STOCK INDEX FUTURES
There were mild gains in the overnight trade due to reports that Greece made progress in their talks with private bondholders on a sovereign debt swap deal.
Prices fell later after the weaker than expected fourth gross domestic product report was released.
The fourth quarter gross domestic product increased 2.8%, which compares to the median estimate of a 3% increase. Although the increase in gross domestic product was less than estimated, it was the fastest rate of growth since the second quarter of 2010.
Personal consumption was up 2%, when a 2.4% advance was anticipated.
The 8:55 January University of Michigan confidence index is expected to be 74.
The bullish impact of this week's Federal Open Market Committee's dovish interest rate outlook was partially offset by their relatively downbeat assessment of the economic outlook.
CURRENCY FUTURES
The euro currency firmed due to reports that progress was made in talks with private bondholders on a Greek sovereign debt swap deal. The European Union Economic and Monetary Affairs Commissioner said Greece was close to reaching an accord. Greece is obligated to repay 14.5 billion euros of bonds in March.
The euro was also supported by a well-received Italian six-month bill auction. However, gains were limited by news that yields on Portuguese debt reached new highs and on a report that the jobless rate in Spain increased.
A meeting of European Union leaders will be held in Brussels on January 30.
In spite of recent strength in the euro, our analysis indicates the euro zone economy will enter into recession and the value of the euro will decline against the U.S. dollar.
INTEREST RATE MARKET FUTURES
Prices are off their lows after the weaker than expected U.S. fourth quarter gross domestic product report was released.
At 9:00, William Dudley, President of the Federal Reserve Bank of New York, will speak on the regional economy in New York.
This week, the Treasury auctioned $99 billion of notes. Yesterday's final auction of the series, the $29 billion of seven-year notes, produced a record low yield.
In the longer term, Treasury futures are likely to be supported by a variety of flight to quality influences, including evidence that the global economy is slowing.
For more market information, I can be reached at 312.242.7911 or via e-mail at alan.bush@archerfinancials.com.
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