Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher with new record highs registered for S&P 500 and Dow futures.
The Federal Reserve’s two-day monetary policy meeting will kick-off today. Policymakers will unveil a new set of economic forecasts when the policy review concludes tomorrow. Economists will also be looking for any comments on the recent rise in bond yields.
February retail sales fell 3.0% when a decline of 0.5% was expected.
Industrial production in February declined 2.2% when an increase of 0.5% was anticipated and February capacity utilization was 73.8%, which compares to the estimated 75.7%
The 9:00 central time March housing market index is predicted to be 83.
Stock index futures are performing well despite weak economic data.
CURRENCY FUTURES
The U.S. dollar came under pressure when the decline in retail sales was reported.
The euro currency advanced on news that the ZEW institute said German economic expectations improved again in March. The measure of economic expectations increased to 76.6 in March from 71.2 in February, which beat economists’ forecast of 74.0 points.
The assessment of the current economic situation in Germany also improved to minus 61.0 in March from minus 67.2 in February. This reading compares with economists’ forecast of minus 61.5 points.
The Bank of England will hold its policy meeting Thursday. Some analysts believe officials will signal an increase in the central bank’s bond buying.
The Japanese yen is lower despite news that Japan’s industrial output growth in January was revised slightly higher to 4.3% from a flash figure of 4.2%. This reading is the strongest growth since July of last year.
The Bank of Japan will hold its policy meeting on Friday. The central bank is likely to clarify how much it will allow bond yields to deviate from its 0% target.
INTEREST RATE MARKET FUTURES
The June 30-year Treasury bond futures firmed when the decline in retail sales was reported.
The Treasury will auction 20-year bonds today.
After the conclusion of Federal Open Market Committee meeting tomorrow officials will release updated economic projections. In addition, Federal Reserve officials will likely note an improving economic outlook.
There is increasing pressure on the Federal Reserve to limit upside pressure on longer-term interest rates, especially after the European Central Bank last week said it will ramp up the pace of its purchases of euro zone debt. The Reserve Bank of Australia earlier this month increased the size of its asset purchase plan.
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