Written Commentary
ADM Reports Q1 2024 Results
April 30, 2024
CURRENCY FUTURES
The U.S. dollar index was a little lower in the overnight trade but advanced when the better than predicted Philadelphia Federal Reserve manufacturing index was reported.
The greenback has been supported by interest rate differentials that have turned more favorable. The Federal Reserve is likely to remain restrictive for longer, while other major central banks will probably become accommodative sooner.
Building permits for apartments in Germany declined 18.3% in February from a year earlier. There were 18,200 permits issued, which is 4,100 fewer than a year ago.
Employment In Australia in March unexpectedly declined by 6,600 when market forecasts had been for a gain of 10,000.
Higher prices are likely for the U.S. dollar index, and lower prices are likely for the euro currency and the British pound.
STOCK INDEX FUTURES
Stock index futures are higher as traders focus on corporate earnings.
Jobless claims in the week ended April 13 were 212,000 when 215,000 were expected.
The April Philadelphia Federal Reserve manufacturing index was 15.5 when 0.0 was anticipated.
The 9:00 central time March existing home sales report is forecast to be 4.180 million, and the March leading indicators report is estimated to be unchanged.
In the short term, the bearish influence of higher interest rates for longer has taken a toll.
However, the longer term fundamentals are mostly bullish.
INTEREST RATE MARKET FUTURES
Futures came under pressure when the stronger than expected Philadelphia Federal Reserve manufacturing index was reported.
Federal Reserve speakers today are Michelle Bowman at 8:05, John Williams at 8:15, Raphael Bostic at 10:00 and Raphael Bostic again at 4:45 this afternoon.
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 69% probability of a rate reduction at the September 18 meeting.
I would not be surprised to see the probability of a fed funds rate cut at the September meeting diminishing as we get closer to that date.
The bearish influence of a Federal Reserve that is slow to pivot to accommodation may be offset by the possibility for a flight to quality flow of funds if geopolitical concerns intensify.
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