Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher.
The March producer price index increased 0.2% when up 0.3% was expected, and the producer price index excluding food and energy advanced 0.2% as anticipated.
Jobless claims in the week ending April 6 were 211,000 when 215,000 were predicted.
First quarter earnings reports from some of the large banks will be reported tomorrow.
Futures will probably resume the uptrend now that the inflation reports are out of the way.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is a little lower.
The European Central Bank kept interest rates unchanged as predicted but hinted at a rate reduction at its June meeting.
Major central bank policies are diverging with the Federal Reserve likely to remain restrictive for longer, while other major central banks are likely to become accommodative sooner.
Japan’s chief cabinet secretary said he won’t rule out any steps to respond to excessive foreign exchange moves.
INTEREST RATE MARKET FUTURES
Futures firmed when the producer price index report was released.
The Treasury will auction 30-year bonds.
Federal Reserve speakers today are John Williams at 7:45, Susan Collins at 11:00 and Raphael Bostic at 12:30. Bostic has been very vocal on talking down the potential for interest rate cuts.
There is increasing speculation that Federal Reserve monetary policy could remain restrictive for longer.
Financial futures markets are predicting there is almost a zero probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the May 1 policy meeting. The FOMC will likely keep interest rate unchanged at its June 12 and July 31 policy meetings as well. However, there is now a 65% probability of a rate reduction at the September 18 meeting.
The fundamentals and technicals for futures are bearish on balance.
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