Written Commentary
ADM Reports Q1 2024 Results
April 30, 2024
INTEREST RATE MARKET FUTURES
Futures are lower across the board as safe-haven assets continue to be liquidated in light of easing tensions in the Middle East.
The Treasury will auction five-year notes today.
There are no speakers from the Federal Reserve today with the Federal Open Market Committee meetings blackout period in effect, which precedes a FOMC meeting.
Financial futures markets are predicting no change in the fed funds rate at the Federal Open Market Committee’s May, June and July meetings. However, there is a 67% probability of a rate reduction at the September 18 meeting.
The fundamentals remain bearish, and lower prices are likely. However, the downtrend is subject to the possibility of a flight to quality flow of funds if geopolitical concerns intensify.
STOCK INDEX FUTURES
Stock index futures are mostly higher due to easing tensions in the Middle East.
The average interest rate for 30-year fixed-rate mortgages increased by 11 basis points to 7.24% in the week ended April 19, hitting the highest level since the last week of November, according to data from the Mortgage Bankers Association.
Durable goods orders in March increased 2.6% when up 2.3% was expected.
The fundamentals in the short term are offsetting.
CURRENCY FUTURES
The U.S. dollar index is higher. The greenback has been supported by increasingly more favorable interest rate differentials. The Federal Reserve is likely to remain restrictive for longer, while other major central banks will probably become accommodative sooner.
Sentiment among German companies improved for a third month in April. The Ifo business climate index improved to 89.4 in April from 87.9 in March, according to data from the Ifo Institute, beating expectations of 88.8.
Joachim Nagel of the European Central Bank said a June interest rate cut may not necessarily be followed by a series of rate cuts. In addition, he said he is not fully convinced that inflation will actually return to target in a timely, sustained manner.
Optimism among U.K. manufacturers increased to its highest level this month since July 2021, according to the Confederation of British Industry. The CBI’s quarterly business optimism gauge advanced sharply to +9, which is up from -3 in January.
The Bank of Japan will hold its monetary policy meeting on Friday. No change in the target interest rate is expected.
The Australian consumer price index increased more than expected in the first quarter of 2024. The consumer price index rose 3.6% year-on-year in the first three months of 2024. The reading was higher than expectations of up 3.4%, but declined from the 4.1% in the prior quarter.
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