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Treasury Bond Futures Lower in Spite of Bullish News

by Archer Financial Services | Jan 11, 2018

By Alan Bush | Senior Financial Economist at ADMIS     

STOCK INDEX FUTURES

Stock index futures fell yesterday following reports that China is considering slowing or halting purchases of U.S. government debt.

However, today price are higher after China's foreign exchange regulator said yesterday’s report could be based on erroneous information, adding that the country was diversifying its foreign exchange reserves in an effort to safeguard their value.    

The producer price index fell .1% in December from a month earlier, which marked the first decline since August 2016. The producer price index, which excludes volatile food and energy, also fell .1%.

Economists had expected both overall and core prices to increase .2% in December.

Initial jobless claims increased 11,000 to a seasonally adjusted 261,000 in the week ended January 6. Economists expected 245,000 new claims last week.

The main trend for stock index futures is higher. 

 

CURRENCY FUTURES

The U.S. dollar is lower even though China's regulator dismissed yesterday’s report that the country could slow or halt its buying of U.S. Treasury securities.

The euro advanced after the European Central Bank made comments that boosted expectations that policymakers are getting ready to reduce their massive monetary stimulus program.

There has been more talk recently that the European Central Bank may withdraw from its stimulus programs sooner rather than later.

Yesterday the Canadian dollar and the Mexican peso declined when Canadian government officials voiced concerns that the U.S. could possibly withdraw from NAFTA.

The Canadian dollar and Australian dollar are higher today due to firming crude oil prices.

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

 

INTEREST RATE MARKET FUTURES

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

New York Federal Reserve Bank President William Dudley will speak at 2:30.

The Treasury will auction 30 year bonds today.

The probability of a fed funds rate hike at the FOMC’s March 21 policy meeting is 63%, which compares to 68% yesterday. 

Futures are lower on a variety of bullish news, which should be viewed as a sign of weakness for the entire interest rate futures complex.

I will be out of the office tomorrow.

 

SUPPORT AND RESISTANCE

 

March 18   S&P 500

Support    2745.00       Resistance    2760.00

 

March 18   U.S. Dollar Index

Support    91.590         Resistance    92.330

 

March 18    Euro Currency

Support   1.19650        Resistance    1.20980

 

March 18    Japanese Yen

Support    .89620         Resistance    .90210

 

March 18    Canadian Dollar

Support    .79350         Resistance    .79980

 

March 18   Australian Dollar

Support    .7825            Resistance    .7897

 

March 18   Thirty Year Treasury Bonds   

Support    149^8           Resistance    150^16

 

February 18   Gold

Support    1314.0          Resistance    1328.0

 

March 18   Copper

Support    3.2250          Resistance    3.2650

 

February  18   Crude Oil

Support    63.31            Resistance    64.31 

 

 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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