Written Commentary
INTEREST RATE MARKET FUTURES
Futures are lower across the board, although here was some recovery when this morning’s on balance weaker than expected U.S. economic reports were released.
Yesterday Atlanta Federal Reserve Bank President Raphael Bostic said inflation is high, but they have seen a lot of progress.
Federal Reserve speakers today are Jeffrey Schmid at 8:15, Michael Barr at 9:00, Michelle Bowman at 10:45 Beth Hammack at 12:15 and Patrick Harker at 2:15.
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, it is likely that the Federal Open Market Committee will reduce its fed funds rate by 25 basis points at its June meeting, and another reduction is priced in for late in the third quarter or in the fourth quarter.
Futures at the long end of the yield curve are likely to continue to gain of futures at the short end of the yield curve.
STOCK INDEX FUTURES
S&P 500 and NASDAQ futures are higher today but remain in a broadly based sideways congestion pattern since December 2024.
Durable goods orders in January increased 3.1% when a gain of 1.9% was expected.
The gross domestic product in the fourth quarter increased 1.3%, which compares to the predicted gain of 2.3%.
Jobless claims in the week ended February 22 were 242,000 when 224,000 were anticipated.
The 9:00 central time January pending home sales index is expected to show a 1.2% decline.
Traders are now focused on tomorrow’s release of the January PCE price index report, which is the Federal Reserve’s preferred inflation measure, and is estimated to be up 0.4% on a month- to-month basis.
CURRENCY FUTURES
The U.S. dollar index is higher, extending gains from the previous session as President Donald Trump’s latest tariff announcements caused caution in financial markets. On Wednesday, Donald Trump indicated plans for 25% “reciprocal” tariffs on European autos and other products, while stating that tariffs on Mexico and Canada will take effect on April 2, instead of the previously announced March 4 deadline.
Financial futures markets are 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 euro zone’s Economic Sentiment Indicator increased to 96.3 in February 2025, when analysts predicted 96.
Switzerland’s gross domestic product, adjusted for sporting events, grew by 0.5% in the fourth quarter of 2024, following 0.2% growth in the previous quarter.
The Japanese yen is holding near its highest level in 12 weeks, underpinned by expectations that the Bank of Japan will continue raising interest rates this year following upside surprises in fourth-quarter inflation.
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