Interest Rate Market Futures Higher
INTEREST RATE MARKET FUTURES
Flight to quality buying and prospects of a weakening global economy supported futures.
The Treasury will auction 5-year notes today.
According to financial futures markets, currently there is a 97.0% of probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points and a 3.0% probability of a 50 basis point hike at the February 1 policy meeting.
The long term outlook for futures is higher.
STOCK INDEX FUTURES
Stock index futures are lower due to increased geopolitical risks and increasing concerns about a potential recession.
Mortgage applications increased 7.0% in the week ended January 20, according to data from the Mortgage Bankers Association.
Despite lower prices today, the technical aspects are supportive on balance.
The U.S. dollar index is steady to a little higher, as futures remain in a trading range.
Interest rate differentials are neutral for the U.S. dollar.
Business confidence in Germany improved in January to its highest level since June. The Ifo business climate index increased to 90.2 in January from 88.6 in December, which was broadly in line with expectations from economists.
The Ifo’s gauge measuring expectations increased to 86.4 from 83.2, although the index assessing the current situation declined slightly to 94.1 in January from 94.4 in December.
The Ifo index is based on a poll of approximately 9,000 companies in manufacturing, services, trade and construction
Australian consumer prices increased by more than expected in the fourth quarter, which reduces hopes that the Reserve Bank of Australia will soon pull back from aggressively hiking interest rates. Inflation in the fourth quarter was 7.8% compared with the same period a year earlier, which is more than the 7.6% expected by economists.
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