STOCK INDEX FUTURES   

Prices are lower due to fears that the lack of a Greek debt swap deal could result in a chaotic default that would slow growth in the euro zone.

A spokesman for the European Union said the deadline for an agreement that would allow a second financing package for Greece had already passed.

There are no major economic reports scheduled for today.

Some analysts believe last Friday's much larger than anticipated increase in nonfarm payroll numbers could be due to an annual seasonal adjustment.

CURRENCY FUTURES  

The euro is lower due to worries that Greece will not be able to reach an agreement that would allow it to receive additional bailout funds.  Negotiations with the private holders of Greek sovereign debt are continuing. Every day, for the past few weeks, we have heard that "an agreement in imminent."

To complicate the situation further, the largest public sector union and private sector union in Greece called for a 24-hour general strike tomorrow to protest planned austerity measures.

The Greek government must secure additional funds from the European Union before March 20, which is when Greece must make a 14.5 billion euro bond payment.

Pressure on the euro was limited by reports that Greek Prime Minister Papademos reached a tentative deal with party leaders that would pave the way for the approval of proposals to increase economic competitiveness, along with austerity measures.

The Japanese yen is a little lower due to daily threats from monetary officials in Japan that the Ministry of Finance will intervene against the yen.

The Australian dollar is lower after a report showed retail sales in the nation declined .1% in December from the previous month. This compares to the median estimate of a .2% advance and was the first decline in six months.

The Reserve Bank of Australia will hold their regularly scheduled policy meeting tomorrow. A survey of economists showed the RBA will probably reduce their benchmark interest rate by 25 basis points to 4% from the current level of 4.25%.

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 higher due to the unresolved Greek debt situation.

At 11:15 central time, Federal Reserve Bank of Dallas President Richard Fisher will speak on the global economic and monetary policy outlook.

In the longer term, Treasury futures are likely 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.

In spite of the FOMC's recent pledge to keep interest rates low at least until the end of 2014, the financial futures market is predicting there is a 38% chance that the FOMC will increase their fed funds target by January 2014.

Expect Treasury futures to trade higher from current levels.

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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