Written Commentary
STOCK INDEX FUTURES
Stock index futures are lower in light of firming U.S. Treasury yields.
Jobless claims in the week ended December 21 were 219,000 when 223,000 were expected.
Investors are closely watching the Federal Reserve’s 2025 policy outlook, focusing on the likelihood of fewer interest rate cuts. However, this bearish influence is likely to be offset by prospects of the US economy growing faster than the consensus view.
CURRENCIES
The US dollar Index is slightly lower and remains in a five-day congestion pattern. The greenback continues to trade close to the two-year high that was touched last week, as traders continue to assess the Federal Reserve’s interest rate strategy following its hawkish projections last week.
The fundamentals and technicals remain supportive to the U.S. dollar, and higher prices are likely.
The fundamentals and technicals remain bearish for the euro currency and the British pound, and lower prices are likely.
INTEREST RATES
December US Treasury bond futures declined to the lowest level since November 2023.
The yield on the 10-year US Treasury note remained near 4.63% on Thursday, and is close to a seven-month high as markets continue to assess the extent of interest rate cuts the Federal Reserve may implement in 2025.
The U.S. Treasury will auction seven-year notes today.
Recent declines in futures, especially at the long end of the yield curve, are due to the hawkish statement from the Federal Open Market Committee meeting on December 18.
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