Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher.
Today is the first day of the two-day Federal Open Market Committee meeting.
The February producer price index increased 0.8% when a 1.0% increase was expected.
The March Empire State Manufacturing index was -11.8 when 8.0 was anticipated.
The dominant influences remain geopolitical tensions and the hawkish Federal Reserve.
CURRENCY FUTURES
The U.S. dollar index is lower but overall is holding up well as traders look ahead to this week’s Federal Open Market Committee meeting.
The euro currency is higher despite news that the ZEW Indicator of Economic Sentiment for Germany fell by 93.6 points to -39.3 in March of 2022, which is the lowest since March 2020, and below market expectations of 10. This was the largest drop in expectations since the survey began in December 1991.
The British pound is higher on news that the U.K. unemployment rate declined to 3.9% in the three months to January of 2022,which is the lowest level in two years and below market expectations of 4.0%.
The Bank of England will hold its policy meeting on Thursday, March 17 and is set 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 declined to a new 5-year low in the overnight trade before a recovery.
The BoJ, which is scheduled to meet on Friday, March 18 has repeatedly stated that it will keep ultra-loose 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.
Housing starts in Canada increased 8.0% over a month earlier to 247,256 units in February of 2022, which is above market expectations of 238,000 units, according to the Canada Mortgage and Housing Corporation.
INTEREST RATE MARKET FUTURES
The Federal Reserve is on track to raise its benchmark interest rate for the first time since 2018 at its Wednesday, March 16 policy meeting.
Financial futures markets are predicting there is a 99.8% probability that the Federal Open Market Committee will hike its fed funds rate by 25 basis points and a .2% probability that the Fed will leave its fed funds rate unchanged at 0 to 25 basis points at its Wednesday policy meeting.
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.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
