Written Commentary
Ag Market View for Apr 23.24
April 23, 2024
STOCK INDEX FUTURES
Stock index futures extended yesterday’s rally after the Senate passed a bill Thursday evening to raise the debt ceiling and prevent a U.S. default.
The debt ceiling agreement suspends the debt limit for two years. It reduces spending on some domestic programs and limits spending increases on the military, as well as expediting some energy projects.
Nonfarm payrolls in May were up 339,000 when a gain of 190,000 was expected and private payrolls increased 283,000 when up 165,000 was anticipated.
Manufacturing payrolls declined 2,000 when an increase of 8,000 was predicted.
The unemployment rate increased to 3.7% when 3.5% was estimated.
Average hourly earnings increased 0.3% as expected.
Futures continue to overperform the news.
CURRENCY FUTURES
The U.S. dollar index firmed when the U.S. employment report was released.
In spite of higher prices today, the greenback is lower and is headed for its first weekly drop in four weeks after comments from Federal Reserve officials suggesting the central bank will pause its tightening cycle in June. Fed Governor Philip Jefferson and Philadelphia Fed President Patrick Harker suggested this week the central bank would skip a rate increase at the next policy meeting.
INTEREST RATE MARKET FUTURES
Futures are lower but remain above major downtrend lines that were broken on the upside on Tuesday.
The Food and Agriculture Organization of the U.S. Food Price Index fell to 124.3 in May 2023, which is the lowest since April 2021 and compares to an upwardly revised 127.7 in April.
Financial futures markets are predicting there is a 65% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its June 14 policy meeting, and there is a 35% chance of a 25 basis point increase.
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