Written Commentary
Ag Market View for May 20.25
May 20, 2025
CURRENCY FUTURES
The U.S. dollar index is sharply lower on Thursday, hitting its lowest level in nearly six months as traders digested President Donald Trump’s measures. Late Wednesday, President Trump announced a comprehensive tariff package aimed at reshaping U.S. trade relationships.
The fundamentals for the U.S. dollar remain bearish.
The euro zone economy showed modest growth for a third month in March. HCOB’s final composite Purchasing Managers’ Index for the euro zone , compiled by S&P Global improved to 50.9 from 50.2, which was better than a preliminary estimate for 50.4.
Industrial producer prices in the euro area increased by 0.2% month-over-month in February 2025, following a downwardly revised 0.7% advance and exceeding market forecasts of a 0.1% increase.
The Japanese yen is sharply higher today due to a flight to safety flow of funds.
STOCK INDEX FUTURES
Stock index futures are sharply lower on Thursday as investors reacted to President Donald Trump’s latest tariff announcement. On Wednesday, President Trump unveiled a baseline 10% tariff on all imports, schedules to take effect on April 5, with approximately 60 countries facing even higher levies.
Global outplacement firm Challenger, Gray & Christmas said on Thursday that layoffs announced by U.S. employers increased to 275,240 in March, which compares to 172,017 in February.
Jobless claims in the week ended March 29 were 219,000 when 226,000 were expected.
The 8:45 central time March services PMI is anticipated to be 54.3.
The 9:00 March Institute for Supply Management services index is estimated to be 53.0.
While traders currently are focusing on the negative implications of trade tariffs and geopolitical issues, a more accommodative Federal Open Market Committee will support futures later this year.
INTEREST RATE MARKET FUTURES
Flight to safety buying is coming into futures across the board as President Donald Trump’s latest reciprocal tariff announcement triggered a broad flight to safety.
The yield on the U.S. 10-year Treasury note declined to around 4.08%, which is the lowest level since mid-October.
Futures have recently broken out above downtrend lines.
Federal Reserve speakers today are Philip Jefferson at 11:30 and Lisa Cook at 1:30.
Financial futures markets are predicting the Federal Open Market Committee will more aggressively move to accommodation this year.
The FOMC will likely lower its key interest rate three times in 2025, with the first reduction at its June policy meeting.
The fundamentals and technicals remain bullish for the interest rate market futures.
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