STOCK INDEX FUTURES
Stock index futures declined after the Federal Reserve in a hawkish surprise raised its inflation expectations and moved up the time frame on when it will hike interest rates.
The Federal Open Market Committee indicated that rate hikes could come as soon as 2023, after signaling in March that it saw no increases until at least 2024.
Jobless claims in the week ended June 12 were 412,000 when 360,000 were expected.
The June Philadelphia Federal Reserve manufacturing index was 30.7 when 31.0 was anticipated.
The 9:00 central time May index of leading economic indicators is estimated to be up 1.3%.
Stock index futures are likely to be higher next week.
The U.S. dollar index is higher after Federal Reserve officials signaled their intention to raise interest rates sooner than previously forecast.
Construction output in the euro area jumped 42.3% in April, following an upwardly revised 20.0% gain in March. This was the strongest increase in construction output since records began in January of 1996.
Reserve Bank of Australia Governor Philip Lowe said Australia’s job market has tightened alongside a rapid economic recovery over recent quarters, but there is still no solid evidence that wage growth or inflation is heating up.
Mr. Lowe said, “For inflation to be sustainably in the 2.0% -3.0% range wage increases will need to be materially higher than they have been recently. This still seems some way off.”
The RBA will make announcements about its bond-buying program and its targeting of three-year government bond yields at its July 6 policy meeting.
INTEREST RATE MARKET FUTURES
The Federal Open Market left the target range for its federal funds rate unchanged at 0% -0.25%, but policymakers signaled they expect two increases by the end of 2023. The Fed will continue to purchase bonds at a rate of $120 billion a month. Also, new economic forecasts showed GDP is likely to grow at a faster 7.0% from 6.5% previously predicted for 2021 and PCE inflation is likely hit 3.4% in 2021, but slow to 2.1% in 2022. The central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program.
Futures are higher today in response to the two weaker than predicted U.S. economic reports that were released this morning.
GOLD AND SILVER
Now that the hawkish FOMC statement is out of the way, which prompted sizable liquidation, it is likely that there will be recovery next week.
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