Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower due to Ukraine escalation fears with no sign of a ceasefire even as diplomatic efforts continue.
The Chicago Federal Reserve National Activity Index was 0.51 for February. The January figure was revised lower to 0.59.
The dominant influences remain geopolitical tensions and the hawkish Federal Reserve.
CURRENCY FUTURES
The U.S. dollar index is higher in a flight to quality move as the Ukraine conflict showed little sign of receding.
The euro currency is lower despite news that annual producer inflation in Germany hit a new record high for a third straight month, reaching 25.9% in February of 2022 compared to 25.0% in January.
The Japanese yen is lower and remains near a six year low, after the Bank of Japan on Friday maintained its dovish policy stance and warned of heightening risks to a fragile economic recovery. Japan’s central bank at its policy meeting kept its deposit rate at -0.1% and the 10-year yield target around 0%. This dovish stance contrasts sharply with other major central banks that are tightening monetary policies.
Lower prices are likely for the Japanese yen.
INTEREST RATE MARKET FUTURES
The Federal Reserve’s most hawkish policymakers said Friday that the central bank needs to take more aggressive steps to combat inflation. Minneapolis Fed President Neel Kashkari said he wants to raise rates to 1.75% to 2.00% this year.
Federal Reserve Bank of Atlanta President Raphael Bostic on Monday said the Fed needs to get its benchmark fed funds interest rate to “neutral” as quickly as we can.
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.
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