STOCK INDEX FUTURES
Stock index futures are higher as markets attempt to rebound from Monday’s sharp sell-off. The downturn was driven by concerns over the U.S.’s AI dominance due to increasing competition.
Durable goods orders in December declined 2.2% when an increase of 0.8% was expected.
The 9:00 central time January consumer confidence index is anticipated to be 106.3, and the 9:00 January Richmond Federal Reserve manufacturing index is estimated to be -8.
Today is the first day of a two-day Federal Open Market Committee meeting. A statement will be released tomorrow at 1:00 central time, and Federal Reserve Chair Jerome Powell will hold a press conference at 1:30.
In the longer term outlook, the bullish influence of prospects of a strengthening U.S. economy will more than offset the bearish influence of the Federal Reserve’s reluctance to ease credit conditions.
CURRENCY FUTURES
The U.S. dollar index is higher on Tuesday as President Donald Trump ramped up his tariff threats. President Trump announced plans to impose tariffs on imported computer chips, pharmaceuticals, and steel, in an attempt to encourage domestic production of these goods.
There was only temporary pressure on the greenback when the bearish U.S. durable goods report was released.
On the March U.S. dollar index daily chart, prices on Friday declined below a double bottom level at 107.545. There was only limited follow-through to the downside on Monday. However, prices are higher today and are above the double bottom breakout level, which suggests Friday’s chart sell signal could be a false signal.
Germany’s BDI industry association on Tuesday said Germany is in a deep economic crisis and is forecasting a 0.1% contraction in gross domestic product in 2025.
The European Central Bank is widely expected to implement another 25 basis point reduction to its key deposit rate on Thursday following four cuts in 2024.
Swiss National Bank Chairman Martin Schlegel spoke in an interview on Monday, and said that while the Bank does not favor negative interest rates, it cannot completely rule them out.
The Bank of Canada is expected to cut interest rates by 25 basis points to 3.0% on Wednesday.
INTEREST RATE MARKET FUTURES
Futures are lower across the board.
The U.S. Treasury will auction seven-year notes.
There is a 99% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at 4.25% – 4.50% at its January 29 policy meeting, and there is a 1% chance of a 25 basis point reduction.
Financial futures markets suggest the FOMC will lower its fed funds rate by 25 basis points in May or June.
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