Fundamentals Improve for US Treasury Bond Futures

STOCK INDEX FUTURES

Stock index futures are mostly higher today, although recent pressure was linked to weaker than expected economic reports.

Personal income in January increased 0.9% when up 0.3% was anticipated. Personal consumption expenditures in January declined 0.2% when an increase of 0.2% was forecast. The PCE price index on a month-to-month basis increased 0.3% when up 0.4% was estimated.

The 8:45 central time February Chicago PMI is expected to be 41.0.

CURRENCY FUTURES

The U.S. dollar index is higher, as traders respond to President Donald Trump’s bullish tariff plans. On Thursday President Trump confirmed that his proposed 25% tariffs on Mexico and Canada will take effect on March 4, along with an additional 10% duty on Chinese goods.

The euro zone’s median inflation expectations for the next 12 months declined to 2.6% in January 2025, which is down from December’s five-month high of 2.8%.

Germany’s consumer price inflation remained at 2.3% in February 2025, which is unchanged from the previous month and is in line with expectations.

Inflation in Tokyo slowed more than expected in February, according to data from the Ministry of Internal Affairs. Consumer prices, excluding fresh food, increased by 2.2% compared to a year earlier, which is slightly under the 2.3% forecast but was still above the Bank of Japan’s 2.0% target. Core inflation, which excludes both fresh food and energy, held steady at 1.9%.

INTEREST RATE MARKET FUTURES

Futures are steady at the front end of the yield curve and are higher at mid-curve and at the long end of the yield curve.

Austan Goolsbee of the Federal Reserve will speak at 9:15 PM.

Financial futures markets are predicting the Federal Open Market Committee will keep its fed funds rate unchanged at its March and May policy meetings.

However, it is likely that the Federal Open Market Committee will reduce its fed funds rate by 25 basis points at its June meeting, and another reduction is priced in for late in the third quarter or in the fourth quarter.

Futures at the long end of the yield curve are likely to continue to gain of futures at the short end of the yield curve.

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