Written Commentary
STOCK INDEX FUTURES
Major stock index futures are lower after advancing to new record highs yesterday.
At 8:00 central time Federal Reserve Chair Jay Powell will give welcome remarks before a “Fed Listens” event to hear perspectives on current economic conditions.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is higher.
Business sentiment improved in Germany in March. The Ifo business-climate index increased to 87.8 in March from 85.7 in February, beating expectations of 86.0.
German import prices fell 5.9% year-on-year in January 2024, following a 7.0% decline in the previous month and compared to market forecasts of a 7.4% decrease.
Retail sales volumes in the U.K. remained unchanged in February 2024, which compares to an anticipated 0.3% decline.
The annual inflation rate in Japan climbed to 2.8% in February 2024 from 2.2% in January, accelerating for the first time in four months and reaching the highest level since last November. The core inflation rate jumped to 2.8% from 2.0% in January.
INTEREST RATE MARKET FUTURES
In addition to Fed Chair Powell, other Federal Reserve speakers are Phillip Jefferson at 9:00, Michael Barr at 11:15 and Raphael Bostic at 3:00.
Financial futures markets are predicting there is a 12.0% 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 an 88.0% chance that the Fed will keep rates unchanged.
Approximately 80 basis points of cuts are now priced in for this year, which is much lower than the 160 or so basis points that had been priced in at the beginning of the year.
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