Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures pared losses to trade near unchanged after the Russian foreign minister’s comments signaled continued diplomatic efforts in the Ukraine crisis.
Traders are now awaiting the FOMC minutes on Wednesday and speeches from several Federal Reserve officials this week for any updates on Fed policy.
The dominant influences remain the hawkish Federal Reserve and tensions in Ukraine.
CURRENCY FUTURES
The U.S. dollar index is higher today, but overall the greenback has underperformed the news in recent weeks.
The Japanese yen is lower as flight to quality has not developed. Last Thursday the yen declined to a five-year low, falling under the January 4 low.
Last week a Bank of Japan board member reiterated that the BoJ will maintain its ultra-loose monetary policy to support the economic recovery and achieve the 2.0% inflation target. His statements were in line with previous comments from other policymakers, underscoring one of the most dovish policy positions among major central banks.
Interest rate differential expectations suggest the long term trend for the Japanese yen is lower.
INTEREST RATE MARKET FUTURES
The Federal Reserve on Friday announced a closed meeting will be held this morning at 10:30 central time under expedited procedures.
In late November 2015, the Fed held an expedited meeting. Shortly thereafter the Fed increased rates for the first time since 2006.
Federal Reserve Bank of St. Louis President James Bullard today said the Fed needs to front load tightening because inflation is possibly accelerating.
Many market participants expect the Federal Open Market Committee will increase its fed funds rate seven times this year with the first hike likely at the March 16 meeting, or possibly earlier.
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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