Written Commentary
STOCK INDEX FUTURES
In a risk off mood, global equity markets are weaker as investors wait for a news conference later today by President Donald Trump, which could escalate tensions between the U.S. and China.
Consumer spending in April declined 13.6% when down 12.6% was expected.
The 8:45 central time May Chicago PMI is expected to be 40 and the 9:00 May consumer sentiment index is anticipated to be 74.
Federal Reserve Chairman Jerome Powell is scheduled to speak at 10:00. The focus of his talk will likely be the economy and the central bank’s stimulus measures. Mr. Powell will also take part in a moderated audience question and answer session.
Overall, stock index futures have been performing well for the news.
CURRENCY FUTURES
The U.S. dollar broke out to the downside falling to its lowest level since March 18.
The euro currency is higher despite news that consumer prices in the euro zone increased at the slowest pace in nearly four years in the year to May. The European Union’s statistics agency said consumer prices were only 0.1% higher than a year ago, which is the smallest increase since June 2016.
The European Central Bank is expected to expand its bond purchasing program when its governing council meets on June 4. Also, on June 4 the ECB will release revised forecasts for inflation, which are likely to be lower.
Flight to quality buying is supporting the Japanese yen. The yen is higher in spite of news that Japan’s April overall retail sales fell 13.7% on the year.
INTEREST RATE MARKET FUTURES
In a flight to quality move futures are mostly higher.
The next Federal Open Market Committee meeting is scheduled for June 9-10. According to financial futures markets there is a 98.6% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points.
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