Weak Durable Goods Report Supports Treasury Bonds
STOCK INDEX FUTURES
U.S. stock index futures declined with tech earnings in focus.
Some traders are evening up ahead of today’s conclusion of the Federal Open Market Committee’s 2-day monetary policy meeting.
Traders will watch to see if earnings will continue to surpass analysts’ expectations.
Durable goods orders in December increased 0.2% when a 1.0% increase was expected.
The euro currency declined and the U.S. dollar advanced after 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.
A gauge of consumer sentiment in Germany dropped to an eight-month low of -15.6 going into February 2021 from a revised -7.5 in the prior month. This is substantially below the consensus of -7.9.
The Australian dollar is lower despite news that Australia’s consumer prices rose 0.9% in the fourth quarter. Economists had expected a quarterly CPI increase of 0.7%.
INTEREST RATE MARKET FUTURES
Futures are higher in light of lower stock index futures.
The Federal Open Market Committee will conclude its two-day policy meeting today. A statement will be released at 1:00 p.m. central time and Federal Reserve Chairman Powell will hold a press conference at 1:30 p.m.
The FOMC will likely maintain its fed funds target range at zero to 25 basis points and promise to keep it there until the goals of maximum employment and inflation “on track to moderately exceed 2.0% for some time” are met. The FOMC recently said this will not happen before 2023.
The FOMC will probably reinforce its commitment to a very accommodative monetary policy and indicate that it is not tapering its asset purchase program anytime soon.
In addition, the FOMC may ramp up its dovish rhetoric and emphasize the need for more fiscal support.
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