Inflation Accelerates in the Euro Zone

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STOCK INDEX FUTURES

Some of Friday’s pressure on stock index futures was due to unfavorable results from the Federal Reserve’s stress tests on banks.

The 9:00 central time May pending home sales report is expected to show an 11.3% increase and the 9:30 June Dallas Federal Reserve manufacturing index is anticipated to be negative 26.

Stock index futures will be supported by the belief that any slowdown in the global economic recovery will be met with additional accommodation from the world’s central banks, along with more fiscal stimulus.

CURRENCY FUTURES

The euro currency is higher after preliminary data showed German consumer prices increased more than expected. Consumer prices advanced 0.6% in June, as measured by national standards and 0.7% in E.U.-harmonized standards. Both figures were above the 0.3% increase economists predicted in both cases.

The British pound is lower, as traders became nervous about the Brexit talks that are scheduled to resume this week. There are concerns that the U.K. could walk away without a meaningful trade deal with the European Union.

The Japanese yen is lower after a report showed Japan’s May overall retail sales fell 12.3% on the year.

Interest rate differential expectations have recently turned slightly more favorable to the U.S. dollar.

INTEREST RATE MARKET FUTURES

The yield on the 10-year U.S. Treasury note ticked up to 0.649% from 0.636% Friday.

John Williams of the Federal Reserve will speak at 2:00.

According to financial futures markets there is a 96.7% probability that the Federal Open Market Committee will leave its fed funds rate unchanged at zero to 25 basis points at its July 29 policy meeting.

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