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U.S. GDP Stronger than Expected

by Archer Financial Services | Aug 29, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures were a little lower in the overnight trade on uncertainty over Canada’s position in NAFTA. The U.S. and Canada are set for bilateral talks today, as the two nations work to salvage the North American Free Trade Agreement.

Futures recovered when the stronger than expected second quarter gross domestic product report was released.  

Gross domestic product, which is the value of all goods and services produced across the economy, increased at a 4.2% annual rate in the second quarter. Economists expected an unchanged reading of 4.1%

The 4.2% rate marks the strongest pace of growth in almost four years.  

The 9:00 central time July pending home sales index is expected to be unchanged.

The still relatively low global interest rate environment and the mostly stronger than estimated U.S. corporate earnings reports remain long term supportive to U.S. stock index futures.

 

CURRENCY FUTURES

The U.S. dollar firmed due to concerns that the conflict over trade between the U.S. and China was not about to be resolved any time soon.

There was additional support for the greenback on news of the stronger than anticipated U.S. gross domestic product report.

The Canadian dollar and the Australian dollar are only mixed in spite of gains in crude oil prices.

 

INTEREST RATE MARKET FUTURES

Futures are mixed with the bullish influence of flight to quality buying being offset by the bearish influence of the stronger than estimated U.S. gross domestic product report.

The Treasury will auction seven year notes today.

The latest reading on gross domestic product bolsters the probability that Federal Reserve officials will raise short term interest rates two more times this year.

Central bank officials have already hiked rates twice this year to a range of between 1.75% and 2%.

According to financial futures markets, the probability of a fed funds rate increase at the Federal Open Market Committee’s September 26 meeting is 96%.

 

SUPPORT AND RESISTANCE

September 18   S&P 500

Support    2895.00      Resistance    2911.00

 

September 18   U.S. Dollar Index

Support    94.550        Resistance    94.880

 

September 18   Euro Currency

Support    1.16630      Resistance    1.17260

 

September 18   Japanese Yen

Support    .89830        Resistance    .90160

 

September 18   Canadian Dollar

Support    .77270        Resistance    .77600

 

September 18   Australian Dollar

Support    .7280          Resistance    .7360

 

September 18   Thirty Year Treasury Bonds

Support    144^8         Resistance    144^30

 

December 18   Gold

Support    1203.0        Resistance    1217.0

 

September 18   Copper

Support    2.6900        Resistance    2.7400

 

October 18   Crude Oil

Support    68.17          Resistance    69.43


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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