NASDAQ Futures at Record Highs

STOCK INDEX FUTURES

Stock index futures advanced for a second day after on Friday the much better than expected May U.S. employment numbers were released. Nonfarm payrolls increased 2,509,000 when economists anticipated a decline of 7,725,000.

Today June S&P 500 futures advanced to their highest level since February 26 and NASDAQ futures traded at record highs.

Stock index futures continue to show positive technical action and have been performing well in spite of a variety of geopolitical concerns.

CURRENCY FUTURES

It is starting to look like the U.S. dollar may be bottoming.

Also, the euro currency appears to be making a near term top now that much of the bullish news is out, especially last Thursday’s news that the European Central Bank at its regularly scheduled policy meeting almost doubled its asset-buying program. The ECB is adding EUR600 billion ($675 billion) to the EUR750 billion that it announced in March.

The euro is higher despite news that German industrial production fell sharply in April. Total industrial output fell 17.9% in April from March. Economists had forecast a 16.8% decline in April.

The Japanese yen is higher on news that Japan’s economy contracted an annualized 2.2% in the January-March quarter, which is better than the 3.4% contraction in a preliminary estimate in May.

INTEREST RATE MARKET FUTURES

U.S. yields surged at the end of last week to their highest level since late March after Friday’s better-than-expected jobs report.

The Treasury will auction three-year notes today.

The next Federal Open Market Committee meeting is scheduled for June 9-10. Federal Reserve Chairman Jerome Powell will conduct a virtual news conference Wednesday after the meeting.

Among the main topics for the Fed’s policymaking group to discuss will be whether to implement so-called yield curve control. This would entail purchasing bonds with the intention of keeping yields at lower levels.

According to financial futures markets there is a 91.4% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points. Also, there is an 8.6% probability of a 25-basis point increase at next week’s meeting.

The yield curve has been steepening recently, which suggests there is a growing belief that there will be recovery in the economy later this year.

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