CURRENCY FUTURES
The U.S. dollar index declined in the overnight trade, and there was additional pressure when the personal consumption expenditures report was released.
The annual inflation rate in the euro area increased for the first time in five months to 2.6% in May 2024 from 2.4% in each of the previous two months. This was above predictions of 2.5%. Core inflation, which excludes energy and food, increased to 2.9%, surpassing the estimated 2.7%.
In spite of these elevated inflation numbers, the European Central Bank is still expected to cut interest rates on June 6, which would be the first reduction since 2019. However, economists are reducing their expectations of how many additional rate cuts are likely this year.
The Nationwide House Price Index in the U.K. increased by 1.3% year-on-year in May 2024, accelerating from a 0.6% increase that was reported in the previous period.
Japan’s Ministry of Finance stated that Japan spent 9.7885 trillion yen ($62.25 billion) on currency intervention between April 26 and May 29, after the Japanese yen plunged to a 34-year-low in April.
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade but quickly firmed when the U.S. personal income report was released.
Personal income in April increased 0.3% as expected. However, personal consumption expenditures In April increased only 0.2% when a gain of 0.3% was anticipated.
The 8:45 central time May Chicago PMI is estimated to be 40.8.
The longer term fundamentals and technicals remain supportive.
INTEREST RATE MARKET FUTURES
Futures quickly advanced when the weaker than expected personal consumption expenditures report was released.
Raphael Bostic of the Federal Reserve will speak at 5:15 this afternoon.
Financial futures markets are predicting there is a 51% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
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