Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
Stock index futures are higher with S&P 500 and NASDAQ futures advancing to historical highs.
The 8:45 central time January PMI manufacturing index is expected to be 47.7.
The fundamentals and technicals remain supportive to stock index futures despite recent talk of a potentially less dovish Federal Reserve in 2024.
CURRENCY FUTURES
The U.S. dollar index is lower today but remains is a 6-day congestion pattern. The next support for the March U.S. dollar index is the breakaway gap made on January 16 at the 102.410 -102.495 area. The greenback recently advanced as interest rate differentials are becoming more supportive.
HCOB’s preliminary euro zone Composite PMI increased to 47.9 this month from December’s 47.6, which is slightly less than expectations of 48.0 and is the eighth month below the 50 level that separates growth from contraction.
The HCOB Germany Composite PMI declined to 47.1 in January 2024, which is down from 47.4 in the previous month and falling under the market consensus view of 47.8.
The Confederation of British Industry survey’s total order book balance fell seven points from a month ago to -30 in January 2024, hitting the second lowest level since January 2021 and falling below market expectations of -23.
Japan’s exports in December increased 9.8% on the year when up 9.1% was predicted.
INTEREST RATE MARKET FUTURES
There are no Federal Reserve speakers, which is in keeping with the Federal Reserve’s “blackout period” in advance of a Federal Open Market committee meeting.
The Treasury will auction five-year notes.
Financial futures markets are predicting there is a 3.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the January 31 policy meeting, and there is a 97.0% probability that the Fed will keep rates unchanged.
The chances of fed funds rate cut at March 20 FOMC meeting are 53%. Yesterday the probability was 44%.
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