Written Commentary
CURRENCY FUTURES
The U.S. dollar index was lower in the overnight trade and continued to decline when the weaker than estimated U.S. durable goods report was released.
The euro zone’s economic sentiment indicator, which is an aggregate measure of business and consumer confidence, decreased slightly to 99.7 in February from a revised 99.8 in January, according to data from the European Commission. This reading misses the 100.9 consensus forecast from economists.
Loans to households in the euro area increased 3.6% year-on-year in January of 2023, slowing for a fifth consecutive month to mark the smallest gain since March of 2021. Lending for house purposes was up 3.9%, which is well below 4.4% in December and credit for consumer purposes also slowed. In addition, credit to companies increased 6.1%, which is less than the 6.3% increase in the previous month.
Traders expect the European Central Bank will raise key rates by another 50 basis points at its March 16 policy meeting.
STOCK INDEX FUTURES
Stock index futures were higher in the overnight trade and continued to advance when the U.S. durable goods orders report was released.
Durable goods orders in January declined 4.5% when down 4.0% was expected.
The 9:00 central time January pending home sales report is anticipated to show a 1.0% increase.
The 9:30 February Dallas Federal Reserve manufacturing index is predicted to be down 9.0%.
Analysts’ commentary on stock index futures has become overwhelmingly bearish.
INTEREST RATE MARKET FUTURES
Futures were lower in the overnight trade but where able to trade higher when the weaker than expected durable goods report was released.
Federal Reserve Governor Philip Jefferson will speak at 9:30.
Most likely the Federal Open Market Committee will increase its fed funds rate by 25 basis points at its March 22 policy meeting, and there is more talk of another 25 basis point hike at the May meeting.
There has been lots of hawkish Fed speak lately, while the severely inverted yield curve is becoming even more inverted but continues to get very little attention.
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