European stock indexes are under selling pressure in early trading on Monday and U.S stock index futures are heading for a flat opening following Friday’s better than expected jobs report for May that boosted the chances of the Federal Reserve raising interest rates at the end of 2015.
The bond market already appears to be bracing for this monetary tightening change to occur after the U.S. central bank has not raised rates since 2006 and maintained a nearly decade long period of loose monetary policies to help stimulate growth.
Following the jobs report on Friday that saw over 280,000 jobs added to the U.S. economy in May, the 10 year Treasury jumped to a 2015 high and reached 2.44 percent.
Over in Europe, the German Bund came just short of doubling last week and climbed to 0.85 percent, the highest level since November 2014, bolstered by some comments made by ECB President Mario Draghi that “we should get used to periods of higher volatility” and this is a function of “very low levels of interest rates” coincided with some earlier positive inflation data out of the Euro area reported on Tuesday that lowered concerns that the 19 member Euro area was headed towards an era of stagflation.
Latest Euro area inflation figures from Tuesday indicated that inflation rose to 0.03 percent in May, up from 0.00 in April, reversing 5 months of stagflation, and fueling hopes of stronger growth in the 19 member Euro area currency union.
Core inflation which excludes energy and food prices was up 0.09 percent in May from 0.06 percent in April.
Draghi said that inflation “bottomed out” at the beginning of the year and is expected to pick up this year and 2016.
The ECB kept its outlook for 2015 GDP growth at 1.5 percent and 1.9 percent in 2016.
The Week Ahead
Last week was filled with lots of market moving economic data.
This week won’t be filled with nearly as much economic data to absorb.
On Thursday retail sales for May will be reported.
Economists from briefing.com are forecasting a retail sales increase of 1.1 percent.
Apple will hold their Worldwide Developer’s Conference in San Francisco from June 8-12th where its developer community will come together to learn about the future of iOS and OS X.
The conference will feature 100 technical sessions and have over 1,000 Apple engineers.
Although there were some earlier reports describing Apple unveiling its new Apple TV set-top box at the conference, the Cupertino company is now believed to delay making a big announcement due to some longer than expected negotiations over securing local programming.
Apple is expected to announce a new subscription based streaming service for $10.00 a month that allows listeners to listen to any song or album that they choose in its huge collection.
Apple will also be announcing an upgrade with its free online radio that has a host of channels, filled with some celebrity personalities.
Tuesday- Wholesale inventories (April), JOLT Job Openings (April)
Wednesday- MBA Mortgage Index, Crude Inventories, Treasury Budget
Thursday- Initial and Continuing Jobless Claims, Retail Sales (May), Export/Import Prices (May), Business Inventories, Natural Gas Inventories
Friday-PPI and Core PPI (May), Michigan Sentiment