Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher due to positive developments on the outlook for Ukraine-Russia talks.
Retail sales in February increased 0.3% when up 0.4% was expected.
There are three 9:00 reports. The March housing market index is anticipated to be 81. The January business inventories report is predicted to show a 1.1% increase and the March Atlanta Federal Reserve business inflation expectations report, which last month was at 3.4%.
The Federal Open Market Committee will conclude its two-day policy meeting today. A statement will be released at 1:00 and Federal Reserve Chairman Jerome Powell will hold a press conference at 1:30.
CURRENCY FUTURES
The U.S. dollar index is lower but overall is holding up well as traders look ahead to today’s Federal Open Market Committee meeting.
The Bank of England will hold its policy meeting tomorrow and is likely to deliver at least a 25 basis point rate hike. The BoE raised interest rates twice since December in an effort to tame accelerating inflation.
The Japanese yen remains near a five-year low.
Exports from Japan increased 19.1% year-over-year in February 2022, which compared with the market consensus of a 21.0% growth and after a 9.6% increase in the prior month.
The BoJ, which is scheduled to meet on Friday, has repeatedly stated that it will keep ultra-easy monetary policies to support the economic recovery and achieve its 2.0% inflation target.
Interest rate differential expectations suggest the Japanese yen will trend lower.
INTEREST RATE MARKET FUTURES
The Federal Reserve is on track to raise its benchmark interest rate today for the first time since 2018.
Financial futures markets are predicting there is a 96.3% probability that the Federal Open Market Committee will hike its fed funds rate by 25 basis points and a 3.7% probability that the Fed will hike by 50 basis points.
The FOMC is expected to issue a statement that shows it is resolved to fight inflation. Fed Chair Powell will likely deliver hawkish on balance comments, paving the way for additional rate hikes this year.
Some analysts believe that if the rate of growth in the U.S. economy slows, and also globally, it will be difficult for the Federal Reserve and other major central banks to maintain ramped-up hawkish policies.
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