Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
Stock index futures are higher with S&P 500, NASDAQ and Dow futures advancing to historical highs.
A new report published by Challenger, Gray & Christmas found that companies planned 721,677 job cuts last year, which is a substantial increase from the 363,832 layoffs that were reported in 2022.
The 9:00 central time December leading indicators report is expected to show a 0.3% decline.
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 slightly lower.
However, the greenback recently advanced as interest rate differentials are becoming more supportive, and it looks like the U.S. dollar may have bottomed.
Most central banks will probably be lowering interest rates this year (not the Bank of Japan). The U.S. Federal Reserve will likely become more accommodative, but at a slower than consensus view pace, while the European Central Bank and the Bank of England will probably be more aggressively easing credit conditions this year than the consensus view.
The Bank of Japan is expected to keep its monetary policy steady on Tuesday, with attention focused on how Bank of Japan Governor Kazuo Ueda assesses the progress made toward achieving the inflation rate needed for ending the negative interest rate policy.
Analysts expect the BoJ will keep its short-term policy rate at -0.1% and leave the parameters of the yield curve control program unchanged.
INTEREST RATE MARKET FUTURES
The yield on the U.S. 10-year Treasury note fell below 4.1%, after touching four-week highs of 4.15% last Friday.
There are no Federal Reserve speakers today.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee keep its fed funds rate unchanged at its January 31 policy meeting.
The chances of fed funds rate cut at March 20 FOMC meeting are now only 46% after being 55% last Friday and over 80% several weeks ago.
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