Q1 GDP Weaker Than Expected
STOCK INDEX FUTURES
Stock index futures are higher today due to better than expected corporate earnings reports.
The first quarter gross domestic product increased 1.1% when up 2.0% was expected.
Jobless claims in the week ended April 22 were 230,000 when 249,000 were predicted.
The 9:00 central time March pending home sales index is anticipated to show a 0.4% increase.
The April Kansas City Federal Reserve manufacturing index will be released at 10:00. The March report was at 0.
Futures will probably trade sideways in advance of the May 3 Federal Open Market Committee meeting.
Confidence among businesses and consumers in the euro zone rebounded only slightly in April. The euro zone’s economic sentiment indicator, which is an aggregate measure of business and consumer confidence, increased to 99.3 in April from a downwardly revised 99.2 in March.
The measure was below expectations from economists who expected the index would improve to 99.9.
Markets are fully pricing in a 25 basis point interest rate hike from the European Central Bank at its policy meeting on May 4.
Also, an additional Bank of England interest rate increase is likely when the central bank meets on May 11.
Economists believe the Bank of Japan will keep policies unchanged at its meeting tomorrow.
Australia’s import prices declined 4.2% quarter-on-quarter in three months to March 2023, reversing a 1.8% increase in three months to December 2022. This was the first decline in import prices since the fourth quarter of 2020.
Longer term, interest rate differentials suggest lower prices for the U.S. dollar and higher prices for the euro currency.
INTEREST RATE MARKET FUTURES
The Treasury will auction 7-year notes today.
Underlying support for futures remains due to the belief that central banks will not be able to keep raising interest rates much longer.
Markets are currently pricing in a 25 basis point rate increase at the Fed’s May 3 policy meeting. However, easier credit conditions from the Federal Reserve are likely later this year.
The technicals and fundamentals remain supportive.
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