Written Commentary
Ag Market View for May 20.25
May 20, 2025
INTEREST RATE MARKET FUTURES
Futures are mixed in advance of the Federal Reserve’s latest policy decision, with the central bank widely expected to keep interest rates unchanged. Market attention will be on the Federal Reserve’s quarterly updates on interest rate projections, as well as its outlook for economic growth, inflation and unemployment.
Approximately three weeks ago there was a major change in the fundamentals and outlook for Federal Reserve policies. The probabilities are increasing that the central bank will more aggressively ease credit conditions this year.
Financial futures markets are predicting the FOMC will lower its key interest rate two more times this year with the first reduction at its June policy meeting.
An accommodative FOMC will underpin prices.
STOCK INDEX FUTURES
Stock index futures are higher and remain above major downtrend lines.
The March Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. In February the report showed inflation expectations at 2.3%.
Today is the second day of the two-day Federal Open Market Committee meeting. A statement will be released at 1:00 followed by a Federal Reserve Chair Powell press conference at 1:30.
Several downside blow-off indicators took place last week, indicating lows for the move may be close.
In the longer term, a more accommodative Federal Open Market Committee will support futures.
CURRENCY FUTURES
The U.S. dollar index is higher, but is close to recent five-month lows. Economic uncertainties and trade tensions have recently weighed on the currency.
The euro currency is a little lower today but remains near its strongest level since November 5, after Germany’s outgoing parliament approved a substantial increase in government borrowing, which includes a major overhaul of the country’s debt rules.
Wages in the euro zone increased 4.1% year-on-year in the fourth quarter of 2024, which is the least so far this year and compares to a downwardly revised 4.3% advance in the third quarter.
The Japanese yen Is lower, marking its fourth consecutive day of decline after the Bank of Japan kept interest rates unchanged at 0.5%, as widely expected. The central bank maintained its view that Japan’s economy will continue growing above potential.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
