Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher today.
Prices declined yesterday after the Federal Open Market Committee mentioned that the U.S. economy will struggle in the coming months. This was in addition to disappointing earnings reports as well as doubts over how soon the economy will get fresh stimulus.
The fourth quarter gross domestic product was up 4.0% when an increase of 4.1% was expected.
Jobless claims in the week ended January 23 were 847,000, which compares to the anticipated 875,000.
The 9:00 December new home sales report is estimated to show 871,000, and the 9:00 December leading indicators index is predicted to be up 0.3%.
The January Kansas City Federal Reserve manufacturing index will be released at 10:00. In December the report showed 14.
CURRENCY FUTURES
A spokesman for the European Central Bank said it is ready to use all the tools necessary to stimulate inflation and is keeping a close eye on the euro’s appreciation.
Yesterday, a European Central Bank official said the central bank has the necessary tools to act on euro strength and could cut the deposit rate further to reach its inflation target.
The German government slashed its growth forecasts for 2021 to 3.0% from 4.4%.
The Japanese yen is lower after a report showed retail sales declined 0.3% year-on-year in December, which compares to the market estimate of a 0.6% increase.
Australia’s export prices unexpectedly increased by 5.5% on the quarter, while import prices fell 1.0% over the same period.
INTEREST RATE MARKET FUTURES
The Treasury will auction 7-year notes.
The Federal Open Market Committee concluded its two-day policy meeting yesterday.
The Federal Reserve acknowledged the economy has softened in recent weeks but kept its policy on hold. The Fed indicated it would keep stimulative measures in place until its goals of lower unemployment and 2.0% inflation are achieved.
The Fed said, “The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic.” However, Fed officials said they believe the setback is only temporary.
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