Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower on Wednesday after China announced retaliatory tariffs on U.S. goods in the latest escalation of global trade tensions. China announced it will impose an 84% levy on U.S. goods starting Thursday. This comes after U.S. tariffs of 104% on Chinese imports took effect shortly after midnight.
The 9:00 central time February wholesale inventories report is expected to show a 0.3% increase.
The Federal Open Market Committee will release the minutes from its March 19 policy meeting at 1:00.
In spite of the current sharply lower prices this morning for stock index futures, some of the technical indicators suggest stock index futures will recover and trade higher today.
CURRENCY FUTURES
The U.S. dollar index is lower today edging closer to the six-month lows touched last week as the bearish influence of interest rate differentials more than offset the bullish influence of flight to quality flows in light of the ongoing trade tariffs.
The fundamentals for the greenback remain bearish.
Other traditional safe-haven currencies such as the Japanese yen and the Swiss franc are higher.
The euro is higher and is approaching its strongest level since October 2024.
Bank of Japan governor Kazuo Ueda said the central bank will continue to raise rates if the economy keeps improving in line with outlook.
The consumer confidence index in Japan declined to 34.1 in March 2025 from a downwardly revised 34.8 in the previous month.
INTEREST RATE MARKET FUTURES
Futures are higher at the front of the yield curve and are lower along the rest of the yield curve.
Thomas Barkin of the Federal Reserve will speak at 11:30.
The U.S. Treasury will auction 10-year notes today.
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 FOMC will likely lower its key interest rate by 25 basis points four times in 2025 with the first reduction likely at the May meeting.
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