Written Commentary
STOCK INDEX FUTURES
Selling yesterday took place when Federal Reserve Chairman Jerome Powell did little to reduce fears about the recent rise in yields. The Fed Chair said the economy is far from reaching full employment, but he stopped short of indicating that the central bank would buy more long-term Treasuries each month in an effort to contain yields.
February nonfarm payrolls increased 379,000 when a gain of 210,000 was expected.
The unemployment rate was 6.2% when 6.3% was anticipated.
The 2:00 January consumer credit report is estimated to show a $13 billion increase.
Overall, stock index futures are performing well for the news.
CURRENCY FUTURES
The U.S. dollar is higher due to Fed Chair Powell’s comments yesterday. There were follow-through gains when the U.S. employment numbers were released.
The euro currency fell to a four-month low despite news that German manufacturing orders increased more than expected in January. Manufacturing orders grew 1.4% on the month in after a revised 2.2% contraction in December. Economists had expected January orders to grow 0.5% on the month.
Comments from a number of European Central Bank policymakers this week suggested the bloc’s monetary authority is ready to provide more stimulus if needed to keep yields down and support the economy.
The Japanese yen fell to a 9-month low against the U.S. dollar.
The Australian Industry Group Australian Performance of Services Index jumped to 58.8 in February, which is the highest reading since June of 2018.
INTEREST RATE MARKET FUTURES
Futures at the long end of the curve declined yesterday after Federal Reserve Chairman Jerome Powell said the central bank’s current policy stance is appropriate. This disappointing some traders who had hoped that he might signal a greater concern over the recent increase in Treasury yields.
Mr. Powell said the recent increase in Treasury yields caught his attention, but he stopped short of signaling that the Fed was close to buying more long-term Treasuries each month in an effort to contain yields, as some investors had thought was possible.
Raphael Bostic of the Federal Reserve will speak at 2:00.
The next FOMC policy meeting is scheduled for March 17.
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