Written Commentary
CURRENCY FUTURES
The U.S. dollar index is higher and is being supported by the U.S. employment report.
Factory orders in Germany increased by 0.2% month-over-month in February 2024, falling short of market predictions of a 0.8% advance.
Retail sales in the euro area declined by 0.5% month-over-month in February 2024, slightly exceeding market expectations of a 0.4% drop.
The Halifax House Price Index in the U.K. increased by 0.3% year-on-year in March 2024, slowing from downwardly revised 1.6% growth in February.
Bank of Japan Governor Kazuo Ueda said greater certainty about achieving the inflation rate target of 2.0% would be necessary before any decision is made on hiking interest rates.
STOCK INDEX FUTURES
Stock index futures declined yesterday due to increasing geopolitical worries and comments from Federal Reserve officials suggesting the Fed will be even slower to pivot to accommodation this year.
Futures were higher in the overnight trade but briefly declined when the employment numbers were reported. Futures are higher now.
Nonfarm payrolls in March increased 303,000 when up 200,000 was expected.
Private payrolls increased 232,000 when a gain of 170,000 was anticipated.
The unemployment rate was 3.8% when 3.9% was estimated.
Average hourly earnings increased 0.3% as forecast.
The 2:00 central time February consumer credit report is expected to show a $17.3 billion increase.
The fundamentals are mostly bullish, while the technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
There were a multitude of Federal Reserve speakers yesterday. Some of them indicated that the Federal Open Market committee may cut interest rates only two times this year.
Federal Reserve speakers today are Susan Collins at 7:30, Thomas Barkin at 8:15, Lorie Logan at 10:00 and Michelle Bowman at 11:15.
Financial futures markets are predicting there is a 9% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the May 1 policy meeting, and there is a 91% chance that the Fed will keep rates unchanged.
The fundamentals and technicals for futures are bearish on balance.
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