Interest Rate Futures Continue to Underperform


Nonfarm payrolls in April increased 428,000 when a gain of 400,000 was expected. Private payrolls increased 406,000 when a gain of 390,000 was anticipated and manufacturing payrolls increased 55,000 when up 35,000 was predicted.

Average hourly earnings were up 0.3% when a gain of 0.4% was estimated. The average workweek was 34.6 hours when 34.7 hours was expected.

The unemployment rate was 3.6% as anticipated.

The 2:00 central time March consumer credit report is estimated at show a $20.0 billion increase.

The dominant influences remain geopolitical tensions and the hawkish Federal Reserve.


The U.S. dollar index advanced to a new 20-year high in the overnight trade before a selloff.

Interest rate differential expectations suggest higher prices are likely for the greenback.

The Japanese yen is lower despite news that the Tokyo April core consumer price index increased 1.9% on the year when up 1.8% was estimated.

Interest rate differential expectations remain bearish for the Japanese yen and lower prices are likely.


Futures are not responding well to the mixed U.S. employment report.

Despite Federal Reserve Chairman Jerome Powell on Wednesday largely ruling out a hike of 75 basis points in the fed funds rate at the June 15 Federal Open Market Committee meeting, financial futures markets are currently predicting there is a 12.9% probability of a 50 basis point increase and an 87.1% probability of a 75 basis point hike in the fed funds rate.

Federal Reserve speakers today are John Williams at 8:15, Neel Kashkari at 10,00, Raphael Bostic at 2:20, Christopher Waller at 6:15, James Bullard at 6:15 and Mary Daly at 7:00.

Lower prices are likely across the board for the interest rate market futures as most major central banks are anticipated to tighten credit policies this year.

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