Written Commentary
STOCK INDEX FUTURES
Investors await the next steps on a new fiscal stimulus package. The House is on track to pass a $1.9 trillion economic support package by the end of this week and the Senate is expected to vote next week.
Federal Reserve Chairman Jerome Powell will deliver the central bank’s semiannual report on the economy and monetary policy to Congress during two days of testimony beginning Tuesday. Mr. Powell is again likely to signal that easy money policies will remain for the foreseeable future. In addition, he will likely face questions on the size of the next fiscal stimulus package, interest rates, bond purchases and the potential for inflation to increase.
The January Chicago Federal Reserve national activity index was 0.66 when 0.44 was expected.
The 9:00 central time January leading indicators report is expected to be up 0.3% and the 9:30 February Dallas Federal Reserve manufacturing survey is anticipated to be 6.7.
CURRENCY FUTURES
The euro currency is higher after a report showed German business sentiment improved in February, beating expectations, according to the Ifo Institute. The Ifo business-climate index came in at 92.4 in February compared to an upwardly revised 90.3 in January. Economists had forecast the index at 90.1.
In addition, companies have become less pessimistic about the coming six months. The expectations component improved to 94.2 from a revised 91.5 in January.
Also, companies assessed their current business situation more favorably than in the previous month. This component went up to 90.6 in February from 89.2 in January.
The Ifo index is based on a poll of approximately 9,000 companies in manufacturing, services, trade and construction.
The British Pound rose to its highest level against the U.S. dollar in nearly three years.
The Bank of England’s recent comments reduced investor fears that it would enact subzero interest rates to support the economy.
INTEREST RATE MARKET FUTURES
Futures are mixed today. However, increased inflationary expectations have recently pressured futures at the long end of the curve.
There are no Federal Reserve speakers scheduled for today.
In light of the Federal Reserve pledging not to hike its fed funds rate until possibly 2023, futures at the short end of the curve are likely to hold steady.
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