Any FDA Delays Has Indexes Lower

STOCK INDEX FUTURES  

The bear camp retains an edge with the potential for a very poor finish to the trading week especially if a full FDA approval of the vaccine is not seen into the late afternoon trade. In fact, with the sharp decline in US stimulus potential a bearish storm could surface and less the FDA saves sentiment today.

CURRENCY FUTURES

While the press has suggested the dollar has broken its weekly downtrend pattern with a likely positive result this week, technical considerations are not foremost in our opinion. Certainly, the lack of a stimulus package, combined with residual uncertainty from US claims data yesterday, provides cushion to the dollar, but the lack of a distinct flight to quality bullish reaction to the data yesterday, suggests the bull camp is not heavily attended. We see initial resistance at 91.13 holding, unless today’s US producer price readings are soft enough to signal slowing of the US economy. Modest initial gains in the Dollar but US equities are likely to dictate action today.

INTEREST RATE MARKET FUTURES

The bias is up in Bonds and notes and the upward track could extend if Producer price readings are in any way deflationary. However, we would suggest equity markets will have a very noted impact on Treasuries today with weakness early in the session likely to add to the initial upward track later one. On the other hand, an afternoon authorization of the vaccine could result in long profit taking from what might become a low to high rally this week of more than 3 points. From a longer-term perspective, for those expecting a slow turn away from pandemic fears toward optimism into the New Year, we suggest selling a return to a longer-term downtrend channel resistance line which is seen today at 175-21 in December Bonds. Down trend channel resistance in March Notes was already taken out early today at 138-01, and that level is now seen as a critical pivot point later today.