Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher.
The final annualized U.S. gross domestic product for the third quarter was up 4.9% when an increase of 5.2% was expected, and personal consumption expenditures were up 3.1% when a gain of 3.6% was anticipated.
Jobless claims in the week ended December 16 were 205,000 when 210,000 were predicted.
The December Philadelphia Federal Reserve manufacturing index was -10.5 when -3.0 was forecast.
The 9:00 central time November leading indicators report is expected to show a 0.4% decline.
The December Kansas City Federal Reserve manufacturing index will be released at 10:00 and is anticipated to be -1.0.
The fundamentals and technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is lower today after falling to over a four-month low last week. Some of today’s selling is linked to mostly weaker than expected U.S. economic reports.
Lower prices are likely for the U.S. dollar longer term.
The Confederation of British Industry’s monthly retail sales balance worsened to -32 in December 2023 from -11 in November, which is well under market expectations of -12.
Japan’s government slightly raised its economic growth projections for this fiscal year from its previous estimates. In the economic outlook, the real economic growth rate for fiscal 2023/24 is estimated at 1.6%, which is up from 1.3% seen six months ago.
INTEREST RATE MARKET FUTURES
Futures were supported by the smaller than expected U.S. gross domestic report.
Prices have trended higher after the Federal Open Market Committee’s policy statement and Federal Reserve Chair Powell’s press conference last week took a turn to the dovish side.
On Wednesday, the $13 billion 20-year U.S. Treasury bond auction drew a high yield of 4.213%.
Financial futures markets are predicting there is a 12% probability that the Federal Open Market Committee will reduce its fed funds rate by 25 points at its January 31, 2024 policy meeting and an 88% probability of no change.
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