Written Commentary
STOCK INDEX FUTURES
S&P 500 futures advanced to six-week highs as fears over the recent financial turmoil continue to ease.
February personal income increased 0.3% as expected.
Personal consumption expenditures were up 0.2% as anticipated.
The PCE price index increased 0.3% when a gain of 0.4% was estimated.
The 8:45 central time March Chicago PMI is predicted to be 43.9.
The 9:00 March consumer sentiment index is expected to be 63.4.
Considering recent strains in the international financial system, stock index futures have held up very well.
CURRENCY FUTURES
The euro currency is lower on news that retail sales in Germany unexpectedly declined by 1.3% month-over-month in February of 2023, missing market estimates of 0.5% growth and following a 0.3% decline in the previous month. This was the third consecutive month of contraction in retail trade.
Headline inflation in the euro zone eased by more than anticipated in March but core prices accelerated slightly. Consumer prices increased by 6.9% on an annualized basis, slowing from an increase of 8.5% in February. Economists had predicted the number would come in at 7.1%. This was the biggest decline since Eurostat began keeping track of the data in 1991. The core annual inflation rate for the euro area accelerated from 5.6% to 5.7%.
The U.K. economy avoided a recession as it grew in the fourth quarter of 2022. Gross domestic product increased by 0.1% between October and December after a preliminary estimate of no growth. GDP in the third quarter was revised to show a 0.1% contraction, which was a smaller decline than initially reported.
INTEREST RATE MARKET FUTURES
Futures were supported by the smaller than predicted increase in the PCE price index.
Underlying support remains due to the belief that central banks will not be able to keep raising interest rates much longer.
Federal Reserve speakers today are John Williams at 2:05 and Lisa Cook at 4:45.
Currently, it appears that the Federal Open Market Committee will keep its fed funds rate unchanged at its May 3 policy meeting.
The technicals and fundamentals for futures have become more supportive since early March.
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