Written Commentary
STOCK INDEX FUTURES
Stock index futures are sharply higher after Treasury Secretary Scott Bessent said the Trump administration was open to negotiating deals to reduce tariffs, saying the U.S. could “end up with some good deals.”
Treasury Secretary Scott Bessent revealed that nearly 70 countries, including Japan, have reached out to the administration to discuss tariff negotiations.
The NFIB Small Business Optimism Index was 97.4 in March, which compares to the expected 98.9.
Yesterday’s gaps down on the daily charts for the S&P 500, NASDAQ and Dow Jones charts had some of the earmarks of being exhaustion gaps and not continuation gaps.
While traders currently are focusing on the negative implications of trade tariffs and geopolitical issues, a more accommodative Federal Open Market Committee will support futures later this year.
CURRENCY FUTURES
The U.S. dollar index is lower today as flight to quality longs are liquidated in light of a better tone to the global trade situation.
The fundamentals for the greenback remain bearish.
The Japanese yen is higher. The yen was supported by comments from Bank of Japan Deputy Governor Uchida when he recently said the central bank will raise interest rates if underlying inflation heightens against a background of continued improvements in economy.
Australian consumer sentiment declined to a six-month low in early April, according to a private survey. The Westpac-Melbourne Institute consumer sentiment index fell 6% in April to 90.1 from 95.9 in March.
INTEREST RATE MARKET FUTURES
Flight to safety long positions are being liquidated due to be a better tone to the global tariff situation.
The yield on the U.S. 10-year Treasury note declined to around 4.18%, which is the lowest level since mid-October.
Chicago Federal Reserve President Austan Goolsbee yesterday said the central bank would have to look at hard data before deciding on its next policy move. Investors are now focused on this week’s inflation data, which could prove pivotal in shaping expectations for potential rate cuts.
Thursday’s March consumer price index report is expected to show a 0.1% increase and Friday’s March producer price index is anticipated to be up 0.2%.
The U.S. Treasury will auction three-year notes today.
Mary Daly of the Federal Reserve will speak at 1:00 central time.
The FOMC will likely lower its key interest rate by 25 basis points four times in 2025 With the first reduction likely at the June meeting.
Although prices are lower due to flight to quality long liquidation, the fundamentals and technicals remain bullish for the interest rate market futures.
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