Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are mixed as investors assess the outlook for tightening monetary policy from the Federal Reserve while watching the situation in Ukraine.
U.S. based employers announced 21,387 cuts in March, which is up 40.3% from the 15,245 cuts announced in February. This is the highest monthly total since October 2021, when 22,822 cuts were announced, according to a report released today from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
Jobless claims in the week ended March 26 were 202,000 when 195,000 were expected.
Personal income in February increased 0.5% as anticipated, and personal consumption expenditures were up 0.2% when a gain of 0.5% was predicted.
The 8:45 central time March Chicago PMI is estimated to be 57.
Futures remain above downtrend lines.
The dominant influences remain geopolitical tensions and the hawkish Federal Reserve.
CURRENCY FUTURES
The euro currency is lower on news that the unemployment rate in the euro area was 6.8% in February of 2022, which is above market forecasts of 6.7%.
Some analysts believe the risk of recession is currently greater in Europe than in the U.S.
Gross domestic product in the U.K. expanded 1.3% in the fourth quarter, which is more than the 1.0% figure previously reported.
On Monday the Japanese yen fell to its lowest level since August 2015, after the Bank of Japan intervened to stop government 10-year bond yields from rising above its key target. The BoJ offered to buy an unlimited amount of government bonds to stop the sell-off prompted by rising global interest rates.
Lower prices are likely for the Japanese yen.
INTEREST RATE MARKET FUTURES
Markets are anticipating a policy tightening cycle with major central banks attempting to tame inflation, currently running at record levels in Europe and 40-year highs in the U.S. Federal Reserve officials, including Chair Powell, continue to make surprisingly hawkish comments leading markets to believe there is a higher probability of the Fed lifting rates by 50 basis points in May. Currently there is a 67.0% probability of a 50 basis point increase in the fed funds rate at the May 4 policy meeting.
John Williams of the Federal Reserve will speak at 8:00.
Traders are keeping a close watch on the yield curve, which measures the spread between short-term and long-term rates and is often seen as a strong indicator of sentiment about the prospects for economic growth.
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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