Indexes Likely to Recover
STOCK INDEX FUTURES
All three major averages finished at record closing highs on Friday. Traders have been encouraged by the Federal Reserve, which said it doesn’t plan to pull back on supportive policies in the near term.
However, stock futures are under some pressure today with lingering concerns over the global economic growth outlook, which at least temporarily is outweighing optimism over a strong second-quarter earnings season.
The 9:00 central time June new home sales report is expected to show 800,000.
The 9:30 July Dallas Federal Reserve manufacturing survey is anticipated to be 32.0.
The fundamentals and technical aspects remain positive for stock index futures.
The U.S. dollar index is lower today but remains near a four-month high as demand for safe-haven assets remains strong.
In the weeks ahead it is likely that the flight to quality influence that the greenback has enjoyed recently will dominate over other market influences.
The euro currency is higher despite news that the Ifo business climate indicator for Germany dropped to 100.8 in July 2021, from the previous month’s two-and-a-half-year high of 101.7 and under market expectations of 102.1.
Bank of England policymaker Gertjan Vlieghe said on Monday that he believes it will remain appropriate to keep the current monetary stimulus in place for at least several quarters.
INTEREST RATE MARKET FUTURES
Futures are mostly higher on prospects of slowing global economic growth.
The Treasury will auction two-year notes.
The interest rate futures markets have been telegraphing since May clues about the state of the global economy.
The U.S. Treasury yield curve has been flattening for several months. Shorter-dated yields have been steady, while longer-dated yields have declined. A flattening yield curve suggests a slower rate of economic growth in the future.
The Federal Open Market Committee will hold its regularly scheduled policy meeting on Tuesday and Wednesday. A statement from the FOMC will be released at 1:00 on Wednesday and a press conference will be held at 1:30.
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