Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures pulled back after yesterday’s record-setting rally.
The February producer price index was up 0.5% when an increase of 0.4% was expected.
The 9:00 central time March consumer sentiment index is anticipated to be 78.5.
Stock index futures are performing well for the news.
CURRENCY FUTURES
A spike in U.S. Treasury yields supported the U.S. dollar index and sparked a risk-off move in global currencies.
The euro currency is lower despite news that euro zone industrial production increased 0.8% in January, beating market expectations of a 0.2% increase.
German consumer prices increased in February. On the year, consumer prices rose 1.3% as measured by national standards and 1.6% by European Union-harmonized standards. Both figures were in line with the increases expected by economists.
Consumer prices rose 0.7% on the month by national standards and 0.6% by E.U.-harmonized standards. These were also in line with the forecasts.
The Australian dollar is lower despite news that new home sales increased 1.7% on the year in February.
INTEREST RATE MARKET FUTURES
The June 30-year Treasury bond futures are lower and fell below a 5-day uptrend line.
There is increasing pressure on the Federal Reserve to limit upside pressure on longer-term interest rates, especially after the European Central Bank yesterday 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.
I believe major central banks, including the Federal Reserve will eventually employ tools to mitigate rising long-term interest rates.
The next Federal Open Market Committee meeting is scheduled for March 17.
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