Written Commentary
STOCK INDEX FUTURES
The February consumer price index increased 0.4% as expected, and the consumer price index excluding food and energy was up 0.4% when a gain of 0.3% was anticipated.
The National Federation of Independent Business Small Business Optimism Index declined to 89.4 in February 2024, the lowest in nine months, from 89.9 in January, and under forecasts of 90.7.
Stock index futures quickly declined when the larger than expected increase in the consumer price index excluding food and energy was reported. However, since then prices have recovered and are now trading substantially higher.
CURRENCY FUTURES
The U.S. dollar index was steady in the overnight trade. The greenback quickly advanced when the larger than expected increase in the consumer price index excluding food and energy was reported but very quickly gave it back.
Regular compensation, which excludes bonus payments in the U.K., was up 6.1% year-on-year in the three months to January 2024, the lowest growth rate since October 2022, below a 6.2% gain in the previous period and expectations of 6.2%.
INTEREST RATE MARKET FUTURES
Futures came under pressure when the consumer price index was released.
The Treasury will auction 10-year notes today.
Financial futures markets are predicting there is a 1.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting, and there is a 99% chance that the Fed will keep rates unchanged.
While futures at the long end of the curve are technically looking better, the fundamentals and technicals remain bearish on balance for futures at the short end of the yield curve.
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