China May Buy Less U.S. Treasuries

by Archer Financial Services | Jan 10, 2018

By Alan Bush | Senior Financial Economist at ADMIS     


Stock index futures fell following reports that China is considering slowing or halting purchases of U.S. government debt. This is short term bearish equity index futures because it pushes up interest rates.

The January Atlanta Federal Reserve Business Inflation Expectations survey will be released at 9:00 central time. The December figure was 2.1%.

Also at 9:00 will be the release of the December wholesale trade inventories report, which is anticipated to show a rise of .7%.

The main trend for stock index futures is higher. 



The U.S. dollar fell after a report that China was ready to slow or stop its U.S. Treasury purchases.

The euro currency advanced on news that German machine and tool orders increased 14% in real terms on the year in November.

Longer term there is underlying support for the euro on the belief that the European Central Bank may withdraw from their stimulus programs sooner rather than later.

The British pound is higher after a report showed U.K. manufacturing output expanded at its fastest rate since early 2008 after recording its seventh consecutive month of growth in November.

The Australian dollar is higher due to firming crude oil prices.

However, the Canadian dollar is lower on news that building permits in Canada fell 7.7% in November from October.  

In the longer term, the Canadian dollar and the Australian dollar, the “commodity currencies,” are likely to trend higher against the U.S. dollar.



Futures are mostly lower, especially at the long end of the curve due to a report that Chinese officials have recommended slowing or halting purchases of U.S. government bonds.

Federal Reserve speakers today are Dallas Federal Reserve Bank President Robert Kaplan at 9:15 and St. Louis Federal Reserve Bank President James Bullard at 12:30.

The Treasury will auction 10 year notes today.

The probability of a fed funds rate hike at the FOMC’s March 21 policy meeting is 68%, which is unchanged from yesterday. 

In the longer term outlook futures are likely to work lower, as it is likely that commodity and wage inflation will accelerate this year and be above the consensus estimates.

This will adversely impact the 30 year Treasury bond futures the most, since the long end of the curve is the most susceptible to the inflation influence.




March 18   S&P 500

Support    2735.00       Resistance    2755.00


March 18   U.S. Dollar Index

Support    91.590         Resistance    92.330


March 18    Euro Currency

Support   1.19590        Resistance    1.20750


March 18    Japanese Yen

Support    .88890         Resistance    .90230


March 18    Canadian Dollar

Support    .80050         Resistance    .80660


March 18   Australian Dollar

Support    .7803           Resistance    .7877


March 18   Thirty Year Treasury Bonds   

Support    148^26         Resistance    150^8


February 18   Gold

Support    1307.0          Resistance    1330.0


March 18   Copper

Support    3.2150          Resistance    3.2800


February  18   Crude Oil

Support    63.03            Resistance    63.88 


 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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