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Inflation Concerns Dominate Trading


Stock index futures were lower in the overnight trade and declined further when the larger than expected increase in the first quarter employment cost index was released.

The employment cost index increased 1.2% on the quarter when up 0.9% was anticipated.

The 8:45 central time April Chicago PMI is predicted to be 45.0, and the 9:00 April consumer confidence index is estimated to be 104.0.

The main event this week will be tomorrow’s statement from the Federal Open Market Committee meeting and Federal Reserve Chair Powell’s press conference.

There is a good chance that Fed Chair Powell will pivot to a hawkish stance, which would reverse his dovish commentary at the beginning of this year. Stubborn inflation is the main reason that will probably influence the Federal Reserve to maintain higher interest rates for an extended period.


The U.S. dollar index was higher in the overnight trade and continued to advance when the bullish U.S. employment cost index report was released.

Follow-through gains for the greenback are likely ahead of tomorrow’s FOMC meeting.

The euro area’s economy expanded by 0.3% in the first quarter, which is the most since the third quarter of 2022, beating market expectations of 0.1% increase.

German retail sales increased by 1.8% month-over-month in March 2024, surpassing market estimates of 1.3%.

Bank of Japan data suggest the government carried out significant yen-buying intervention on Monday.


Futures were slightly lower in the overnight trade but quickly declined on news that the employment cost index came in higher than forecast.  Futures at the front end of the yield curve fell to new lows for the move.

There are no speakers from the Federal Reserve today.

Financial futures markets are predicting no change in the fed funds rate at the Federal Open Market Committee’s May 1, June 12, July 31 and September 18 meetings.

However, there is a 60% probability of a rate cut at the November 7 meeting.

I would not be surprised to see the probability of a fed funds rate cut at the November meeting diminishing as we get closer to that meeting.

The fundamentals remain bearish, and lower prices are likely. However, the downtrend is subject to the possibility of a flight to quality flow of funds if geopolitical concerns intensify.


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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.

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