Stock Index Futures at Record Highs

STOCK INDEX FUTURES

Stock index futures are higher as the post-election gains continue.

New record highs were registered today for S&P 500, NASDAQ, Dow Jones and Russell 2000 futures.

No major economic reports are scheduled for today.

The fundamentals and technicals continue to remain supportive to stock index futures.

CURRENCY FUTURES

The U.S. dollar index is higher and is trading at its highest level since the first week in July.

The fundamentals and technicals remain supportive to the U.S. dollar.

The December euro currency declined to near the 1.0650 level, which is its lowest level since late April, as traders closely monitor economic, monetary developments and the political situation in Germany.

There are expectations that the European Central Bank will lower its key interest rates more aggressively than the Federal Reserve, putting pressure on the common currency.

The ECB is expected to implement a 25 basis point interest rate cut at December 12 policy meeting, with markets pricing in a reduction to 2.0% by June 2025.

German commercial property prices declined 4.7% in the third quarter from a year earlier but showed signs of stabilization.

The Japanese yen is lower and continues to underperform after the Bank of Japan indicated a lack of urgency to hike interest rates.

INTEREST RATE MARKET FUTURES

Federal Reserve Bank of Minneapolis President Neel Kashkari indicated the Federal Open Market Committee could pause at the December meeting. He said the Fed needs to see more evidence before deciding on another interest rate cut.

Currently there is a 69% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its December 18 policy meeting, and there is a 31% chance that the FOMC will keep its key rate unchanged at 4.50% to 4.75%.

In a reversal from early last week, the fundamentals have turned neutral to slightly bearish for futures at the front end of the yield curve, and are neutral for futures at the long end of the yield curve.

It is likely that the FOMC will be slower to add accommodation in 2025 than the consensus view.

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