Written Commentary
Ag Market View for Dec 13.24
December 13, 2024
CURRENCY FUTURES
The U.S. dollar index is higher despite a slight easing of tensions over the Ukraine-Russia conflict.
The fundamentals and technicals remain supportive to the U.S. dollar and are bearish for the euro currency.
Producer prices in Germany declined by 1.1% year-on-year in October 2024, easing from a 1.4% fall in the previous month and aligning with market forecasts. This marked the 16th consecutive period of producer price deflation.
There are expectations that the European Central Bank will lower its key interest rates more aggressively than the Federal Reserve, which is likely to put additional pressure on the euro.
Consumer prices in the U.K. surged to 2.3% in October, exceeding forecasts and the Bank of England’s 2.0% target, which is curbing December interest rate cut expectations.
STOCK INDEX FUTURES
Stock index futures are mostly higher due to a slight easing of tensions between Ukraine and Russia.
The November Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. In October the report showed inflation expectations were 2.2% on an annualized basis.
The long term fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are lower across the board. Flight to quality longs are being liquidated in light of a slight easing of tensions between Ukraine and Russia.
Higher than expected inflation numbers in the U.K. suggests the Bank of England may be slower to lower key interest rates. This in turn, suggests the Federal Reserve may be somewhat influenced to be slower to move to accommodation as well.
Federal Reserve speakers today are Michael Barr at 9:00, Lisa Cook at 10:00, Michelle Bowman at 11:15 and Susan Collins at 4:00 PM.
There is a 59% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its December 18 policy meeting, and there is a 41% chance of the FOMC keeping rates unchanged at 4.50% – 4.75%.
It is likely that the FOMC will be slower to add accommodation in 2025 than the consensus view.
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