STOCK INDEX FUTURES   

Prices are higher due to a better tone to the financial situation in the euro zone, along with better economic data from China and Germany. 

There are reports that progress had been made in debt swap negotiations with the private holders of Greek sovereign debt. The holders of Greek debt may get a sweetener, as part of the deal to accept a lower yield on new debt, in the event that there was an improvement in the Greek economy.

Equity futures were also supported be news that China's purchasing managers' index for January increased to 50.5 from 50 .3 in December.

The Mortgage Bankers Association reported mortgage applications in the week ended January 27 were down 2.9%, which compares to the 5% decline in the previous week.

The Automatic Data Processing employment change report for January was 170,000, which compares to the estimate of a 182,000 increase.

The 9:00 central time December construction spending report is expected to show a .5% increase.

The 9:00 January Institute for Supply Management manufacturing index is expected to be 54.5 and the prices paid portion of the report is anticipated to be 50.

Vehicle sales for January are scheduled to be released later today. Domestic vehicle sales are expected to total 10.5 million and total vehicle sales are anticipated to be 13.5 million.

According to a Bloomberg report, approximately 67% of the 198 corporations in the S&P 500 that have reported earnings since January 9 have beat analysts' estimates.

CURRENCY FUTURES  

A better tone to the euro zone financial situation helped the euro to advance.  In addition to reported progress made in talks to restructure Greek sovereign debt, the euro was supported by a decline in Italian and Spanish debt yields.

The British pound is higher after a report showed manufacturing in the U.K. unexpectedly improved in January, as orders increased for the first time in six months.

The Japanese yen hit a three-month high against the U.S. dollar, which prompted speculation that the Bank of Japan could soon intervene by selling yen. Yesterday, Japan's finance minister threatened to take "decisive" measures to limit the strength of the yen.

In spite of the strength in the euro today, 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  

Prices are lower due to the better tone to the financial situation in the euro area, along with improving Chinese economic data.

In the longer term, Treasury futures are likely to be supported by a variety of flight to quality influences.

In addition to the bullish influence of continuing tensions in the Middle East, there are 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 marketin information, I can be reached at 312.242.7911 or via e-mail at alan.bush@archerfinancials.com.

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