Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
U.S. stock index futures are lower due to political uncertainties.
The December consumer price index increased 0.4% as expected.
The Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. In December it was 2.0%.
At 1:00 the Federal Open Market Committee will release its Beige Book on the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles evidence on economic conditions from each of the 12 Federal Reserve districts.
CURRENCY FUTURES
Flight to quality buying is supporting the U.S. dollar index today.
However, longer term, the U.S. dollar is likely to trend lower on the belief that an increase in fiscal spending would raise the budget and current account deficits. Also undermining the greenback are expectations for an extended period of low interest rates.
The euro currency is lower despite news that industrial production in the euro area increased 2.5% in November, which is the seventh consecutive month of growth and compared with market expectations of a 0.2% increase.
INTEREST RATE MARKET FUTURES
Yesterday, the 30-year Treasury bond futures fell to the lowest level since March 2020.
Yesterday, Fed officials James Bullard and Eric Rosengren said monetary support will still be needed for some time.
Federal Reserve speakers today are James Bullard at 8:30, Lael Brainard at 12:00 and Richard Clarida at 2:00.
The Treasury will auction 30-year bonds.
Financial futures markets are predicting there is a 95.2% probability that the Federal Open Market Committee will keep its key fed funds rate unchanged at 0 to 25 basis points at its January 27, 2021 policy meeting.
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