Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher across the board.
Federal Reserve Chair Powell will testify before the Senate Banking Committee at 9:00 central time. Yesterday, in his semiannual monetary policy testimony before the House Financial Services Committee, Powell provided only limited guidance for the future of monetary policy in 2024. He said it is “likely” that interest rates are at their current peak. He said, “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.” His outlook was in line with his previous comments.
Challenger, Gray & Christmas said job cuts in February were 84,638, the most in eleven months, which compares to 82,307 in January.
Jobless claims in the week ended March 2 were 217,000 when 215,000 were expected.
Nonfarm productivity on an annualized rate in the fourth quarter increased 3.2% when up 3.1% was expected, and annualized unit labor costs increased 0.4% when up 0.7% was predicted.
The 2:00 January consumer credit report is forecast to show a $9.3 billion increase
The fundamentals are mostly bullish, while and technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is lower and is near the bottom of a five-week congestion pattern.
Interest rate differentials remain supportive to the greenback longer term.
The European Central Bank kept its Refi rate unchanged at 4.50% at its policy meeting today as expected. The ECB lowered it’s 2024 growth forecast to 0.6% from 0.8% and lowered its 2024 inflation estimate to 2.3% From 2.7%.
Factory orders in Germany shrank 11.3% month-to-month in January 2024, which is worse than market forecasts of a 6.0% decline, after an upwardly revised 12% gain in the prior month. This was the steepest drop in six months.
INTEREST RATE MARKET FUTURES
Futures firmed when it was reported that annualized unit labor costs increased less than expected.
In addition to Fed Chair Powell, Loretta Mester of the Federal Reserve will speak at 10:30.
Financial futures markets are predicting there is a 3.0% 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 97% 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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