Written Commentary
INTEREST RATE MARKET FUTURES
Futures are higher across the board as investors move funds to safe-haven vehicles.
In the last few days futures have broken out above downtrend lines.
Thomas Barkin of the Federal Reserve will speak at 8:00 central time.
Financial futures markets are predicting the Federal Open Market Committee will more aggressively move to accommodation this year. The FOMC will likely lower its key interest rate three times this year, with the first reduction at its June policy meeting.
STOCK INDEX FUTURES
Stock index futures are lower as trade war concerns continue to weigh on the economic outlook and investor sentiment. Reciprocal tariffs are set to take effect on April 2nd, including a 25% levy on all cars that are not manufactured in the U.S.
The 8:45 central time March PMI manufacturing final is expected to be 49.8.
There are three 9:00 reports. The March Institute for Supply Management manufacturing index is anticipated to be 49.6, and the February construction spending report is estimated to show a 0.4% increase. The February Job Openings and Labor Turnover Survey (JOLTS) is forecast to be 7.6 million.
While traders currently are focusing on the negative implications of trade tariffs and geopolitical issues, in the longer term, a more accommodative Federal Open Market Committee will support futures.
CURRENCY FUTURES
The U.S. dollar index is slightly higher today as investors await the implementation of President Donald Trump’s reciprocal tariffs to gain insight on the economic outlook.
In the longer term, the bullish influence of flight to quality buying is likely to be more than offset be the bearish influence of interest rate differentials that have turned bearish for the greenback.
Euro zone inflation hit a four-month low at 2.2% in March. Financial futures markets are pricing in a 65% probability that the European Central Bank will lower its key interest rate at its April 17 policy meeting.
HCOB’s final euro zone manufacturing Purchasing Managers’ Index, compiled by S&P Global, was 48.6 in March, which was just below a preliminary estimate for 48.7.
The seasonally adjusted S&P Global U.K. Manufacturing Purchasing Managers’ Index fell to a 17-month low of 44.9 in March, which is down from 46.9 in February.
The Reserve Bank of Australia maintained its cash rate at 4.1% at its policy meeting today, which was in line with expectations.
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