By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures are lower due to rising interest rates and liquidation ahead of the two day Federal Open Market Committee meeting that starts today.
Also, investors are turning their attention to President Donald Trump's State of the Union speech this evening.
The 9:00 central time January consumer confidence index is expected to come in at 123.6, which would be up from December's decline to 122.1.
Traders are worried that the FOMC statement could be on the hawkish side. Some economists expect the central bank will raise its economic assessment, which I believe will probably be the case.
Once the FOMC meeting is out of the way, I expect the bull market to resume.
The main trend for stock index futures is higher.
The U.S. dollar is lower and is failing to respond to rising U.S. interest rates, which is a sign of weakness.
The main trend for the U.S. dollar is lower.
The euro currency rallied on news that euro zone growth hit a 10 year high in 2017.
The economy of the 19 nation bloc grew 2.5% last year, which is the strongest growth since the 3% rate in 2007.
Expect higher prices for the euro currency, as speculation grows that the European Central Bank will remove some of its accommodation later this year.
The British pound is higher as financial futures markets now show traders believe there is approximately a 50% probability of another 25 basis point hike in U.K. interest rates in May.
Global bond yields continued to increase, which pressured the long end of the curve.
Some economists expect the FOMC to raise its economic assessment at this week’s policy meeting, which could put additional pressure on futures.
The probability of a fed funds rate hike at the Federal Open Market Committee’s January 30-31 policy meeting is 5%.
The probability of a fed funds rate hike at the FOMC’s March 21 policy meeting is 76%, which compares to 78% 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 2826.00 Resistance 2860.00
March 18 U.S. Dollar Index
Support 88.660 Resistance 89.540
March 18 Euro Currency
Support 1.23660 Resistance 1.24980
March 18 Japanese Yen
Support .91750 Resistance .92550
March 18 Canadian Dollar
Support .80770 Resistance .81360
March 18 Australian Dollar
Support .8036 Resistance .8122
March 18 Thirty Year Treasury Bonds
Support 147^4 Resistance 148^16
April 18 Gold
Support 1337.0 Resistance 1358.0
March 18 Copper
Support 3.1500 Resistance 3.2200
March 18 Crude Oil
Support 64.45 Resistance 65.67
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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