Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower due to global growth fears, geopolitical worries and the anticipated aggressive tightening by the Federal Reserve.
Of the 102 companies in the S&P 500 that reported earnings through Monday, 77.5% topped analysts’ profit expectations, according to Refinitiv data.
Durable goods orders in March increased 0.8% when a 1.0% advance was expected.
There are three 9:00 central time reports.
The April consumer confidence index is predicted to be 106.8.
New home sales in March are estimated to be 772,000 and the April Richmond Federal Reserve manufacturing index is expected to be 5.0.
CURRENCY FUTURES
The U.S. dollar index advanced to a new high for the move and is at its highest level since March 2020.
Interest rate differential expectations suggest higher prices are likely for the greenback.
The euro currency fell to its lowest level since March 2020 despite the growing prospects of an early European Central Bank interest rate hike.
Lower prices are likely for the euro.
The U.K. government recorded an £18.1 billion deficit in its public finances in March, which is less than market expectations of £19.3 billion.
Switzerland’s trade surplus dropped to CHF 1.8 billion in March from a downwardly revised all-time high of CHF 5.5 billion in the prior month. This was the smallest trade surplus since August 2019.
The Japanese yen is higher on news that Japan’s March jobless rate was 2.6% when 2.7% was expected.
Interest rate differential expectations remain bearish for the Japanese yen and lower prices are likely.
INTEREST RATE MARKET FUTURES
Flight to quality buying and the weaker that expected durable goods report supported futures.
Currently there is a 98.7% probability of a 50 basis point increase and a 1.3% probability of a 25 basis point hike in the fed funds rate at the Federal Open Market Committee’s May 4 policy meeting.
Longer term, lower prices are likely across the board for the interest rate futures market as most major central banks are anticipated to tighten credit policies this year.
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