Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced on Friday as investors evaluated economic risks from Federal Reserve monetary policy tightening and the situation in Ukraine.
Futures remain above downtrend lines.
The 9:00 central time March consumer sentiment index is expected to be 59.7.
The 9:00 February pending home sales report is anticipated to show a 0.9% increase.
CURRENCY FUTURES
The U.S. dollar index is lower but remains close to the highest level in nearly two years after Federal Reserve officials recently indicated a readiness to take more aggressive steps to bring inflation under control.
The euro currency is higher despite news that the Ifo Business Climate indicator for Germany fell to a 14-month low of 90.8 in March of 2022 from 98.9 in February and was much lower than market forecasts of 94.2.
The Japanese yen fell to a six-year low before a recovery. Bank of Japan Governor Haruhiko Kuroda said stable inflation is needed to trigger a policy change at the central bank, not yen weakness. Kuroda maintained his view that a weak Japanese currency is positive for the economy overall and his stance that BoJ stimulus must remain.
Lower prices are likely for the Japanese yen.
INTEREST RATE MARKET FUTURES
Futures are lower across the board.
Recent global bond market declines are due to the anticipation of a policy tightening cycle. Several major central banks are attempting to tame inflation, which is currently running at records levels in Europe and 40-year highs in the US.
Federal Reserve Chair Powell and other Fed officials have recently made hawkish policy comments, which led markets to anticipate a higher probability of the Fed hiking rates by 50 basis points rather than 25 basis points at the May policy meeting.
Federal Reserve speakers today are John Williams at 9:00, Mary Daly at 10:00, Thomas Barkin at 10:30 and Christopher Waller at 11:00.
Some analysts believe that it may be difficult for the Federal Reserve and other major central banks to maintain ramped-up hawkish policies if the rate of growth in the global economy slows.
Lower prices for futures are likely as many central banks tighten credit policies in an effort to fight inflation.
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