Jobless Claims Higher Than Projected

STOCK INDEX FUTURES

Stock index futures are higher.

Analysts are having a difficult time explaining why stock index futures have recently hit historical highs despite recent talk of a potentially less dovish Federal Reserve in 2024.

Gross domestic product in the fourth quarter increased 3.3% when up 2.0% was expected and personal consumption expenditures were up 2.8% when a gain of 2.5% was anticipated.

Durable goods orders in December were unchanged when a 1.0% increase was estimated.

Jobless claims in the week ended January 20 were 214,000 when 200,000 were predicted.

The December Chicago Federal Reserve national activity index was negative 0.15, which compares to the revised 0.01 in the previous month.

The 9:00 central time December new home sales report is expected to show 650,000.

The fundamentals and technicals remain supportive to stock index futures.

CURRENCY FUTURES

The U.S. dollar index firmed today and remains in a 7-day congestion pattern.

The next major support for the March U.S. dollar index is the breakaway gap made on January 16 at the 102.410 – 102.495 area. Interest rate differentials in January have become more supportive to the greenback.

The European Central Bank kept interest rates unchanged at record high levels at its first meeting of 2024. The ECB pledged to maintain interest rates at restrictive levels for as long as necessary to bring inflation back to its 2.0% target. The main refinancing operations rate remained at a 22-year high of 4.5% for a third consecutive meeting, while the deposit facility rate held unchanged at an all-time record 4.0%.

The Ifo Business Climate indicator for Germany declined for a second consecutive month to 85.2 in January 2024, which is down from a revised 86.3 in the previous month and falling under the market consensus of 86.7.

The Confederation of British Industry’s monthly retail sales balance plunged 18 points to -50 in January 2024, indicating retail sales volumes declined at the fastest rate since January 2021.

INTEREST RATE MARKET FUTURES

There are no Federal Reserve speakers, which is in keeping with the Federal Reserve’s “blackout  period” in advance of a Federal Open Market Committee meeting.

The Treasury will auction seven-year notes.

Financial futures markets are predicting there is a 3.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the January 31 policy meeting, and there is a 97.0% probability that the Fed will keep rates unchanged.

 

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