STOCK INDEX FUTURES   

Prices are higher due to reports that Greek politicians reached an austerity deal.

Initial jobless claims in the week ended February 4, were down 15,000, to 358,000, when 370,000 were anticipated and continuing claims in the week ended January 28 were 3.515 million, which compares to the estimate of 3.5 million.

The 9:00 central time December wholesale inventories report is expected to show a 4% increase.

Strength in stock index futures persists in spite of growing concerns that growth in the global economy is slowing.

CURRENCY FUTURES  

The euro is higher on news that Greek politicians reached an austerity deal.

The new deadline for a debt swap accord with private holders of Greek sovereign debt is February 13. This is the minimum amount of time for all the necessary procedures to be finalized before March 20 when Greece must make a 14.5 billion euro bond payment.

The European Central Bank left their benchmark interest rate unchanged at a record low of 1%, as expected. However, there is talk that the ECB could reduce their key interest rate at next month's policy meeting.

Gains in the euro were limited by talk that Italy's gross domestic product declined more in the fourth quarter than in the third quarter. In addition, Spanish bond yields increased in the overnight trade due to the announcement of an unscheduled debt offering.

The Bank of England decided to increase their target for bond purchases by 50 billion pounds to 325 billion pounds in an effort to further stimulate the U.K. economy.

The Japanese yen is lower after machinery orders in Japan declined more than anticipated.  The Bank of Japan makes almost daily threats to intervene against the yen.

Our analysis indicates the euro zone economy will enter into recession and the value of the euro will decline against the U.S. dollar in the long term.  

INTEREST RATE MARKET FUTURES  

The Treasury is auctioning $72 billion of debt this week. Today the Treasury will sell $16 billion of 30-year bonds.

In the longer term, Treasury futures are going to be supported by a variety of flight to quality influences, including the continuing tensions in the Middle East, increasing prospects of a recession in the euro zone, a trend toward weaker economic data from China, along with fears that the Chinese economy is headed for a hard landing.

Expect Treasury futures to trade higher from the current lower levels.

For more futures market information, I can be reached at 312.242.7911 or via e-mail at alan.bush@archerfinancials.com.

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