Written Commentary
STOCK INDEX FUTURES
NASDAQ futures advanced to record highs.
The October Chicago Federal Reserve National Activity Index was 0.76 when 0.90 was expected.
The 9:00 central time October existing home sales report is anticipated to show 6.2 million.
The fundamentals remain bullish on balance for stock index futures.
CURRENCY FUTURES
The U.S. dollar index advanced and is close to its highest level since July 2020. Much of the strength is linked to bullish interest rate differential expectations and flight to quality flows of funds.
The U.S. dollar strengthened mainly against the euro currency, which is near a 16-month low, as European Central Bank President Lagarde continues to push back against expectations of policy tightening in the euro zone. Recently the ECB chief said it does not make sense to tighten policy, as inflation pressures in the euro zone are expected to fade.
The British pound is not far from an 11-month low due to doubts whether the Bank of England will raise interest rates at its December 16 policy meeting. Governor Andrew Bailey on Sunday made comments indicating he is taking a more careful view on policy than in his remarks earlier about the likelihood that policy will tighten soon.
INTEREST RATE MARKET FUTURES
Bond yields increased Monday, after dropping last week when new lockdowns in Europe prompted investors to reach for safe-haven assets.
The Treasury will auction 2-year and 5-year notes today.
Money markets are currently expecting an increase in the fed funds rate in July 2022.
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