerate next year.
Applications to refinance a home loan jumped 12% for the week and were 107% higher than a year ago.
The July Empire State manufacturing survey was 17.2 when 8.9 was expected.
June industrial production was up 5.4% when an increase of 4.4% was anticipated and June capacity utilization was 68.6% when 68.1% was predicted.
On the S&P 500 and Dow daily charts there are breakaway gaps to the upside.
Stock index futures continue to have upside momentum.
The U.S. dollar is lower as flight to quality longs are liquidated.
Employment in the German industrial sector at the end of May fell 2.1% from the previous year, representing 122,000 fewer workers.
The European Central Bank will hold its regularly scheduled policy meeting on Thursday. No change in policy is expected.
The European Union summit will be held on July 17-18 where leaders need to bridge the gaps on a long-term budget. Investors will also watch whether an agreement on a proposed 750 billion euro recovery fund emerges.
The British pound is higher after news of an unexpected increase in U.K. inflation in June to 0.6% year to year from 0.5% in May. Analysts had predicted a dip to 0.4%.
The Japanese yen is higher after Bank of Japan Governor Haruhiko Kuroda said there have been some signs of recovery in the Japanese economy, including improvements in production and the consumption of goods.
The Bank of Canada will hold its policy meeting today. The central bank is expected to retain the current policy.
INTEREST RATE MARKET FUTURES
Patrick Harker of the Federal Reserve will speak at 11:00 central time.
At 1:00 the Federal Reserve will release its Beige Book. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion a different Federal Reserve district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts.
According to financial futures markets there is a 95.6% probability that the Federal Open Market Committee will leave its fed funds rate unchanged at zero to 25 basis points at its July 29 policy meeting.
Futures appear to be caught between the bearish influence of more government stimulus and the bullish influence of ongoing historically accommodative central bank policies.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.