TBonds Up Despite Bearish Reports
INTEREST RATE MARKET FUTURES
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.
STOCK INDEX FUTURES
Stock index futures are lower.
March personal income increased 0.3% when up 0.2% was expected and personal consumption expenditures were unchanged as anticipated.
The first quarter employment cost index increased 1.2% when up 1.0% was predicted.
The 8:45 central time April Chicago PMI is estimated to be 43.5.
The 9:00 April consumer sentiment index is expected to be 63.5.
Futures will probably trade sideways in advance of the May 3 Federal Open Market Committee meeting.
The euro currency is lower on news that the euro zone economy expanded by 0.1% in the first quarter, falling short of the predicted 0.2% expansion.
Germany’s consumer price inflation eased to 7.2% year-on-year in April 2023, which is down from 7.4% the month before and slightly under market expectations of 7.3%.
The unemployment rate in Germany was 5.6% in April 2023, unchanged from the previous month’s 20-month high and in line with market expectations.
Markets are fully pricing in a 25 basis point interest rate hike from the European Central Bank at its policy meeting on May 4.
A Bank of England interest rate increase is likely when the central bank meets on May 11.
Switzerland’s leading KOF economic barometer declined to 96.4 in April of 2023 from an upwardly revised 99.2 in the previous month, missing market predictions of 98.1.
At today’s Bank of Japan policy meeting the central bank maintained its key short-term interest rate at -0.1% and that of 10-year bond yields at approximately 0% by a unanimous vote.
The jobless rate in Japan was 2.8% in March, which compares to the expected 2.5%.
Longer term, interest rate differentials suggest lower prices for the U.S. dollar and higher prices for the euro currency.
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