Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures ended Wednesday’s session on a firm note, reversing an earlier selloff after the release of the minutes of the Federal Reserve’s January 25-26 policy meeting.
Although the minutes did not appear to differ from recent public comments from Federal Reserve officials, traders were relieved that they did not show an even more hawkish tone. The minutes made no mention of a discussion of a potential 50 basis point rate hike at the Fed’s March meeting.
Stock index futures are lower today as Ukraine tensions worsen.
Jobless claims in the week ended February 12 were 248,000 when 224,000 were expected.
Housing starts in January were 1.638 million when 1.708 million were anticipated and building permits were 1.899 million, which compares to the estimated 1.885 million.
The February Philadelphia Federal Reserve manufacturing index was 16.0 when 19.7 was predicted.
The dominant influences remain tensions in Ukraine and the hawkish Federal Reserve.
CURRENCY FUTURES
In light of increased tensions in Ukraine, the flight to quality vehicles, the U.S. dollar, Swiss franc and the Japanese yen are higher.
However, overall, the greenback has underperformed the news in recent weeks.
The British pound is higher on news that U.K. annual inflation unexpectedly accelerated to 5.5% in January, which is above market expectations of 5.4%.
This report strengthened the case for a third consecutive interest rate hike from the Bank of England.
Although there are flight to quality gains in the Japanese yen today, interest rate differential expectations suggest the long term trend for the Japanese yen is lower.
INTEREST RATE MARKET FUTURES
Global bond yields fell due to a general flight to safety as geopolitical tensions increase.
Federal Reserve speakers today are James Bullard at 10:00 and Loretta Mester at 4:00.
Many market participants expect the Federal Open Market Committee will increase its fed funds rate seven times this year with the first hike likely at the March 16 meeting, or possibly earlier.
Some analysts believe that if the rate of growth in the U.S. economy slows, and also globally, it may be difficult for the Federal Reserve and other major central banks to maintain ramped-up hawkish policies.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
