March 6 – Stocks are in the red at mid-day, with the major indexes down anywhere from 0.35% to 0.90% at the time of writing, while the VIX has cooled from this morning but remains relatively elevated around the 23.2 level. The U.S. dollar is continuing this week’s freefall as it dips below 104 for the first time in three months, hovering around the 103.9 level currently. Treasuries are recovering today, with 10-year yields pushing up to 4.32% and 2-year yields up more slightly to hang around 3.99%. Crude oil continues this week’s plunge, however, with nearby WTI back below the $66 mark at mid-day after recovering from lows into yesterday's close. The ags are seeing a nice recovery day today following their recent selloff, with the soy complex showing the most strength thus far.
The European Central Bank (ECB) cut rates by 25 basis points today, marking their sixth such cut since June and bringing their target rate down to 2.5%, considerably below the U.S. and several other major central banks. The main theme of ECB President Christine Lagarde’s remarks centered around growing uncertainty in the global economy, which she noted was “likely to weigh on investment.” The ECB also lowered their 2025 Euro Zone GDP growth projection to only 0.9% from the 1.1% projected back in December while raising their inflation expectations for 2025 from 2.1% up to 2.3%. The European economy appears poised to continue garnering investor attention, however, as European equities have outperformed the U.S. and other majors thus far in early 2025, bolstered in large part by the drastic shift in fiscal policy from Germany’s (the E.U.’s largest economy) likely new government.
The uncertainty of recent weeks has shifted central bank policy expectations rather sharply, with the market now pricing in three 25 basis point rate cuts from the Fed by the end of 2025, with the first penciled in at their June meeting. It wasn’t long ago that expectations had fallen to only one cut this year, coming at the July meeting. Traders will get to parse through comments from a wide range of FOMC members in the next two days, most notably Fed Chair Powell’s speech tomorrow. Philadelphia Fed President Patrick Harker made headlines with his hawkish comments this morning, and it will be interesting to see if other FOMC officials have changed their tune due to the rapid pace of market moving headlines since their last meeting at the end of January, or if we can get any hints to shape expectations for their next meeting, scheduled for March 18-19.
U.S. soybean oil sales jumped to 54.8k metric tons in the week ending 2/27, the highest reported sales in seven weeks and keeping cumulative sales on track to blow past USDA’s most recent 726k metric ton (1,600M lbs) target. In fact, marketing year-to-date now total ~764k metric tons, surpassing the current full year target with seven months left to go. Unknown destinations were the featured buyer, followed by India (our top buyer for the year by a comfortable margin), then Mexico.
Challenger job cuts spiked to 172k in February, more than tripling from the month prior and marking the highest monthly cuts seen since July 2020, as well as the largest total for the month of February since 2009. This is one of the first data releases to show the impact of the ongoing government cuts led by DOGE on the U.S. labor market, with government leading all sectors at 62.24k job cuts in February. Other notable cuts were seen in the retail and tech sectors, at 38.96k and 14.55k, respectively. This brings total government cuts through the first two months of 2025 at 62.53k; for context, government cuts totaled only 151 in the first two months of 2024. Total job cuts through the first two months of 2025 now sit at 221.81k, up 32.9% year-over-year and marking the largest total for the period since 2009, as can be seen in the below chart from Challenger, Gray & Christmas, Inc. The market will get more labor data to digest tomorrow with February’s Non-Farm Payrolls on tap.
