Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
Stock index futures declined as traders prepare for the Federal Open Market Committee’s 1:00 central time release of the minutes from its January 31 policy meeting.
The minutes may shed some light on policymakers’ thinking about cuts to interest rates, the economy and the central bank’s balance sheet.
The February Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. In January the report showed inflation expectations were 2.2%.
Despite lower prices today the fundamentals and technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is steady.
Interest rate differentials remain supportive to the greenback longer term.
The German government expects the economy to grow 0.2% this year, which is much less than a previously forecast 1.3%.
The Confederation of British Industry survey’s total order book balance improved by 10 points from a month earlier to -20 in February 2024. This is the highest level since September 2023 and surpassed expectations of -27.
Japan’s government downgraded its view on the economy in February for the first time in three months.
Australian wages grew at the fastest annual rate in 15 years in the fourth quarter. Figures from the Australian Bureau of Statistics showed the wage price index increased 0.9%, matching forecasts. Wages jumped a record 1.3% the previous quarter.
INTEREST RATE MARKET FUTURES
Futures are a little higher today after yesterday March Treasury bond futures fell to their lowest level since December 4, 2023.
Michelle Bowman of the Federal Reserve will speak at 12:00.
The U.S. Treasury will auction 20-year bonds today.
Financial futures markets are predicting there is a 6.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting, and there is a 94% chance that the Fed will keep rates unchanged.
The fundamentals and technicals remain bearish on balance for futures.
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