Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher ahead of a heavy slate of corporate earnings reports.
The 9:00 central time January housing market index is expected to be 86.
CURRENCY FUTURES
Interest rate differential expectations suggest lower prices for the U.S. dollar and higher prices for the euro currency longer term.
The British pound appreciated after economic data showed the U.K. inflation rate increased more than expected in December. The inflation rate edged up to 0.6% in December from 0.3% in November and was slightly above market forecasts of 0.5%.
The Bank of Japan began a two-day policy meeting today. It is widely anticipated that monetary easing will be maintained. Tomorrow the BOJ will announce its quarterly economic outlook report, along with its assessment on the current state of the economy.
The Australian dollar is higher despite news that consumer sentiment in Australia fell 4.5% on a month-to-month basis in January.
INTEREST RATE MARKET FUTURES
The Treasury will auction 20-year bonds.
In light of a likely unchanged fed funds target rate from the Fed at its January 27 policy meeting and its pledge not to hike its fed funds rate until possibly 2023, futures at the short end of the curve are likely to hold steady.
However, the fundamentals at the long end of the curve have changed. Since last August, the fundamentals on balance have been bearish for the 30-year Treasury bond futures and new lows for the move were made last week. The fundamentals have now turned mixed.
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