Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures were lower in the overnight trade, extending last week’s pressure on worries of escalating geopolitical tensions in Eastern Europe.
However, stock index futures bounced back from early losses following hopes that the ongoing talks to halt the escalation of tensions in Ukraine will be successful.
The 8:45 central time February PMI composite is expected to be 51.9.
The 9:00 February consumer confidence index is anticipated to be 110.0 and the 9:00 February Richmond Federal Reserve manufacturing index is estimated to be 10.0.
The dominant influences remain tensions in Ukraine and the hawkish Federal Reserve.
CURRENCY FUTURES
There was flight to quality buying in the safe haven currencies, such as the U.S. dollar, the Swiss franc and the Japanese yen in the overnight trade. More recently, most of the price gains in the save-haven currencies were given back.
The Ifo Business Climate indicator for Germany improved to 98.9 in February of 2022 from an upwardly revised 96.0 in January and beating the market forecast of 96.5.
The Confederation of British Industry’s order book balance fell to a 4-month low of 20.0 in February of 2022, which was below market forecasts of 25.0.
Interest rate differential expectations suggest the long term trend for the British pound is higher and the long term trend for the Japanese yen is lower.
INTEREST RATE MARKET FUTURES
Federal Reserve governor Michelle Bowman on Monday said she had an open mind over whether the central bank should kick off interest-rate increases next month with a larger half-percentage-point rate hike.
Raphael Bostic of the Federal Reserve will speak at 2:30.
The Treasury will auction 2-year notes today.
Many market participants expect the Federal Open Market Committee will increase its fed funds rate six times this year with the first hike likely at the March 16 policy meeting.
Financial futures markets are predicating there is a 69% probability that the Fed will hike its fed funds rate by 25 basis points at its March meeting. Also, the consensus view is that the Fed will hike its fed funds rate six times this year. Last week the consensus view was that the Fed would hike seven times in 2022.
Some analysts believe that if the rate of growth in the U.S. economy slows, and also globally, it may be difficult for the Federal Reserve and other major central banks to maintain ramped-up hawkish policies.
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