Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher despite an atmosphere of increasing concerns about a potential recession.
The 8:45 central time January PMI manufacturing index is expected to be 46.5 and the PMI services index is anticipated to be 45.5.
The 10:00 January Richmond Federal Reserve manufacturing index is estimated to be -3.0.
The technical aspects are supportive on balance.
CURRENCY FUTURES
The U.S. dollar index is steady.
Interest rate differentials are neutral for the U.S. dollar.
The euro zone economy expanded in January for the first time in seven months, according to a purchasing managers survey.
The S&P Global flash euro zone PMI composite output index, which measures activity in the manufacturing and services sectors, increased to 50.2 in January from 49.3 in December, which is the highest level since June. Economists expected the PMI to come in at 49.7.
The European Central Bank is likely to raise interest rates by 50 basis points at its February and March policy meetings.
The Confederation of British Industry’s order book balance fell by 11 points from a month ago to -17 in January, which is the weakest since February 2021 and worse than predictions of -8, according to the CBI’s latest Industrial Trends Survey.
INTEREST RATE MARKET FUTURES
According to financial futures markets, currently there is a 99.0% of probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points and a 1.0% probability of a 50 basis point hike at the February 1 policy meeting.
The long term outlook for futures is higher.
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