Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
Stock index futures are higher in light of no reported new problems in the banking sector.
The National Federation of Independent Business said its Small Business Optimism Index increased 0.6 point to 90.9 in February. Although the reading was better than the expected 89.9, it still was the 14th consecutive month that the index was under the 49-year average of 98.
The February consumer price index increased 0.4% as anticipated, and the consumer price index on an annualized basis increased 6.0% as predicted.
CURRENCY FUTURES
The U.S. dollar is higher after three days of declines.
Average weekly earnings, including bonuses in the U.K., increased 5.7% year-on-year in the three months to January of 2023, which is the smallest increase since July. This follows an upwardly revised 6.0% increase in the last three months of 2022.
INTEREST RATE MARKET FUTURES
Some of the flight to quality longs that were established over the past few days are being liquidated today.
The recent flight to safety move was due to concerns over the health of the banking sector. Big international banks are also being adversely affected.
A week ago the Federal Reserve was on track for a 50 basis point hike in its fed funds rate at the March 22 policy meeting. However, there has been a shift in expectations.
Financial futures markets are now suggesting the Federal Open Market Committee will hike its fed funds rate by 25 basis points at its meeting next week, and there is a smaller chance the central bank may make no change to interest rates.
The technicals and fundamental for the June 30-year Treasury bond futures have become more supportive in the past seven trading sessions.
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