Stimulus Hopes Support Stock Indexes

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STOCK INDEX FUTURES    

U.S. stock index futures are higher as investors believe central banks and governments will do more to support the economy.

Congress is returning from a more than two-week recess today. Lawmakers are scheduled to begin discussions for another round of economic stimulus this week to help relieve individuals and companies.

There are no major economic reports scheduled for today.

S&P 500 futures remains above a major downtrend line on the daily chart.

Stock index futures continue to perform well for the news and have upside momentum.

CURRENCY FUTURES

The European Union summit is continuing today as leaders need to bridge the gaps on a long-term budget. The euro currency traded higher as negotiators reportedly made progress in a historic stimulus package, which was still missing after three days of deadlocked weekend negotiations.

The summit, originally scheduled for Friday and Saturday, continued into Monday as fiscal hawk states led by the Netherlands were resistant to the size of grants to the worst-affected states and demanded aid be conditional on economic reforms.

However, there were indications of a possible deal around the grants being reduced to 390 billion euros, which would be a compromise between the 350 billion euros backed by the “frugal” states and the 400 billion euros that were demanded by France and Germany.

INTEREST RATE MARKET FUTURES

There are no Federal Reserve speakers scheduled for today.

According to financial futures markets there is a 95.6% 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.

My analysis suggests there will be no change in the fed funds rate at the July meeting.

Futures appear to be caught between the bearish influence of more government stimulus and the bullish influence of ongoing historically accommodative central bank policies.

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