Written Commentary
CURRENCY FUTURES
The U.S. dollar index continues to underperform the news.
Interest rate differential expectations are long-term bearish for the greenback, and lower prices are likely.
The S&P Global euro zone composite PMI increased to 48.8 in December of 2022 from 47.8 in November, beating market forecasts of 48.
The consumer price inflation in the euro area was revised to 10.1% year-on-year in November 2022, which is slightly up from a preliminary estimate of 10.0%.
Retail sales in the U.K. unexpectedly declined 0.4% month-over-month in November of 2022, after increasing an upwardly revised 0.9% in the previous month.
Japan’s manufacturing activity shrank at the fastest pace in over two years in December, according to a corporate survey. The au Jibun Bank flash Japan manufacturing purchasing managers’ index was down to a seasonally adjusted 48.8 in December from a final reading of 49.0 in November.
STOCK INDEX FUTURES
Stock index futures are lower on the belief that a more hawkish Fed could tip the economy into recession.
The 8:45 central time December PMI composite is expected to be 46.7.
Despite lower prices today, the fundamentals and technicals for stock index futures remain supportive.
INTEREST RATE MARKET FUTURES
Yesterday the March 30-year Treasury bond futures advanced to a three-month high.
Today futures are steady to a little higher at the front of the curve and are lower at the long end of the curve.
According to financial futures markets currently, there is a 73.0% probability that the Federal Open Market Committee will increase its fed funds rate by 25 basis points at the February 1 policy meeting and a 27.0% probability that the rate will be hiked by 50 basis points.
The fundamental and technical aspects are supportive for futures.
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