Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher.
The 8:45 central time February PMI manufacturing report is expected to be 51.6.
The 9:00 February Institute for Supply Management manufacturing index is anticipated to be 50.5, and the 9:00 January construction spending report is estimated to be unchanged.
My analysis suggests the Federal Open Market Committee will more aggressively move to additional accommodation this year, which is supportive to stock index futures in the longer term.
CURRENCY FUTURES
The U.S. dollar index weakened after U.S. Commerce Secretary Howard Lutnick indicated on Sunday that tariffs on Mexico and Canada are still “fluid,” suggesting they could be lower than the proposed 25%. However, Lutnick confirmed that the additional 10% tariff on China is “set.”
The annual inflation rate in the euro area eased to 2.4% in February 2025, which is down from a six-month high of 2.5% in January but is slightly above market predictions of 2.3%.
It is widely expected that the European Central Bank will lower its key interest rate by 25 basis points at its March 6 policy meeting.
The Bank of Japan is likely to increase interest rates further this year.
INTEREST RATE MARKET FUTURES
Futures are lower across the board today after substantial gains were registered over the past two weeks.
Federal Reserve Bank of St. Louis President Alberto Musalem will speak at 10:35 on the U.S. economy and monetary policy.
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, it is likely that the Federal Open Market Committee will reduce its fed funds rate by 25 basis points at its June meeting, and another reduction is priced in for the September policy meeting.
In light of increasing probabilities of the FOMC more aggressively moving to accommodation this year, futures across the yield curve will probably advance.
Interested in more futures markets? Explore our Market Dashboards here.
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.
