Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
Stock index futures advanced yesterday with follow-through gains today after yesterday Atlanta Federal Reserve Bank President Raphael Bostic said he supported keeping rate increases at 25 basis point increments and said the central bank could be in a position to pause rate hikes sometime this summer.
The 8:45 central time February services PMI final is expected to be 50.5.
The 9:00 February Institute for Supply Management services index is anticipated to be 54.5.
Analysts’ outlooks on stock index futures remains very bearish.
CURRENCY FUTURES
The U.S. dollar is lower, and the euro currency is higher.
The euro currency is lower after news that euro zone producer prices fell by more than expected in January. Prices at factory gates declined 2.8% month-on-month in January for a 15.0% year-on-year increase, slowing from the 24.5% yearly increase in December. Economists had expected a year-on-year deceleration to 17.7%.
A flash estimate of the composite purchasing managers index for the euro zone increased to 52.0 from 50.3 in January, which was slightly below the 52.3 consensus estimate.
The U.K. service sector returned to growth in February as business activity expanded at the fastest pace since June 2022.
INTEREST RATE MARKET FUTURES
Futures are higher across the curve after yesterday’s less hawkish comments from Atlanta Federal Reserve Bank President Raphael Bostic who just a day earlier made hawkish comments.
Federal Reserve speakers today are Lorrie Logan at 10:00, Raphael Bostic at 10:45. Michelle Bowman at 2:00 and Thomas Barkin at 3:15.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March 22 policy meeting, and there is more talk of another 25 basis point hike at the May meeting.
The severely inverted yield curve continues to get very little attention.
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