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Treasury Bond Futures Lower in Spite of Mostly Bullish News

by Archer Financial Services | Sep 14, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are higher as expectations grew that the U.S. and China would begin new trade talks, while an interest rate increase in Turkey supported the Turkish lira and global risk appetite.

The Shanghai Composite Index fell after data showed cooling real estate investment in China in August.  

U.S. retail sales in August increased 0.1% from the prior month, which was well below the 0.4% increase economists had expected.

Core retail sales were also weaker than anticipated, gaining 0.3% last month. Economists were expecting an increase of 0.5%.   

U.S. import prices decreased 0.6% in August from the previous month. August's monthly drop was lower than the 0.3% decline that was forecast by economists.

U.S. industrial output increased for the third month in a row in August.   Industrial production grew 0.4% in August from the prior month, when economists had expected a 0.3% gain.

Capacity utilization increased by 0.2% to 78.1% in August. Economists had expected 78.2%.

Two 9:00 central time reports are scheduled. July Business Inventories are expected to be up .5% and the September Consumer Sentiment index is anticipated to be 97.

Despite of a variety of ongoing geopolitical issues, the still relatively low interest rate environment is dominating and remains long term supportive to U.S. stock index futures.

 

CURRENCY FUTURES

The euro currency is lower after a report showed the euro zone posted its smallest trade surplus in four years.

The 0.8% drop in goods exported during July indicates the euro zone economy is unlikely to rebound any time soon from the slowdown in the first half of this year.

The Canadian dollar and the Australian dollar are lower in spite of higher crude oil prices.

 

INTEREST RATE MARKET FUTURES

The thirty year Treasury bond futures fell to a five month low in spite of the bullish decline in U.S retail sales and the larger than expected drop in U.S. import prices.

According to financial futures markets, the probability of a fed funds rate increase at the Federal Open Market Committee’s September 26 meeting is close to 100%, and the probability of another fed funds rate hike in December is 80%.

Futures are ignoring bullish news, which should be viewed as a sign of weakness.

The long term trend for futures is lower as the U.S. economy remains strong and the FOMC will likely continue on its tightening path.

 

SUPPORT AND RESISTANCE

September 18   S&P 500

Support    2899.00      Resistance    2916.00

 

September 18   U.S. Dollar Index

Support    94.260        Resistance    94.800

 

September 18   Euro Currency

Support    1.16550      Resistance    1.17350

 

September 18   Japanese Yen

Support    .89160        Resistance    .89550

 

September 18   Canadian Dollar

Support    .76700        Resistance    .77110

 

September 18   Australian Dollar

Support    .7163          Resistance    .7223

 

December 18   Thirty Year Treasury Bonds

Support    141^12       Resistance    142^12

 

December 18   Gold

Support    1203.0        Resistance    1217.0

 

December 18   Copper

Support    2.6600        Resistance    2.7000

 

October 18   Crude Oil

Support    68.45          Resistance    69.55


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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