Written Commentary
Ag Market View for May 20.25
May 20, 2025
STOCK INDEX FUTURES
Stock index futures are lower as trade war concerns continue to weigh on the economic outlook and investor sentiment. Reciprocal tariffs are set to take effect on April 2nd, including a 25% levy on all cars that are not made in the US.
The 8:45 central time March Chicago PMI is expected to be 44.1.
The 9:30 March Dallas Federal Reserve manufacturing survey is anticipated to be -12.
While traders are focusing on the negative implications of trade tariffs and geopolitical issues currently, in the longer term, a more accommodative Federal Open Market Committee will support futures.
CURRENCY FUTURES
The U.S. dollar index is slightly higher today.
The bullish influence of flight to quality buying is likely to be more than offset be the bearish influence of interest rate differentials that have turned bearish for the greenback.
Germany’s consumer price inflation slowed to 2.2% in March 2025 from 2.3% in February, which is the lowest rate since November 2024 and was in line with market expectations. Core inflation also fell in March, declining to 2.5% from 2.7% recorded in the previous month.
The Japanese yen is higher, marking its second consecutive session of gains as investor anxiety over new U.S. tariffs fueled demand for safe-haven assets.
The yen’s sharp moves prompted Finance Minister Katsunobu Kato to warn against excessive currency fluctuations, stating that he would maintain close communications with his U.S. counterpart on foreign exchange issues. Hawkish interest rate signals from the Bank of Japan also supported the yen.
INTEREST RATE MARKET FUTURES
Futures are higher across the board as investors move funds to safe-haven vehicles.
Mary Daly of the Federal Reserve recently said two interest rate cuts are still reasonable for 2025.
The yield on the U.S. 10-year Treasury note fell about 6 basis points to 4.207%, nearing a four-week low.
There are no Federal Reserve speakers scheduled for today.
Financial futures markets are predicting the FOMC will lower its key interest rate three times this year, with the first reduction at its June policy meeting.
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