Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
INTEREST RATE MARKET FUTURES
There are no Federal Reserve speakers scheduled for today.
The Treasury will auction two-year notes.
A Federal Reserve that will likely be relatively slow to add accommodation this year has pressured futures.
Financial futures markets are predicting there is a 3.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the January 31 policy meeting, and there is a 97.0% probability that the Fed will keep rates unchanged.
The chances of fed funds rate cut at March 20 FOMC meeting are now only 44%, which is much less than the 90% probability at the beginning of the month.
STOCK INDEX FUTURES
Stock index futures are mostly higher.
The 9:00 central time December Richmond Federal Reserve manufacturing index is expected to be -7.0.
The fundamentals and technicals remain supportive to stock index futures despite recent talk of a potentially less dovish Federal Reserve this year.
CURRENCY FUTURES
The U.S. dollar index is higher.
The greenback recently advanced as interest rate differentials are becoming more supportive.
The Bank of Japan maintained its ultra-easy monetary policy at its first meeting this year, which was in line with expectations. The BoJ kept its key short-term interest rate at -0.1% and retained the 1.0% upper limit on the 10-year Japanese government bond yield.
A survey from National Australia Bank showed its index of business conditions fell 2 points to +7 in December. Its measure of business confidence improved 7 points to -1.
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