Written Commentary
CURRENCY FUTURES
The U.S. dollar is lower today. On Friday the greenback fell to its lowest level since August 4, 2023.
Lower prices are likely for the U.S. dollar longer term.
Japan’s unemployment rate was 2.5% in November 2023, which was unchanged from the previous month and matched market forecasts.
Bank of Japan Governor Kazuo Ueda said on Monday the probability of achieving the 2.0% inflation target was “gradually rising,” increasing hopes of a potential policy normalization.
STOCK INDEX FUTURES
Stock index futures are higher and are performing better than the news would suggest.
The November Chicago Federal Reserve national activity index was 0.03 when 0.20 was expected.
The 9:30 central time December Dallas Federal Reserve manufacturing survey is anticipated to show -20.5.
The fundamentals and technicals remain supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are mixed but have recently been supported by the belief that the Federal Reserve will be cutting interest rates next year.
The Treasury will auction two-year notes today.
Financial futures markets are predicting there is a 15% probability that the Federal Open Market Committee will reduce its fed funds rate by 25 points at its January 31, 2024 policy meeting and an 85% probability of no change.
However, financial futures markets are currently suggesting the Federal Open Market Committee will reduce its fed funds rate by 25 basis points at its March 20, 2024 policy meeting.
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