Written Commentary
STOCK INDEX FUTURES
Stock index futures advanced yesterday due to Federal Reserve Chair Powell’s dovish on balance comments following the Federal Open Market Committee’s policy meeting.
S&P 500 futures advanced to a five-month high today.
According to Challenger, Gray & Christmas, Inc., U.S. based employers announced there were 102,943 job cuts in January of 2023, which is the most since September of 2020, and compared to 43,651 in December. It is the highest January total since 2009.
Jobless claims in the week ended January 28 were 183,000 when 193,000 were expected.
Nonfarm productivity in the fourth quarter increased 3.0% when up 2.4% was anticipated and unit labor costs were up 1.1% when a gain of 1.5% was predicted.
The 9:00 central time December factory orders report is expected to show a 2.2% increase.
Stock index futures are likely to remain firm this week.
CURRENCY FUTURES
The U.S. dollar index is lower after Fed Chair Powell’s dovish on balance comments yesterday.
The European Central Bank increased its deposit rate by 50 basis points to 2.50% as expected and indicated an additional rate hike is likely in March.
German exports fell more than expected in December, falling by 6.3% from the previous month, and compared to expectations of a 3.3% drop. Imports fell 6.1% compared to forecasts for a drop of just 0.8%.
The British pound declined after the Bank of England dropped its pledge to keep increasing rates “forcefully.” The BoE hiked its main interest rate by 50 basis points as expected to 4.0% from 3.5% to its highest level since 2008.
INTEREST RATE MARKET FUTURES
Futures advanced when Fed Chair Jerome Powell said the “disinflationary process has started.”
My analysis suggests the Federal Open Market Committee will increase the fed funds rate by another 25 basis points at its March meeting.
The long term outlook for futures is higher.
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