SIFs Hopeful on Softer Tariffs

STOCK INDEX FUTURES

S&P 500, NASDAQ and Dow futures gapped higher on Monday and remain above major downtrend lines.

Prices are sharply higher as traders hope the new U.S. tariffs set to take effect on April 2 could be softer and more targeted than initially anticipated. President Donald Trump suggested on Friday that there could be “flexibility” in the plan, while weekend reports indicated that the tariffs may be narrower in scope, and could potentially spare some industries.

The February Chicago Federal Reserve national activity index was 0.18 when -0.08 was expected.

The 8:45 central time March Manufacturing index is anticipated to be 51.8, and the services index is forecast to be 51.2.

In the longer term, a more accommodative Federal Open Market Committee will support futures.

INTEREST RATE MARKET FUTURES

Futures are lower across the board as flight to quality longs are liquidated.

Approximately three weeks ago there was a major change in the fundamentals and outlook for Federal Reserve policies. The probabilities are increasing that the central bank will more aggressively ease credit conditions this year.

Financial futures markets are predicting the FOMC will lower its key interest rate three more times this year with the first reduction at its June policy meeting.

An accommodative FOMC will underpin prices.

CURRENCY FUTURES

The U.S. dollar index is steady, although interest rate differentials remain bearish for the greenback.

The HCOB euro zone Composite PMI edged higher to 50.4 in March from 50.2 in February, but fell short of market expectations of 50.8.

The U.K. economy is showing early signs of recovering, according to a survey. The purchasing managers’ index from S&P Global saw a significant increase, reaching a six-month high of 52 in March. This is an increase from the 50.5 that was reported in the previous month.

The latest U.K. PMI data showed significant growth in the services sector. As a result, analysts now see a 60% probability of a 25-basis point interest rate cut in May, which is down from earlier expectations of a more aggressive pace.

Canada’s Business Barometer long-term index, which gauges 12-month forward expectations for business performance, plummeted 24.8 points to a record low of 25.0 in March 2025.

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