Written Commentary
STOCK INDEX FUTURES
Stock index futures fell today after a surge on Friday. Selling today is linked to reports of significant losses and the liquidation of equity positions at a large U.S. investment fund.
The 9:30 central time March Dallas Federal Reserve manufacturing index is expected to be 12.5.
Expect futures to at least partially recover from the early morning losses.
Overall, stock index futures have been performing well for the news.
CURRENCY FUTURES
The U.S. dollar is near four-month highs. The greenback is likely to remain firm over the near term, especially against the euro currency, as traders remain cautious due to increasing coronavirus infections and restrictions in Europe.
The euro currency has been under pressure recently as the prospects of tougher coronavirus restrictions in France and Germany weighed on the short-term outlook for the European economy.
The British pound is higher despite news that consumer credit in the U.K. fell for the seventh month and U.K. mortgage approvals declined more than forecast.
The Australian dollar is higher after a report showed Australia’s residential property market continues to be strong.
INTEREST RATE MARKET FUTURES
Flight to quality buying is coming into the market in light of lower stock index futures.
Federal Reserve Chairman Jerome Powell last week continued to play down inflation risks and reiterated the U.S. economic recovery is strengthening but remains far from complete.
Even after the Reserve Bank of Australia and the European Central Bank earlier this month announced measures to limit upward pressure on longer-term interest rates, the Federal Reserve has indicated that it is not concerned about the rise in bond yields.
However, It is my belief that the Federal Reserve and other major central banks will follow the lead of the RBA and the ECB and eventually implement yield curve control measures.
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