Written Commentary
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade due to reigniting trade tensions between the U.S. and China as President Donald Trump walked back his softening stance.
Durable goods orders in March increased 9.2% when a gain of 1.4% was expected.
Jobless claims in the week ended April 19 were 222,000 when 220,000 were anticipated.
The 9:00 central time March existing home sales report is estimated to show 4.12 million.
The technicals are improving for stock index futures. Yesterday, the June S&P 500 futures advanced above a five-day downtrend line, and there was follow-through strength with a gap higher opening.
Futures are responding well to mostly bearish news, which is a sign of at least short term strength.
Anticipated interest rate cuts from the Federal Reserve later this year remain an underlying long term supportive influence.
CURRENCY FUTURES
The June U.S. dollar index is lower on Thursday after two consecutive sessions of gains. There was almost no upside in the greenback when the bullish U.S. durable goods orders report was released, which is a sign of weakness for the U.S. dollar, and lower prices are likely.
The German government lowered its economic growth forecast and now sees stagnation in 2025 instead of a 0.3% expansion.
The Confederation of British Industry’s monthly net balance of new orders came in at -26 in April 2025, which is the highest in five months. This compares to -29 in March and forecasts of -35.
Traders are increasingly betting that the Reserve Bank of Australia will lower interest rates at its May 20 meeting. While a 25 basis-point reduction is widely anticipated, some analysts are pricing in a more aggressive 50 basis-point cut.
Looking at all of the financial futures markets, the best place to be right now is the short side of the U.S. dollar index, despite a recent limited recovery in the greenback.
INTEREST RATE MARKET FUTURES
Futures are higher.
Yesterday, Federal Reserve Bank of Cleveland President Beth Hammack said, “This is not a good time to be pre-emptive” with monetary policy.
The yield on the 10-year U.S. Treasury note declined by approximately 5 basis points to 4.36% on Thursday.
The U.S. Treasury will auction seven-year notes today.
Neel Kashkari of the Federal Reserve will speak at 4:00 PM.
The Federal Open Market Committee will probably keep its fed funds rate unchanged at 4.25% – 4.50% at its May 7 policy meeting.
However, the Federal Open Market Committee is likely to lower its fed funds rate by 25 basis points three times this year with the first reduction potentially coming at the June 18 policy meeting.
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