Written Commentary
STOCK INDEX FUTURES
Stock index futures were higher in the overnight trade but quickly declined when the larger than expected increase in the consumer price index was reported.
The March consumer price index increased 0.4% when up 0.3% was expected, and the consumer price index excluding food and energy advanced 0.4% when a gain of 0.3% was anticipated.
The minutes from the March 20 Federal Open Market Committee meeting will be released at 1:00 central time.
Futures will probably resume the uptrend after tomorrow’s producer price index report is out of the way.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index quickly advanced when the consumer price index was reported.
Major central bank policies are diverging with the Federal Reserve likely to remain restrictive for longer, while other major central banks are likely to become accommodative sooner.
The European Central Bank will hold its policy meeting on Thursday, and it is widely anticipated that the ECB will maintain current interest rates. However, traders expect the central bank will reduce its key interest rate by 25 basis points at its June meeting.
The Bank of Canada is expected to keep its main interest rate unchanged for a sixth-consecutive time at 5.0% at its policy meeting today. However, there is a 70% probability of a rate cut in June.
INTEREST RATE MARKET FUTURES
Futures were higher in the overnight trade but quickly declined to new lows for the move when the larger than expected increase in the consumer price index was reported.
The Treasury will auction 10-year notes.
Federal Reserve speakers today are Michelle Bowman at 7:45, Thomas Barkin at 11:45 and Austan Goolsbee at 11:45.
There is increasing speculation that Federal Reserve monetary policy could remain restrictive for longer.
The fundamentals and technicals for futures are bearish on balance.
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