Written Commentary
STOCK INDEX FUTURES
Stock index futures are mixed.
The January ADP employment report change showed an increase of 107,000 when up 145,000 was expected.
The fourth quarter employment cost index increased 0.9% when up 1.0% was anticipated.
The 8:45 central time January Chicago PMI is predicted to be 48.1.
Today is the second day of the two-day Federal Open Market Committee meeting. The FOMC will release a statement at 1:00 and Fed Chair Jerome Powell will hold a press conference at 1:30.
The fundamentals and technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is higher and remains in a 12-day congestion pattern.
The fundamentals and technicals remain supportive to the U.S. dollar.
German retail sales unexpectedly fell 1.6% month-on-month in December. Economists forecast retail sales would increase 0.7%.
Germany’s adjusted unemployment rate was 5.8% in January, which is the same as in December and November. Economists expected the rate to tick up to 5.9%. The number of unemployed people fell by 2,000 in January on a seasonally adjusted basis. Economists expected an increase in jobless claims.
The Bank of England is expected to leave interest rates unchanged at 5.25% at its policy meeting tomorrow.
INTEREST RATE MARKET FUTURES
Futures are mostly higher, especially at the long end of the curve. Some of the strength is linked to the smaller than forecast increase in the January ADP employment report change report.
The Federal Open Market Committee is expected to keep its fed funds rate unchanged at a 23-year high of 5.25% – 5.50% for a fourth consecutive meeting today. However, the focus will be on any indications regarding the timing of interest rate reductions in 2024. It is anticipated that the central bank’s policy statement will no longer retain its tightening bias.
Financial futures markets are predicting there is a 2.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points today, and there is a 98% probability that the Fed will keep rates unchanged.
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