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S&P 500 Advances Above Downtrend Line

STOCK INDEX FUTURES

U.S. stock index futures are higher with S&P 500 futures advancing above a downtrend line.

Nonfarm labor productivity in the U.S. fell an annualized 5.2% in the third quarter of 2021, which is more than a preliminary estimate of a 5.0% decline and more than market expectations of a 4.9% drop. This was the largest decline in quarterly productivity since the second quarter of 1960, as output increased 1.8% and hours worked increased 7.4%.

The 2:00 central time October consumer credit report is expected to show a $30.0 billion  increase.

The long-term fundamentals remain bullish on balance for stock index futures.

CURRENCY FUTURES

The ZEW Indicator of Economic Sentiment for Germany edged down to 29.9 in December from 31.7 in the previous month, but was above market expectations of 25.1.

The Reserve Bank of Australia kept its cash rate unchanged at a record low of 0.1% for the 13th month at its policy meeting today, as expected. The board reiterated that it will not increase the cash rate until Australia’s actual inflation is sustainably within the 2.0% to 3.0% target range. The committee said that it will continue to buy government bonds at a pace of A$4 billion a week until February, when it will review the operation.

INTEREST RATE MARKET FUTURES

The yield curve has flattened recently, with yields on shorter-dated issues rising and yields on longer-dated issues ticking down, which is an indication of a slowing economy.

Federal Reserve Chair Jerome Powell recently indicated the Fed will discuss speeding up the tapering of its bond-buying program at the central bank’s next meeting on December 15.

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.

The Treasury will auction three-year notes today.

Most analysts expect a first fed funds rate hike in June or July.

The longer-term trend for the 30-year Treasury bond futures is higher.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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