Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower in response to the January personal consumption expenditures report coming in higher than expected. Personal consumption expenditures were up 1.8% when an increase of 1.2% was anticipated. Personal income in January increased 0.6% when a 1.0% gain was anticipated.
The 9:00 central time January new home sales report is anticipated to show 617,000.
The 9:00 February consumer sentiment index is predicted to be 66.4.
CURRENCY FUTURES
The U.S. dollar index advanced in light of the personal consumption expenditures report coming in higher than predicted.
The euro currency is lower on news that the German economy shrank 0.4% on quarter in the last quarter of 2022, which is much worse than the initial estimate of a 0.2% decline. This marks the first drop in GDP in almost two years.
Japanese consumer inflation increased as expected in January. The national core consumer price index, which excludes volatile items such as fresh food, increased 4.2% in January, compared to 4.0% in the prior month.
INTEREST RATE MARKET FUTURES
There was a one-day reversal to the upside in yesterday’s trade in the March 30-year Treasury bond futures.
However, futures came under pressure today when the stronger than estimated personal consumption expenditures report was released.
Loretta Mester of the Federal Reserve repeated her view that she saw a good case for a 50 basis point increase at the last Federal Open Market Committee meeting.
Federal Reserve speakers today Loretta Mester at 9:15, James Bullard at 10:30, Susan Collins at 12:30 and Christopher Waller at 12:30.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March 22 policy meeting, and there is more talk of another 25 basis point hike at the May meeting.
There has been lots of hawkish Fed speak lately, while the severely inverted yield curve is getting very little attention.
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