Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower as investors digested yesterday’s release of the minutes from the January 29 Federal Open Market Committee meeting.
Jobless claims in the week ended February 15 were 219,000 when 215,000 were expected.
The February Philadelphia Federal Reserve manufacturing index was 18.1 when 22.7 was anticipated.
The 9:00 central time January leading indicators report is expected to be unchanged.
The bullish influence of an improving economic outlook in the U.S. is likely to more than offset the bearish impact of a Federal Reserve that is predicted to be slow to move to additional accommodation.
CURRENCY FUTURES
The U.S. dollar index is lower despite yesterday’s release of the minutes from the most recent Federal Open Market Committee meeting, which highlighted policymakers’ focus on the need for more evidence of sustained disinflation. The minutes echoed Federal Reserve Chair Powell’s previous statement that the Fed is in no hurry to lower rates further.
Financial futures markets are still predicting the Bank of England will lower its key interest rate at its March policy meeting despite yesterday’s release of the hotter than expected U.K. consumer prices report.
The Confederation of British Industry’s monthly net balance of new orders improved to -28 in February 2025 from -34 in January. Analysts were predicting a reading of -30.
The Bank of Japan is expected to hike interest rates once more this year, probably in the third quarter, which will bring the benchmark rate to 0.75%, according to a Reuters poll of economists.
INTEREST RATE MARKET FUTURES
Futures are mixed at the front end of the yield curve and are slightly higher at mid-curve and at the long end of the curve.
Minutes from the Fed’s January policy meeting highlighted policymakers’ focus on the need for more evidence of progress on controlling inflation.
Federal Reserve speakers today are Austan Goolsbee at 8:35, Alberto Musalem at 11:05, Michael Barr at 1:30 and Adriana Kugler at 4:00 PM.
Financial futures markets are predicting the Federal Open Market Committee will keep its fed funds rate unchanged at its March, May and June policy meetings. However, financial futures markets are predicting the Federal Reserve will reduce its fed funds rate by 25 basis points at its July meeting.
An additional interest rate reduction from the FOMC is unlikely until next year.
The fundamentals and technical aspects have weakened for futures at the front end of the yield curve.
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