Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher. Traders are optimistic about potential interest rate cuts from the Federal Reserve this year.
No major economic reports are scheduled for today.
However, traders will be closely watching inflation reports later this week. Tuesday’s April producer price index report is expected to show a 0.3% increase, and Wednesday’s April consumer price index report is anticipated to show a gain of 0.3%.
The fundamentals and technicals are becoming more bullish.
CURRENCY FUTURES
The U.S. dollar index is lower.
The consumer confidence indicator in Switzerland was almost unchanged at -38.1 in April 2024, holding near an eight-month high of -38.0 in the previous period and compared to market predictions of -40.0.
Japan’s economy likely contracted at an annualized rate of 1.5% in the January-March quarter, according to a Reuters poll, which will probably set back Bank of Japan efforts to hike interest rates.
INTEREST RATE MARKET FUTURES
Futures are mixed to higher.
At 8:00 central time Federal Reserve Bank of Cleveland President Loretta Mester and Federal Reserve Board Vice Chair Philip Jefferson will participate in a discussion before the Central Bank Communications: Theory and Practice Conference, hosted by the Federal Reserve Bank of Cleveland.
Financial futures markets are predicting there is a 63% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its September 18 meeting.
There is growing evidence that the “higher for longer“ mantra is coming to an end. This is not just the case for the Federal Reserve but also likely for the European Central Bank and the Bank of England.
The fundamentals and technicals have improved for futures, especially at the long end of the yield curve.
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