Written Commentary
STOCK INDEX FUTURES
The National Federation of Independent Business small business optimism index in the U.S. moved up to 90.3 in January of 2023 from a six-month low of 89.9 in December but is still below its 49-year average of 98.
The January consumer price index increased 0.5% when up 0.4% was expected.
January retail sales will be released on Wednesday, and on Thursday we will get the January producer price index.
The technical aspects for stock index futures remain supportive.
CURRENCY FUTURES
The U.S. dollar index is lower despite the mildly bullish consumer price index report.
Interest rate differentials are neutral for the U.S. dollar index, and breakouts for the greenback are likely to fail in both directions.
Annual wholesale price inflation in Germany eased to a 20-month low of 10.6% in January of 2023 from 12.8% in December 2022.
The euro zone economy expanded marginally in the fourth quarter of 2022. Gross domestic product grew 0.1% from October to December compared with the previous quarter.
A European Central Bank official said the ECB could increase interest rates above 3.5% and likely won’t cut them this year as the bank moves to bring inflation back to its target.
INTEREST RATE MARKET FUTURES
Yesterday’s release of the Federal Reserve Bank of New York’s survey of consumer expectations showed the median expected growth in household income declined 1.3 percentage point to 3.3% in the January survey, which is the largest monthly drop in data going back almost ten years.
Federal Reserve speakers today are Lorrie Logan at 10:00, Patrick Harker at 12:00 and John Williams at 1:05.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March 22 policy meeting.
Futures are higher despite the mildly bearish consumer price index report.
The long term outlook for futures is higher.
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