Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower as it appears that the Federal Reserve will be slow to pivot to accommodation.
The 9:00 central time February factory orders report is expected to show a 1.0% increase.
The 9:00 February Job Openings and Labor Turnover Survey (JOLTS) is anticipated to be 8.8 million.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is lower.
HCOB’s final euro zone manufacturing Purchasing Managers’ Index was 46.1 in March, which compares to a preliminary estimate of 45.7.
Median consumer expectations for euro area inflation over the next 12 months decreased to 3.1% in February 2024 from 3.3% in January, according to the ECB Consumer Expectations Survey. However, expectations for inflation three years ahead remained unchanged at 2.5%.
The German preliminary March consumer price index increased 0.4% on the month when up 0.6% was estimated.
House prices in the U.K. increased in March at their fastest annual rate since December 2022.
Nationwide Building Society, which is Britain’s second largest mortgage lender, said house prices were 1.6% higher in March from a year ago, increasing from annual growth of 1.2% in February.
INTEREST RATE MARKET FUTURES
Futures are mostly lower as it is appearing more likely that the Federal Reserve will be slow to pivot to accommodation this year.
Federal Reserve Chair Jerome Powell reiterated on Friday that the central bank was in no hurry to cut interest rates, and that the latest PCE inflation data was in the line with what the Fed wants to see.
Federal Reserve speakers today are Michelle Bowman at 9:10, John Williams at 11:00, Loretta Mester at 11:05 and Mary Daly at 12:30.
Federal Reserve Chairman Powell will speak tomorrow at 11:10 at the Stanford Business, Government, and Society Forum.
Financial futures markets are predicting there is a 2.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the May 1 policy meeting, and there is a 98.0% chance that the Fed will keep rates unchanged.
The consensus view currently is that the FOMC will lower its fed funds rate three times this year starting in June.
My view is that only two cuts are likely this year.
The fundamentals and technicals for futures are bearish on balance.
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