Written Commentary
STOCK INDEX FUTURES
The February producer price index report showed an increase of 0.6% when up 0.3% was expected, and the producer price index, excluding food and energy, advanced 0.3% when a gain of 0.2% was anticipated.
Jobless claims in the week ended March 9 were 209,000 when 215,000 were estimated.
Retail sales in February increased 0.6% when up 0.7% was forecast, and retail sales excluding vehicles increased 0.3% when up 0.4% was expected.
Stock index futures have traded higher this year despite a Federal Reserve that is slow to pivot to accommodation.
Stock index futures are higher this morning despite the bearish interest rate implications of the 7:30 economic reports.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures
CURRENCY FUTURES
The U.S. dollar index is higher in response to this morning’s economic reports, which on balance came in stronger than expected.
Japan’s 10-year government bond yield increased to near 0.77%, hitting its highest levels in three months ahead of the Bank of Japan’s policy decision on March 19.
Recently Bank of Japan Governor Kazuo Ueda offered a slightly less optimistic assessment of the Japan’s economy.
Speculation is increasing regarding an exit from the BOJ’s negative short-term interest rate policy, possibly occurring as soon as next week, while some analysts anticipate Japan’s first rate hike since 2007 could take place in April.
INTEREST RATE MARKET FUTURES
The mostly stronger than anticipated economic reports this morning put pressure on futures across the board.
Financial futures markets are predicting there is a 1.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting, and there is a 99% chance that the Fed will keep rates unchanged.
The fundamentals and technicals remain bearish on balance for futures at the short end of the yield curve.
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