Written Commentary
CURRENCY FUTURES
The U.S. dollar index declined yesterday after Powell’s speech and there is follow-through weakness today.
Interest rate differentials are neutral for the U.S. dollar index and breakouts for the greenback are likely to fail in both directions.
Bank lending in Japan in January increased 3.5% on an annualized basis.
STOCK INDEX FUTURES
Stock index futures rallied yesterday after Powell’s speech was out of the way. However, prices are lower today.
Yesterday’s December consumer credit report showed a reluctance on the part of consumers to spend. The report showed an increase of only $11.6 billion when up $25.0 billion was expected.
The 9:00 central time December wholesale inventories report is anticipated to show a 0.1% increase.
The technical aspects for stock index futures remain supportive.
INTEREST RATE MARKET FUTURES
Yesterday Fed Chair Jerome Powell reiterated that the disinflationary process has begun, and the Fed has the tools to bring down inflation to its 2.0% target.
The Treasury will auction 10-year notes today.
Federal Reserve speakers today are Raphael Bostic at 9:00, Neel Kashkari at 11:30 and Christopher Waller at 12:45.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March meeting.
The long term outlook for futures is higher.
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