STOCK INDEX FUTURES
U.S. stock index futures were higher in the overnight trade and there were sharp follow-through gains despite the neutral to slightly bearish November consumer price index.
The November consumer price index was up 0.8% when an increase of 0.7% was expected. On an annualized basis the consumer price index advanced 6.8%, as predicted. This marks the fastest increase in consumer prices since June 1982 when inflation hit 7.1%.
The 9:00 central time December consumer sentiment index is anticipated to be 67.0.
Advancing on neutral to bearish news is a sign that there will be additional price gains today for stock index futures.
The long-term fundamentals remain bullish on balance for stock index futures.
CURRENCY FUTURES
The U.S. dollar index declined despite the slightly bullish U.S. consumer price index report.
Divergent monetary policies continued to pressure the Japanese yen, as hawkish signals from the Federal Reserve contrasted with the Bank of Japan’s commitment to retain easy monetary policies to achieve its 2.0% price stability target.
The BOJ is set to maintain ultra-easy policies at its scheduled meeting on December 17, but is expected to consider whether to scale-back pandemic-related emergency funding.
INTEREST RATE MARKET FUTURES
The yield curve has flattened recently, with yields on shorter-dated issues rising and yields on longer-dated issues ticking down, which is an indication of a slowing economy.
The Federal Reserve will hold a two-meeting meeting next week at which it may provide more details about how it plans to wind down its bond-buying program and when it plans to begin hiking interest rates.
Federal Reserve Chair Jerome Powell recently indicated the Fed will discuss speeding up the tapering of its bond-buying program at the central bank’s December 15 meeting.
If the U.S. economy weakens it may be difficult for the Fed to justify an accelerated taper of its asset-purchase program, especially now that other central banks are adding more accommodation or are delaying the partial removal of easy monetary policies.
The longer-term trend for the 30-year Treasury bond futures is higher.
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