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Stock Index Futures Likely to Recover

STOCK INDEX FUTURES

U.S. stock index futures are lower due to political uncertainties.

The December consumer price index increased 0.4% as expected.

The Atlanta Federal Reserve business inflation expectations report will be released at 9:00 central time. In December it was 2.0%.

At 1:00 the Federal Open Market Committee will release its Beige Book on the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles evidence on economic conditions from each of the 12 Federal Reserve districts.

CURRENCY FUTURES

Flight to quality buying is supporting the U.S. dollar index today.

However, longer term, the U.S. dollar is likely to trend lower on the belief that an increase in fiscal spending would raise the budget and current account deficits. Also undermining the greenback are expectations for an extended period of low interest rates.

The euro currency is lower despite news that industrial production in the euro area increased 2.5% in November, which is the seventh consecutive month of growth and compared with market expectations of a 0.2% increase.

INTEREST RATE MARKET FUTURES

Yesterday, the 30-year Treasury bond futures fell to the lowest level since March 2020.

Yesterday, Fed officials James Bullard and Eric Rosengren said monetary support will still be needed for some time.

Federal Reserve speakers today are James Bullard at 8:30, Lael Brainard at 12:00 and Richard Clarida at 2:00.

The Treasury will auction 30-year bonds.

Financial futures markets are predicting there is a 95.2% probability that the Federal Open Market Committee will keep its key fed funds rate unchanged at 0 to 25 basis points at its January 27, 2021 policy meeting.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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