Written Commentary
STOCK INDEX FUTURES
The minutes from the Federal Reserve’s policy meeting on January 27 were released yesterday afternoon. The minutes reinforced the central bank’s willingness to let the economy run hot, while keeping monetary policy ultra-accommodative.
Jobless claims in the week ended February 13 were 861,000 when 768,000 were predicted.
Housing starts in January were 1.580 million when 1.655 million were expected.
The February Philadelphia Federal Reserve manufacturing index was 23.1 when 20.0 was estimated.
In recent months, stock index futures have shown a tendency to recover from bearish news.
CURRENCY FUTURES
The U.S. dollar is lower, and the euro currency is higher.
The European Central Bank policy meeting minutes showed officials agreed that headline inflation was at a very low level and that it remained distant from the central bank’s target. In addition, the ECB said a further appreciation of the euro posed a risk to the inflation outlook.
The British pound advanced to a two-and-a-half-year high. The pound has been supported by lessening expectations of negative interest rates.
The Japanese yen is higher today after making a 5-month low yesterday. The Bank of Japan’s governor indicated that the central bank would conduct a review of its policy tools in March to ensure it can maintain its ultra-loose monetary policy for a long period.
INTEREST RATE MARKET FUTURES
In recent days, Federal Reserve officials reaffirmed their belief that the central bank’s main job is to help get the economy back on track.
Yesterday, Federal Reserve Bank of Boston President Eric Rosengren said some parts of financial markets are “frothy.” In addition, he said, “The time to really worry about financial stability is when we’re much closer to full employment.”
Raphael Bostic of the Federal Reserve will speak at 9:00.
In light of the Federal Reserve pledging not to hike its fed funds rate until possibly 2023, futures at the short end of the curve are likely to hold steady.
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