STOCK INDEX FUTURES
Futures temporarily firmed after the Challenger Grey job cuts report for May showed a 41.2% decline, which compares to the 6% drop in April
Jobless claims in the week ended June 1 declined 11,000 to 346,000, which compares to the estimate of 345,000.
Futures have recently been undermined by the growing belief that the Federal Reserve will reduce the pace of their asset purchases sooner than previously expected.
On the way up for futures, regardless of the economic news, the Fed's accommodation was virtually assured. The bad news was the bullish news because it suggested the Fed would need to continue with their quantitative easing and the good news was bullish because it showed the Fed's quantitative easing was working.
Now the opposite appears to be true. The bad news is the bad news because it shows the accommodation may not be working well enough and the good news is the bad news because it suggests the accommodation has done its job and can be scaled back.
Our analysis suggests the Federal Reserve will scale back their quantitative easing program earlier than the consensus view.
CURRENCY FUTURES
The European Central Bank and the Bank of England held their regularly scheduled policy meetings today. Policies at both central banks were left unchanged with both central banks keeping their benchmark interest rate unchanged at 50 basis points.
April German factory orders declined 2.3% from March, which compares to the estimate of a 1% drop.
Unemployment in France hit 10.8% in the first quarter of 2013, which is a 14 year high.
The Greek jobless rate increased in March to near a record high of 26.8%.
The Australian dollar is lower and is at a 20 month low.
Interest rate differential expectations remain bearish for the Japanese yen and the Australian dollar.
The main trend for the Japanese yen and the Australian dollar is lower, with the Australian dollar likely to be the weaker of the two.
INTEREST RATE MARKET FUTURES
Over the past few days, weakness in equity prices caused flight to quality buying to come into Treasury futures. This has, at least for now, offset the bearish influence of the likely Federal Reserve scale back of their quantitative easing program.
At 11:00 central time Federal Reserve of Philadelphia Bank President Plosser will speak on the economy.
The next Federal Open Market Committee meeting will be held on June 18-19.
Stand aside for now in the credit futures market because of the opposing crosscurrents.
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 views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options market. 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.
Futures temporarily firmed after the Challenger Grey job cuts report for May showed a 41.2% decline, which compares to the 6% drop in April
Jobless claims in the week ended June 1 declined 11,000 to 346,000, which compares to the estimate of 345,000.
Futures have recently been undermined by the growing belief that the Federal Reserve will reduce the pace of their asset purchases sooner than previously expected.
On the way up for futures, regardless of the economic news, the Fed's accommodation was virtually assured. The bad news was the bullish news because it suggested the Fed would need to continue with their quantitative easing and the good news was bullish because it showed the Fed's quantitative easing was working.
Now the opposite appears to be true. The bad news is the bad news because it shows the accommodation may not be working well enough and the good news is the bad news because it suggests the accommodation has done its job and can be scaled back.
Our analysis suggests the Federal Reserve will scale back their quantitative easing program earlier than the consensus view.
CURRENCY FUTURES
The European Central Bank and the Bank of England held their regularly scheduled policy meetings today. Policies at both central banks were left unchanged with both central banks keeping their benchmark interest rate unchanged at 50 basis points.
April German factory orders declined 2.3% from March, which compares to the estimate of a 1% drop.
Unemployment in France hit 10.8% in the first quarter of 2013, which is a 14 year high.
The Greek jobless rate increased in March to near a record high of 26.8%.
The Australian dollar is lower and is at a 20 month low.
Interest rate differential expectations remain bearish for the Japanese yen and the Australian dollar.
The main trend for the Japanese yen and the Australian dollar is lower, with the Australian dollar likely to be the weaker of the two.
INTEREST RATE MARKET FUTURES
Over the past few days, weakness in equity prices caused flight to quality buying to come into Treasury futures. This has, at least for now, offset the bearish influence of the likely Federal Reserve scale back of their quantitative easing program.
At 11:00 central time Federal Reserve of Philadelphia Bank President Plosser will speak on the economy.
The next Federal Open Market Committee meeting will be held on June 18-19.
Stand aside for now in the credit futures market because of the opposing crosscurrents.
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 views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. The information provided is designed to assist in your analysis and evaluation of the futures and options market. 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.
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