Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher in an attempt to recover from Friday’s sharp sell-off.
The January Chicago Federal Reserve national activity index was -0.03 when 0.21 was expected.
The 9:30 central time February Dallas Federal Reserve manufacturing survey is anticipated to be 18.
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 slightly higher.
Traders are now focused on this week’s second estimate of fourth-quarter gross domestic product growth and the PCE price index report, which is the Federal Reserve’s preferred inflation measure.
The euro currency is steady on Monday as traders digest the results of the German election on Sunday.
The euro area annual inflation rate was 2.5% in January 2025, which is up from 2.4% in December 2024. A year ago, the rate was 2.8%. European Union annual inflation was 2.8% in January 2025, which is up from 2.7% in December 2024. A year earlier the rate was 3.1%.
The Ifo Business Climate indicator for Germany was 85.2 in February 2025, which is unchanged from the slightly revised figure in the previous month and falling under the market consensus estimate of 85.8.
Financial futures markets are still 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 Bank of Japan is expected to increase interest rates once more this year, probably in the third quarter, which will bring the benchmark rate to 0.75%, according to a poll of economists.
INTEREST RATE MARKET FUTURES
Futures are steady at the front of the yield curve, and are lower elsewhere on the curve.
The U.S. Treasury will auction two-year notes today.
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, financial futures markets are predicting the Federal Reserve will reduce its fed funds rate by 25 basis points at its June meeting.
The fundamentals and technical aspects have weakened for futures at the front end of the yield curve.
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