Written Commentary
STOCK INDEX FUTURES
Jobless claims in the week ended April 17 were 547,000 when 615,000 were expected.
The March Chicago Federal Reserve national activity index was 1.71 when 0.58 was anticipated.
The 9:00 central time existing homes sales report is estimated to be 6.205 million and the 9:00 March leading indicators index is predicted to be up 0.6%.
The 10:00 April Kansas City Federal Reserve manufacturing index is expected to be 26.
The long term outlook for stock index futures remains positive.
CURRENCY FUTURES
As expected, the European Central Bank kept its aggressive monetary stimulus unchanged, while reconfirming its “very accommodative” monetary policy stance and the “significantly” faster pace of bond buying. The ECB said that it will continue to conduct net asset purchases until at least the end of March 2022. The ECB said it would buy assets at a “significantly higher pace” during the first months of this year, which repeats a pledge made last month.
The British pound is lower despite news that the Confederation of British Industry’s quarterly gauge of manufacturing optimism in the U.K. jumped to 38 in the second quarter of 2021 from 22 in the previous three-month period. This is the highest level since the second quarter of 1973.
INTEREST RATE MARKET FUTURES
There are no major Federal Reserve speakers scheduled for today.
Yesterday’s Treasury auction of $24 billion of 20-year bonds was surprisingly well received. After eight consecutive auctions, which saw the yield on the recently reintroduced 20-year Treasury bond increase, the latest 20-year offering saw the first sequential decline in the auction yield, and with a high yield of 2.144%. The April 20-year auction not only was below the March 2.29% high, but also stopped through the When Issued rate by a considerable margin.
This well received auction, along with four weeks of trending higher 30-year Treasury bond futures is difficult to explain under the prevailing consensus view of ramped up inflation expectations.
In my minority view, I am seeing indications that global economic growth may not be as strong as many analysts are predicting. A wide variety of markets are showing that this may be the case. For example, copper and crude oil have been basically trading sideways in the past two months after previous strong advances.
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