STOCK INDEX FUTURES
U.S. stock index futures are higher on the first trading day of 2022 with the S&P 500 and NASDAQ futures near record highs.
The 8:45 central time December PMI manufacturing final index is expected to be 57.8.
The 9:00 November construction spending report is anticipated to show a 0.6% increase.
Stock index futures have a tendency to gain in the start of a new year. The S&P 500 was higher in the first week of the calendar year in 11 of the last 13 years.
Higher prices are likely in the first part of 2022.
CURRENCY FUTURES
The U.S. dollar index and the euro currency remain in broad sideways patterns, and with interest rate differential expectations offering no clear advantage to either currency, the sideways trade will likely continue for the U.S. dollar and the euro currency over the near term.
The December euro zone manufacturing PMI was 58.0, as predicted.
A hawkish Bank of England will likely continue to support the British pound. The Bank of England surprised traders in December by hiking interest rates from record low levels. In addition, markets have priced in up to four Bank of England interest rate hikes in 2022.
An accommodative Bank of Japan will likely pressure the yen in the first part of this year. There is a double bottom on the daily March Japanese yen chart, which will likely be taken out.
INTEREST RATE MARKET FUTURES
The U.S. Treasury will auction $60 billion in 13-week bills and $51 billion in 26-week bills.
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 some central banks are adding more accommodation or are delaying the partial removal of easy-monetary policies.
On December 30 futures at the short end of the curve broke out above a downtrend line that started in late November.
The fundamentals for the interest rate futures at the short end of the curve are now mostly aligned on the bullish side.
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