Written Commentary
CURRENCY FUTURES
The U.S. dollar index is a little lower.
In January 2024, compared with December 2023, seasonally adjusted industrial production declined by 3.2% in the euro area and by 2.1% in the EU, according to Eurostat.
Germany’s wholesale prices fell by 3.0% year-on-year in February 2024, after a 2.7% decline in the previous month. This was the eleventh consecutive month of falling wholesale prices.
The U.K. economy expanded 0.2% month-over-month in January 2024, following a 0.1% decline in December, and matching analysts’ forecasts. This rebound follows a technical recession in the second half of last year.
Bank of Japan Governor Kazuo Ueda offered a slightly less optimistic assessment of the economy ahead of the central bank’s policy meeting on March 19. Ueda told parliament, “Japan’s economy is recovering moderately, although weakness has been seen in some data.”
Speculation grows regarding an exit from the BOJ’s negative interest rate policy, possibly occurring as soon as next week, while some analysts anticipate Japan’s first rate hike since 2007 could take place in April.
STOCK INDEX FUTURES
Stock index futures are mixed.
There are no major economic reports scheduled for today.
Tomorrow’s February producer price index report is expected to show a 0.3% increase and the producer price index, excluding food and energy, is anticipated to be up 0.2%.
Stock index futures have traded higher this year despite a Federal Reserve that is slow to pivot to accommodation.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are lower across the board.
The Treasury will auction 30-year bonds today.
Financial futures markets are predicting there is a 1.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting, and there is a 99% chance that the Fed will keep rates unchanged.
While futures at the long end of the curve are technically looking better, the fundamentals and technicals remain bearish on balance for futures at the short end of the yield curve.
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