Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher on limited news.
The 2:00 central time December consumer credit report is expected to show a $21.0 billion increase.
Fourth quarter earnings season is drawing to a close with a few large companies still to report. This week, approximately 9.0% of S&P 500 companies will report earnings.
The dominant influence now is the geopolitical risk, followed closely by the hawkish Federal Reserve.
CURRENCY FUTURES
The U.S. dollar index appears to be underperforming the news.
The euro currency is lower after a report showed industrial production in Germany unexpectedly edged down 0.3% month-over-month in December of 2021, which compares to forecasts of a 0.4% increase. This is the first decline in industrial output in three months.
The Halifax house price index in the U.K. increased 9.7% from a year ago in January 2022., This is la little lower than the 9.8% increase in December 2021, which was the largest increase since July 2007.
The Bank of England chief economist recently said the benchmark lending rate in the U.K. will probably increase again in the coming months.
Interest rate differential expectations suggest the long term trend for the British pound is higher and lower for the Japanese yen.
INTEREST RATE MARKET FUTURES
Many market participants expect the Federal Open Market Committee will increase its fed funds rate five times this year with the first hike likely at the March 16 meeting.
Some analysts believe that if the rate of growth in the U.S. economy slows, and also globally, it may be difficult for the Federal Reserve and other major central banks to maintain ramped-up hawkish policies.
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