Written Commentary
Ag Market View for May 20.25
May 20, 2025
STOCK INDEX FUTURES
Stock index futures are mixed today after chart breakouts to the upside on Monday.
Durable goods orders in February increased 0.9% when a decline of 1.0% was expected.
Currently traders are anticipating the new U.S. tariffs set to take effect on April 2 could be softer and more targeted than initially anticipated.
President Donald Trump recently suggested there could be “flexibility” in the plan, while reports indicated that the tariffs may be narrower in scope, and could potentially spare some industries.
In the longer term, a more accommodative Federal Open Market Committee will support futures.
INTEREST RATE MARKET FUTURES
Futures are steady at the front of the yield curve and are lower elsewhere on the curve.
The yield on the U.S. 10-year Treasury note remained near 4.34% on Wednesday.
Federal Reserve speakers today are Neel Kashkari at 9:00 central time and Alberto Musalem at 12:10.
The U.S. Treasury will auction five-year notes today.
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 in the long term.
CURRENCY FUTURES
The U.S. dollar index is higher in light of a stronger than expected U.S. durable goods orders report.
However, recent pressure on the greenback is linked to interest rate differentials that are turning bearish.
The annual inflation rate in the U.K. declined to 2.8% in February 2025 from 3.0% in January, which is well under market expectations of 2.9%, although in line with the Bank of England’s forecast.
There was little market reaction when Bank of Japan Governor Kazuo Ueda told parliament that they will continue raising interest rates if economic predictions are realized.
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