Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower despite better than expected economic reports.
Jobless claims in the week ended March 20 were 684,000 when 730,000 were anticipated.
The fourth quarter gross domestic product increased 4.3% when 4.1% was estimated.
The 10:00 central time March Kansas City Federal Reserve manufacturing index is predicted to be 26.
Major support for June S&P 500 futures is at the 3840.00 level.
CURRENCY FUTURES
The U.S. dollar advanced to its highest level since November despite falling U.S. interest rates, as a shift in risk appetite is favoring safe-haven flows.
The euro currency is lower as traders remain cautious due to increasing coronavirus infections and restrictions in Europe.
The euro is lower despite news that German consumer sentiment is set to increase in April. A forward-looking consumer sentiment index is set to improve to minus 6.2 points in April from a revised minus 12.7 points in the previous month. The increase beats forecasts of economists who expected consumer sentiment to improve to minus 12.9 points.
This survey took place between March 4 and March 15 before the significant increase in the number of infections in recent days, and the tightening of restrictions were not taken into account.
The Swiss franc is steady after the Swiss National Bank at its policy meeting today held its policy rate at -0.75% and the interest rate it charges on overnight deposits it holds for commercial banks at -0.75%, as predicted by economists. The Swiss National Bank’s ultra-expansive monetary policy has the world’s lowest interest rates.
The British pound fell to a seven-week low before a recovery.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures appear to be stabilizing after a sell-off in recent weeks, as Federal Reserve Chairman Jerome Powell continued to play down inflation risks and reiterated the U.S. economic recovery is strengthening but remains far from complete.
Earlier today Fed Chair Powell said now is not the time to focus on reducing federal debt.
Mr. Powell repeated the Fed does not plan to scale back the pace of asset purchases until the economy makes “substantial further progress” toward its goals.
Other Federal Reserve speakers today are Richard Clarida at 9:10, John Williams at 9:30, Raphael Bostic at 11:00, Charles Evans at 12:00 and Mary Daly at 6:00.
Today the Treasury will auction seven-year notes.
It is my belief that the Federal Reserve and other major central banks will follow the lead of the Reserve Bank of Australia and the European Central Bank and eventually implement yield curve control measures.
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