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Is the Bad News Now the Good News Again?

by Archer Financial Services | Jul 14, 2017
By Alan Bush | Senior Financial Economist at ADMIS     
 

STOCK INDEX FUTURES

Stock index futures are holding up well in spite of a weak retail sales report as spending at U.S. retailers declined in June for the second consecutive month. Today’s report was the first back-to-back sales drop since July and August of 2016.

Retail sales decreased a seasonally adjusted .2% in June from the prior month. Economists expected a .1% increase. Also, excluding autos, sales were down 0.2% last month when economists had predicted .2% gain.   

The June consumer price index was unchanged from the prior month, which compares to the estimate of a .1% increase.  

So once again it appears that we are in a situation where the bad news is the good news in that weak economic data will delay a fed funds rate hike.

The main trend for stock index futures is higher. 

 

CURRENCY FUTURES

The U.S. dollar fell to a 10 month low after weaker than expected U.S. retail sales and consumer price index reports. Interest rate differentials remain unfavorable to the greenback.

Longer term it appears that lower prices are likely for the U.S. dollar.

Most foreign currencies advanced against the greenback as a result of the weak U.S. economic data. The euro currency remains near 14 month highs.

Speculation remains that the European Central Bank could announce plans to wind down its quantitative easing program at its September 7 policy meeting.

The main trend for the euro currency is higher.

The Canadian dollar and the Australian dollar were also supported by advancing crude oil prices.

 

INTEREST RATE MARKET FUTURES

Futures quickly advanced when the weak retail sales and inflation reports were released.

The probability that the Federal Open Market Committee will increase its fed funds rate at the December 13 meeting is 48%, which compares to 57% yesterday.

The long term fundamentals for futures are mixed.

 

SUPPORT AND RESISTANCE

September 17   S&P 500

Support    2439.00       Resistance    2454.00

 

September 17   U.S. Dollar Index

Support    94.930         Resistance    95.660

 

September 17    Euro Currency

Support    1.14230       Resistance    1.15260

 

September 17    Japanese Yen

Support    .88220         Resistance    .89440

 

September 17    Canadian Dollar

Support    .78440         Resistance    .78960

 

September 17   Australian Dollar

Support    .7711           Resistance    .7838

 

September 17   Thirty Year Treasury Bonds

Support    152^0          Resistance    153^20

 

August 17   Gold

Support    1214.0         Resistance    1235.0

 

September 17   Copper

Support    2.6600         Resistance    2.6950

 

August 17   Crude Oil

Support    45.78           Resistance    46.88

 

 

For more information about these markets, please contact Alan at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

 

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff.  Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.

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