Written Commentary
STOCK INDEX FUTURES
Stock index futures are higher.
November durable goods orders declined 2.1% when down 0.8% was expected
Personal income in November increased 0.4% when up 0.3% was anticipated and personal consumption expenditures advanced 0.1% when an increase of 0.2% was predicted.
The 9:00 central time November new home sales report is estimated to be 600,000, and the 9:00 December consumer sentiment index is expected to be 59.1.
There is a seasonal tendency for the last five days of a calendar year and the first two trading days of the new year for stock index futures to trade higher. Today is the beginning of that period. If this seasonal works it would mark the seventh one in a row.
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 annual inflation rate in Japan increased to 3.8% in November 2022 from 3.7% a month earlier, pointing to the highest reading since January 1991.
The Bank of Japan may surprise markets again by tightening monetary policy as soon as next month.
INTEREST RATE MARKET FUTURES
According to financial futures markets currently, there is a 66.0% 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 34.0% probability that the rate will be hiked by 50 basis points.
The fundamental and technical aspects are supportive for futures.
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