Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced when the March producer price index report was released.
The March producer price index declined 0.5% when unchanged was expected, and the producer price index, excluding food and energy, fell 0.1% when an increase of 0.3% was anticipated.
Jobless claims in the week ended April 8 were 239,000, which compares to the estimated 233,000.
Stock index futures have performed very well considering recent strains in the international financial system and recent hawkish comments from Federal Reserve officials.
CURRENCY FUTURES
The U.S. dollar index came under pressure when the decline in the producer price index was reported.
Euro zone industrial production increased more than expected in February. Industrial production, which comprises output from manufacturing, mining and utilities, increased 1.5% in February compared with the previous month. Economists expected industrial production to increase 0.7%.
Consumer inflation expectations in Australia fell to 4.6% in April 2023 from 5.0% in March, moderating for the third consecutive month to the lowest level since February 2022.
Figures from the Australian Bureau of Statistics showed net employment increased 53,000 in March from February. Market forecasts had been for a gain of 20,000. The jobless rate remained at 3.5% when analysts had estimated 3.6%.
INTEREST RATE MARKET FUTURES
Futures are higher across the board due to the bullish U.S. producer price index report.
Yesterday’s release of the minutes of the Federal Open Market Committee’s March 22 policy meeting revealed several Federal Reserve officials considered pausing interest rate increases until it was clear that the failure of two regional banks would not cause wider financial stress.
The Treasury will auction 30-year bonds.
Underlying support for futures remains due to the belief that central banks will not be able to keep raising interest rates much longer.
The technicals and fundamentals for futures turned supportive in early March.
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