Written Commentary
STOCK INDEX FUTURES
U.S. stock index futures are higher.
Jobless claims in the week ended November 13 were 268,000 when 261,000 were expected.
The November Philadelphia Federal Reserve manufacturing index was 39, which compares to the anticipated 21.4.
The 9:00 central time October leading indicators index is estimated to show a 0.8% increase.
The November Kansas City Federal Reserve manufacturing index will be released at 10:00. The index in the previous month was 31.
A strong earnings season has propelled stock index futures to fresh highs in recent weeks, offsetting investors’ concerns that inflation will remain high for longer than expected, which could force central banks to tighten credit policies sooner.
CURRENCY FUTURES
The U.S. dollar index is a little lower but remains near a 16-month high.
Interest rate differential expectations suggest the U.S. dollar will trend higher, while lower prices are likely for the euro currency.
The euro currency has been undermined recently after European Central Bank President Christine Lagarde said on Monday that tightening monetary policy to curb inflation could choke off the euro zone’s economic recovery, in an increasing contrast from hawkish comments from other central banks.
Annual inflation in the U.K. accelerated to its fastest rate in a decade, which strengthens expectations that the Bank of England will likely be the first major central bank to hike interest rates. Economists believe the BOE could act as soon as next month to increase its key interest rate.
Consumer prices in the U.K. increased 4.2% on the year in October following a 3.1% rise in September. This is the fastest rate of inflation since December 2011 and more than twice the BOE’s 2.0% target.
INTEREST RATE MARKET FUTURES
The U.S. 30-year Treasury bond futures are higher despite mostly stronger than expected economic reports.
Yesterday the Treasury auctioned $23 billion in 20-year bonds at a high yield of 2.065% amid tepid demand.
Federal Reserve speakers today John Williams at 8:30, Charles Evans at 1:00 and Mary Daly at 2:30.
Most analysts expect a first fed funds rate hike in June or July.
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