Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher, including a new record high for Dow Jones stock index futures, following recent gains that were inspired by a recently dovish Federal Reserve.
The December Empire State manufacturing index was -14.5 when 3.7 was expected.
Industrial production in November increased 0.2% when a gain of 0.3% was anticipated, and capacity utilization was 78.8% when 79.1% was predicted.
The 8:45 central time December PMI manufacturing index is forecast to be 49.2.
The fundamentals and technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is higher today after yesterday falling to over a four-month low.
Economic activity in the euro zone contracted in December for the seventh month in a row.
The HCOB flash euro zone Composite PMI output index, which is a gauge of activity in the manufacturing and services sectors, declined to 47.0 from 47.6 in November. The level in December was a two-month low. Expectations were for 48.2.
The HCOB Germany Composite PMI fell to 46.7 in December 2023, which is down from 47.8 in the previous month and below market expectations of 48.2. This was the sixth consecutive month of contraction.
Hourly labor costs in the euro area increased by 5.3% year-on-year in the third quarter of 2023, which is up from the 4.5% increase in the previous three-month period.
The S&P Global/CIPS U.K. Composite PMI increased to 51.7 in December 2023, which is up from 50.7 in the previous month and surpassing the market consensus of 50.9. Economists had forecast a smaller increase to 50.9.
The Bank of Japan will hold its policy meeting on December 19. Analysts will be looking for hints about a possible end to the central bank’s negative interest rate policy.
Housing starts in Canada in November were down 22.0% from October.
INTEREST RATE MARKET FUTURES
The International Monetary Fund said central banks around the world should not rush to relax their fight against inflation even with the Federal Reserve signaling a policy pivot next year.
Financial futures markets are predicting there is a 15% 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 85% probability of no change.
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