Indices Higher Despite Bearish CPI
STOCK INDEX FUTURES
Stock index futures are higher despite the bearish consumer price index report.
The May consumer price index increased 0.6% when up 0.4% was expected.
Jobless claims in the week ended June 5 were 376,000, which compares to the anticipated 369,000.
There was temporary pressure on stock index futures before a move to new daily highs. Ignoring bearish news is a sign of strength, which suggests higher prices for stock index futures.
A congestion pattern is forming now that most likely will be followed by an upside breakout.
The U.S. dollar index is lower despite the bullish U.S. consumer price index, which is a sign of weakness. Lower prices are likely for the greenback from current levels today.
In the longer term, pressure on the U.S. dollar is likely as the U.S. budget deficit grows and the Fed’s balance sheet expands. The next major support on the daily chart is the early January low of 89.155.
The European Central Bank at its policy meeting today said it would maintain its aggressive monetary stimulus in place. The ECB said it would keep its key interest rate at minus 0.5%, which was widely expected and continue to buy euro zone debt under an emergency 1.85 trillion euro bond-buying program ($2.253 trillion) through at least March of 2022. The central bank said it would buy those bonds at a “significantly higher pace” than during the first months of this year, repeating a promise made in March.
I expect higher prices for the euro currency from current levels today and also in the longer term.
The Australian dollar is higher on news that new home sales increased 15.2% month-over-month in May, while a measure of consumer sentiment fell to the lowest level in five months in June, easing from an 11-year high that was touched in the previous month.
INTEREST RATE MARKET FUTURES
Futures are steady at the front end of the curve and lower at the long end of the curve.
The Treasury will auction 30-year bonds.
In my minority view, I am seeing indications that the global economy will continue to improve, but growth may not be as strong as many analysts are predicting. This could explain why the 30-year Treasury bond futures are holding up despite the Federal Reserve talking about when it may taper its asset-purchase program.
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.