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Fed Likely Slow to Add Accommodation


There are no Federal Reserve speakers scheduled for today.

The Treasury will auction two-year notes.

A Federal Reserve that will likely be relatively slow to add accommodation this year has pressured futures.

Financial futures markets are predicting there is a 3.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the January 31 policy meeting, and there is a 97.0% probability that the Fed will keep rates unchanged.

The chances of fed funds rate cut at March 20 FOMC meeting are now only 44%, which is much less than the 90% probability at the beginning of the month.


Stock index futures are mostly higher.

The 9:00 central time December Richmond Federal Reserve manufacturing index is expected to be -7.0.

The fundamentals and technicals remain supportive to stock index futures despite recent talk of a potentially less dovish Federal Reserve this year.


The U.S. dollar index is  higher.

The greenback recently advanced as interest rate differentials are becoming more supportive.

The Bank of Japan maintained its ultra-easy monetary policy at its first meeting this year, which was in line with expectations. The BoJ kept its key short-term interest rate at -0.1% and retained the 1.0% upper limit on the 10-year Japanese government bond yield.

A survey from National Australia Bank showed its index of business conditions fell 2 points to +7 in December. Its measure of business confidence improved 7 points to -1.


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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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