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Support for US Federal Reserve Chairman Powell and the independence of the US Federal Reserve has been almost unanimous.
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The Federal Reserve’s forward funds futures curve continues to show the next rate that will occur at the conclusion of the June FOMC meeting, the first meeting after the end of Powell’s term as chairman.
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The commodities complex was mostly in the green to start the day, with the Energy sector awaiting the US President’s next post on social media.
Morning Summary: Much of Friday’s market discussion before dawn had to do with words that begin with “In.” The first step was the near-unanimous endorsement of US Federal Reserve Chairman Powell by central banks and key figures around the world in terms of the importance of the US Federal Reserve remaining independent. The potential ripple effects of trumped-up criminal charges whose root cause is discontent over interest rates is a dangerous precedent (or “president”) to set. Chicago Federal Reserve President Goolsbee was quoted as saying, “If you try to take away the independence of the central bank, inflation will come back with a vengeance.”(Yo). Speaking of interest rates, the Federal Reserve Funds Futures Forward Curve (ZQF26) continues to show that the next rate cut will occur at the conclusion of the June 2026 meeting, interestingly the first meeting after the end of Powell’s tenure as Fed Chair in May. In terms of markets, US stock index futures rose early in the day even though Asian markets closed mostly lower and European markets traded lower early in the session on Friday. The US Dollar Index ($DXY) weakened modestly, settling 0.06 below and at its session low at the time of writing. Meanwhile, Energies was in the green, awaiting the US president’s next social media post.
Corn: The corn market rose quietly early Friday morning. The March issue (ZCH26) recorded a trading range of 1.5 cents overnight on a trading volume of 10,000 contracts and was 0.5 cents higher before dawn. Technically, March continues to hold above the round number of $4.20, as well as its low of $4.1725 from last Tuesday, possibly attracting a light round of new non-commercial buying. It will be interesting to see what the next Trader Commitments report shows (legacy, futures only). In the previous edition, Watson held a net long futures position of 60,110 contracts as of Tuesday, January 6, a decrease of 6,920 contracts. As mentioned, March lost 24.25 cents from Tuesday to Tuesday (January 13), indicating that the net long futures position may have been erased. On the other hand, on the commercial side, the market continues to see support. The national average base was calculated Thursday night at 36.0 cents lower for March futures compared to last Friday’s final figure of 37.0 cents lower. Additionally, as of Thursday’s close, the March-May spread covered 36% of the total calculated trade carry, while the May-July spread covered 30%, compared to last week’s deals of 38% and 31% respectively. This tells us that the real supply and demand situation of the corn market is not as bearish as the imaginary USDA figures.