US Dollar Slightly Higher
STOCK INDEX FUTURES
U.S. stock index futures are lower but remain near all-time highs. Traders continue to look for indications of progress on an economic relief bill.
The November National Federation of Independent Business small business optimism index was 101.4 when 102.5 was expected.
Overall, stock index futures are performing well for the news suggesting higher prices are likely longer term.
The U.S. dollar is a little higher.
However, longer term the U.S. dollar is likely to trend lower due to expectations for an extended period of low interest rates and concerns over rising U.S. levels of debt.
The euro currency is slightly higher. German economic expectations increased sharply in December according to the ZEW economic research institute. The measure of economic expectations increased to 55.0 in December from 39.0 in November and beat economists’ forecast of 36.0.
The assessment of the current economic situation in Germany slightly worsened, falling to minus 66.5 in December from minus 64.3 in November. The reading compares to the economists’ estimate of minus 67.0.
The euro zone economy grew 12.5% in the three months to September 2020, recovering from a record decline of 11.7% in the previous period. It was the steepest rate of expansion since 1995.
Some analysts believe the euro will be underpinned by favorable euro zone trade numbers and that this bullish influence will outweigh the anticipated additional easing measures when the European Central Bank meets this Thursday.
U.K. Prime Minister Boris Johnson plans to travel to Brussels to meet with European Commission President Ursula von der Leyen, as negotiations continue.
Japan’s Prime Minister Yoshihide Suga said Japan will compile a new economic stimulus package worth $708 billion, following a combined $2.2 trillion from two previous packages in an effort to help push “new economic growth.”
INTEREST RATE MARKET FUTURES
Futures are mixed to higher.
There are no major Federal Reserve speakers scheduled for today.
The Treasury will auction three-year notes today.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will keep its fed funds rate unchanged at zero to 25 basis points at the December 16 policy meeting.
In the months ahead the yield curve is likely to steepen, which should put pressure on futures at the long end of the curve, especially the 30-year Treasury bond futures, while futures at the short end of the curve are likely to hold steady.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.