Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst
April 10 – All eyes were on inflation data this morning and another hotter-than-expected reading put a real dent in Wall Street enthusiasm; equities futures tumbled following the 7:30 AM central time release, after peaking higher pre-report-release. Dow Jones futures are indicating more than a 450-point drop as of the time of this writing, with both the S&P 500 and NASDAQ pointing towards losses of well over 1% as well. Treasury yields surged (more than 10 bps higher for both the two-year and ten-year) with the trade now scaling back closer to expecting two Fed rate cuts for the remainder of 2024, rather than three, and a June rate cut essentially off the table. The U.S. dollar index is surging back towards week-ago highs after a week of declines, with foreign currencies plummeting against the greenback, including the euro – that’s ahead of an expected steady interest rate announcement from the European Central Bank following their meeting tomorrow.
The U.S. Consumer Price Index rose 0.4% month-over-month and 3.5% year-over-year in March, with CPI excluding food and energy up 0.4% MoM and 3.8% YoY; all of those were one tick (0.1%) higher than trade expectations, and steady to higher from February readings as well. It’s the third straight month of higher-than-expected readings as Fed policies fail to eliminate sticky inflation. The list of items pushing up core inflation is a long one, including clothing, education, medical care, etc.
MBA Mortgage Applications edged higher on the week ending April 5, up 0.1% after a 0.6% decline on the week prior; home purchases fell 4.7% week-over-week after falling 0.1% the week before, while home refinancings rose 9.9% after falling 1.6% in the previous week. That was despite the average 30-year fixed mortgage rate rising back above the 7% mark for the first time in a month, to 7.01%, up from 6.91% the previous week. The U.S. housing market is holding on to decent momentum as analysts see buyers getting accustomed to “elevated” interest rates.
Wheat is leading gains this morning but the rest of the grain complex doesn’t seem willing to follow its lead, and any grain “rallies” don’t look like enthusiastic ones amid a bearish fundamental overall environment. The southern Plains are seeing beneficial rains through mid-week with corn planting officially kicking off in a dry heart of the corn belt as well. The grain trade is mostly in wait for Conab and USDA data tomorrow morning, and also mostly ignored as the larger marketplace processes today’s inflation readings.
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