New Infrastructure Plan

STOCK INDEX FUTURES

U.S. stock index futures are sharply higher due to a report that the Trump administration is considering a $1 trillion infrastructure plan. The plan would provide funds for roads and bridges and also for high-tech infrastructure, including 5G and rural internet.

Retail sales in May were up 17.7% when an increase of 7.5% was expected.

May industrial production was up 1.4% when a gain of 2.9% was anticipated and May capacity utilization was 64.8%, which compares to the estimate of 66.7%.

The 9:00 central time April busines inventories report is predicted to be down 0.5% and the 9:00 June housing market index is expected to be 44.

Federal Reserve Chairman Jerome Powell begins the first of two days of his semiannual monetary policy report to Congress. Powell is scheduled to appear before the Senate Banking Committee at 9:00 today and before the House Financial Services Committee on Wednesday at 11:00.

The technical picture remains positive for stock index futures.

CURRENCY FUTURES

German economic expectation increased in June for the third month in a row, according to the ZEW economic research institute. The measure of economic expectations advanced to 63.4 in June from 51.0 in May. This report is better than the economists’ forecast of 60.0. The president of the ZEW institute said, “There is growing confidence that the economy will bottom out by summer 2020.”

The hourly wages of euro zone workers jumped in the first quarter of 2020. The European Union’s statistics agency said in the three months through March, hourly wages were 3.4% higher than in the same period a year ago.

The Bank of Japan left its ultra-easy monetary policy on hold at its policy meeting today. Bank of Japan Governor Haruhiko Kuroda suggested the bank would likely keep its short-term interest rate target at minus 0.1% over the next two years or so. In addition, Mr. Kuroda indicated that it would be difficult for the BoJ to raise interest rates ahead of the Federal Reserve.

INTEREST RATE MARKET FUTURES

In light of sharply higher stock index futures flight to quality longs are being liquidated, especially at the long end of the curve.

In addition, there is selling pressure in response to the much stronger than estimated retail sales report and President Trump’s proposed infrastructure spending plan.

Richard Clarida of the Federal Reserve will speak at 5:00 central time this afternoon.

According to financial futures markets there is a 97.8% probability that the FOMC will leave its fed funds rate unchanged at zero to 25 basis points at its July 29 policy meeting.

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.

© 2024 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.