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CPI Weaker than Expected

by Archer Financial Services | May 10, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures advanced for a sixth day.

Initial jobless claims in the week ended May 5 were unchanged from the previous week at 211,000, according to the Labor Department. Economists expected 215,000 new claims.

The consumer price index increased .2% in April, when up .3% was expected. Core prices, which excludes the volatile food and energy categories, gained .1% when an increase of .2% was anticipated.

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 is lower due to the weaker than anticipated consumer price index report.

The British pound is under pressure after the Bank of England’s Monetary Policy Committee voted seven to two to leave its key interest rate unchanged at .5%. Two members voted to raise the rate to .75%. 

Prior to the meeting futures markets were predicting there was only a 10% probability that the BoE would hike its key lending rate today.

The Bank of England said it still expects to hike its key interest rate over the coming years, saying that a slowdown in economic growth in the U.K. in the first quarter was probably temporary and is likely not as severe as first estimated.

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

 

INTEREST RATE MARKET FUTURES

Futures are mostly higher as a result of the weaker than estimated consumer price index report.
 
The Treasury will auction 30 year bonds today.

The Federal Open Market Committee 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.  

While a June interest rate hike from the Federal Reserve appears to be fully priced in, the odds of a fourth rate hike in December stands at 90%.

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    2688.00       Resistance    2710.00

 

June 18   U.S. Dollar Index

Support    92.350         Resistance    93.110

 

June 18   Euro Currency

Support    1.18660       Resistance    1.19770

 

June 18   Japanese Yen

Support    .91030         Resistance    .91770

 

June 18   Canadian Dollar

Support    .77740         Resistance    .78660

 

June 18   Australian Dollar

Support    .7446           Resistance    .7544

 

June 18   Thirty Year Treasury Bonds

Support    142^10        Resistance    143^16

 

June 18   Gold

Support    1308.0         Resistance    1327.0

 

July 18   Copper

Support    3.0450         Resistance    3.1200

 

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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