PPI Higher Than Anticipated


Stock index futures were higher in the overnight trade but came under pressure when the November producer price index report was released. The producer price index increased 0.3% when a gain of 0.2% was expected. On an annualized basis the producer price index increased 7.4% when up 7.2% was anticipated.

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The 9:00 central time December consumer sentiment index is predicted to be 56.8 and the 9:00 wholesale inventories are estimated to be up 0.8%.

In spite of lower prices today, the fundamentals and technicals for stock index futures remain supportive.


The U.S. dollar index was lower in the overnight trade but advanced when the larger than predicted increase in the producer price index was released.

Interest rate differential expectations are long-term bearish for the greenback, and lower prices are likely.


The 30-year Treasury bond futures were higher in the overnight trade but are lower now in response to the producer price index report.

There are no Federal Reserve speakers today with the Fed’s self-imposed blackout period in force ahead of next week’s Federal Open Market Committee meeting.

Recently the spread between 2-year Treasury and 10-year Treasury note yields inverted by over 80 basis points, the most in 41 years, which has recessionary implications.

According to financial futures markets currently, there is a 75.0% probability that the Federal Open Market Committee will increase its fed funds rate by 50 basis points at the December 14  policy meeting and a 25.0% probability that the rate will be hiked by 75 basis points.

The fundamental and technical aspects have turned more supportive for futures.


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