Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher in a risk-on move.
Personal income in November increased 0.4% when up 0.5% was expected.
Jobless claims in the week ended December 18 were 205,000, as anticipated.
Durable goods orders in November increased 2.5% when a gain of 1.5% was estimated.
The 9:00 central time November new home sales report is predicted to show 770,000 and the 9:00 December consumer sentiment index is expected to be 70.4.
The seasonal tendency for the S&P 500 futures is to be higher on a month-to-month basis in the month of December.
The dominant short-term influence continues to be the variant news.
However, the long-term fundamentals remain bullish on balance for stock index futures.
CURRENCY FUTURES
The U.S. dollar index and the euro currency continue to trade in broad trading ranges.
The British pound advanced above $1.34, the highest in almost five weeks, as traders turned more positive about the U.K. economic outlook.
INTEREST RATE MARKET FUTURES
The 30-year Treasury bond futures are holding up well despite the ramped-up Federal Reserve’s tapering schedule and the Fed’s plans to hike its fed funds rate in 2022.
The Federal Reserve said at its December 15 meeting it would speed up its tapering of bond purchases, putting it on track to conclude the program in March 2022 and paving the way for three interest rate hikes by the end of 2022.
Most analysts expect a first fed funds rate hike in May.
If the U.S. economy weakens it may be difficult for the Fed to justify an accelerated taper of its asset-purchase program, especially now that other major central banks are adding more accommodation or delaying the partial removal of easy monetary policies.
Tighter credit policies from the Fed appear to be fully reflected in current futures pricing.
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