Indices Extend Recovery
STOCK INDEX FUTURES
Stock index futures are higher, suggesting major indexes will extend their rebound.
Fears of a slowing global economic recovery are being offset by a banner start to the corporate earnings season.
Mortgage applications in the U.S. declined 4.0% in the week ended July 16. Applications to purchase a home fell 6.4% and those to refinance a home loan declined 2.8%.
In recent months, stock index futures have shown a tendency to recover from bearish news.
The U.S. dollar index advanced and 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 is currently enjoying will dominate over other market influences.
The European Central Bank will hold its policy meeting tomorrow.
Japan’s exports increased 48.6% in June from a year earlier, which compares with May’s 49.6% increase and was stronger than the 46.2% increase expected by economists.
INTEREST RATE MARKET FUTURES
Safe-haven flows took the 30-year Treasury bond futures to a 5-month high yesterday, although some longs were liquidated late yesterday and today as stock index futures advanced.
The Treasury will auction 20-year bonds.
Substantial gains in the 30-year Treasury bond futures since May and a flattening yield curve suggests the rate of inflation may be peaking and the rate of growth in the global economy may be slowing.
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