Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher due to renewed stimulus hopes.
Investors are continuing to monitor the corporate earnings season with 111 companies from the S&P 500 index scheduled to report this week.
In recent months stock index futures have shown a tendency to recover from bearish news.
Also short-term downtrend lines were taken out on the upside today.
CURRENCY FUTURES
The euro currency is lower despite news that the euro zone economy contracted in the fourth quarter, but less than feared. Gross domestic product fell by 0.7% in the fourth quarter, according to the European Union’s statistics agency Eurostat. Economists had expected a 1.2% contraction.
On an annualized basis, the euro zone economy shrank by 5.1%, which compares to a 5.7% decline anticipated by economists.
The Bank of England will hold its monetary policy meeting on Thursday. Policies are predicted to remain unchanged.
The Reserve Bank of Australia announced an unexpected extension of its government bond-buying program when the current one expires in April, indicating its determination to support the economy. Policymakers said they would extend their bond-buying program by another A$100 billion and promised to keep rates on hold until at least 2024.
The central bank left its official cash rate at 0.10%, as widely expected.
INTEREST RATE MARKET FUTURES
Federal Reserve Bank of Minneapolis President Neel Kashkari on Monday said the U.S. economy has a long way to go before it fully recovers and will need strong support from the Federal Reserve and the federal government. Mr. Kashkari said, “The key now is for the Fed to keep its foot on the monetary policy gas” to help the economy. He also said it is critical that fiscal aid be in the mix as well, adding that the central bank will use all available tools to help achieve its job and inflation goals.
Federal Reserve speakers today are Robert Kaplan at 12:00, John Williams at 1:00 and Loretta Mester at 1:00.
In light of the Federal Reserve pledging not to hike its fed funds rate until possibly 2023, futures at the short end of the curve are likely to hold steady.
The next Federal Open Market Committee meeting is scheduled for March 17.
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