Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
U.S. stock index futures are higher despite news that today’s employment numbers were on balance weaker than expected.
Nonfarm payrolls in November increased only 210,000 when a gain of 545,000 was anticipated. Private payrolls increased 235,000 when up 525,000 were estimated and manufacturing payrolls gained 31,000 when up 45,000 was predicted The unemployment rate was 4.2% when 4.5% was expected. Average hourly earnings increased 0.3% when up 0.4% was anticipated.
The 9:00 central time October factory orders report is predicted to be up 0.5% and the 9:00 November Institute for Supply Management services index is estimated to be 65.0.
The short-term outlook is subject to variant news. However, the long-term fundamentals remain bullish on balance for stock index futures.
CURRENCY FUTURES
The U.S. dollar came under pressure when the on balance weaker than expected U.S. employment data were released. It looks like the bull market for the U.S. dollar is over for now. The greenback has not performed well in recent days.
Euro zone retail sales increased 0.2% from a month earlier in October 2021, following a revised 0.4% decline in September and matching market expectations.
New car registrations in November in Germany fell 32.0% to 198,258.
The Canadian economy added a net 153,700 jobs in November of 2021, which is above market expectations of 35,000.
INTEREST RATE MARKET FUTURES
The yield curve has flattened this week, with yields on shorter-dated issues rising and yields on longer-dated issues ticking down, which is an indication of a slowing economy.
Federal Reserve Chair Jerome Powell indicated the Fed will discuss speeding up the tapering of its bond-buying program at the central bank’s next meeting on December 15.
If the U.S. economy weakens it may be difficult for the Fed to justify an accelerated taper of its asset-purchase program.
The longer-term trend for the 30-yearTreasury bond futures is higher.
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