Written Commentary
CURRENCY FUTURES
The U.S. dollar index weakened to its lowest level since September 1 as recent economic reports reinforced beliefs that the Federal Reserve has reached the end of its tightening cycle.
Severe technical damage was done to the greenback earlier this month when major trendlines were penetrated on the downside.
Germany’s economy shrank slightly in the third quarter compared with the previous three months. The figure confirmed an initial estimate, published in late October, which showed Europe’s largest economy contract by 0.1%.
Business sentiment in Germany improved for the third month in a row in November, according to a survey of companies. The Ifo business-climate index increased slightly to 87.3 in November from a revised 86.9 in October, according to data from the Ifo Institute. However, the reading was a little lower than expectations of 87.5.
Japanese core consumer inflation grew slightly but below expectations in October.
STOCK INDEX FUTURES
Stock index futures are mixed.
The 8:45 central time November PMI manufacturing index is expected to be 49.9.
The technical aspects have become much more supportive to stock index futures.
INTEREST RATE MARKET FUTURES
Futures are mostly lower, especially at the long end of the curve.
Despite recent hawkish comments from Federal Reserve officials, there is a growing consensus that the Federal Reserve has concluded its rate hiking cycle.
Financial futures markets are predicting there is a 95% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at its December 13 policy meeting.
Futures at the front end of the yield curve are likely to perform better than futures at the long end of the curve, especially the 30-year bonds.
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