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PPI Up .1%

by Archer Financial Services | May 09, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures advanced with shares of energy companies getting a boost from a rally in crude oil after President Donald Trump pulled the U.S. out of a nuclear deal with Iran.

U.S. producer prices edged only slightly higher last month. The Labor Department said the producer price index increased a seasonally adjusted .1% in April from a month earlier. Economists had forecast a .2% increase.    

Next week, China’s top economic official, Vice Premier Liu He, is scheduled to visit Washington to resume trade negotiations.

In the longer term, traders will probably gradually shift their focus of attention more toward corporate earnings and the still overall accommodative global interest rate policies and away from a variety of geopolitical worries, including global trade tensions and now the situation between the U.S. and Iran.

 

CURRENCY FUTURES

The U.S. dollar made new highs for the move in the overnight trade, although it is lower now. 

The euro currency is higher even though the European Central Bank will probably not be in a position to hike interest rates until possibly 2019.

The British pound is higher in spite of declining probabilities of a near term increase in U.K. interest rates. Financial futures markets are predicting there is only a 10% probability that the Bank of England will hike its key lending rate at its regularly scheduled policy meeting tomorrow.

Recent economic reports from the U.K. suggest the Bank of England may not be able to increase its key interest rate until much later this year.

The Japanese yen is lower despite a report that real wages in Japan in March were up .8% on the year compared to -.8% in February.

The Canadian dollar and the Australian dollar are higher due to the sharp increase in crude oil prices.

The Canadian dollar was also supported by news that building permits in Canada increased 3.1% in March from February.

 

INTEREST RATE MARKET FUTURES

Oddly enough there was no flight to quality buying in Treasury futures in spite of yesterday’s news that President Donald Trump pulled the U.S. out of a nuclear agreement with Iran.

The Treasury will auction $25 billion in 10 year notes today.

At 12:15 central time Atlanta Federal Reserve Bank President Raphael Bostic to speak at the World Affairs Council in Jacksonville, Florida. 

The FOMC remains on track to deliver its second rate hike of the year when it meets next month.

The probability of a fed funds rate increase from the FOMC at the June 13 meeting is almost 100%, which is unchanged from yesterday.  

I am still anticipating only two more rate increases this year from the Federal Reserve; one in June and another in December.

 

SUPPORT AND RESISTANCE

 

June 18   S&P 500

Support    2663.00       Resistance    2686.00

 

June 18   U.S. Dollar Index

Support    92.550         Resistance    93.300

 

June 18   Euro Currency

Support    1.18500       Resistance    1.19330

 

June 18   Japanese Yen

Support    .91210         Resistance    .92050

 

June 18   Canadian Dollar

Support    .77010         Resistance    .77840

 

June 18   Australian Dollar

Support    .7403           Resistance    .7477

 

June 18   Thirty Year Treasury Bonds

Support    142^4          Resistance    143^12

 

June 18   Gold

Support    1304.0         Resistance    1321.0

 

July 18   Copper

Support    3.0350         Resistance    3.0700

 

June 18   Crude Oil

Support    69.76           Resistance    71.55



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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