Written Commentary
STOCK INDEX FUTURES
Stock index futures are mostly higher.
The 8:45 central time February manufacturing PMI is expected to be 51.3.
There are two 9:00 reports. The February consumer sentiment index is anticipated to be 68.0, and the January existing home sales report is estimated to show 4.16 million.
The bullish influence of an improving economic outlook in the U.S. is likely to more than offset the bearish impact of a Federal Reserve that is predicted to be slow to move to additional accommodation.
CURRENCY FUTURES
The U.S. dollar index is higher.
The euro zone Manufacturing PMI improved to a nine-month high at 47.3, which exceeded expectations. However, the Services PMI declined to 50.7, which was a three-month low.
The S&P Global U.K. Manufacturing PMI declined to 46.4 in February 2025 from 48.3 in January, when 48.4 was forecast, according to a preliminary estimate. This marked the sector’s sharpest contraction since December 2023.
Retail sales in the U.K. increased 1.7% month-over-month in January 2025, surpassing market predictions of 0.3% gain and rebounding from an upwardly revised 0.6% decline in December 2024.
Financial futures markets are still predicting the Bank of England will lower its key interest rate at its March policy meeting despite the recently released hotter than expected U.K. consumer prices report.
The annual inflation rate in Japan increased to 4.0% in January 2025 from 3.6% in the previous month, marking the highest reading since January 2023.
This stronger-than-expected increase reinforces expectations that the Bank of Japan may continue hiking interest rates as inflationary pressures remain.
The Bank of Japan is expected to increase interest rates once more this year, probably in the third quarter, which will bring the benchmark rate to 0.75%, according to a poll of economists.
INTEREST RATE MARKET FUTURES
Futures are lower at the front end of the yield curve and are higher at the long end of the curve.
Federal Reserve speakers today are Philip Jefferson at 10:30 and Mary Daly also at 10:30.
Financial futures markets are predicting the Federal Open Market Committee will keep its fed funds rate unchanged at its March and May policy meetings. However, financial futures markets are predicting the Federal Reserve will reduce its fed funds rate by 25 basis points at its June meeting.
The fundamentals and technical aspects have weakened for futures at the front end of the yield curve.
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