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Non-Farm Payrolls Weaker than Expected

by Archer Financial Services | Oct 05, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures declined on news that U.S. nonfarm payrolls increased a seasonally adjusted 134,000 in September, the smallest gain in a year, when 180,000 were expected.

The unemployment rate fell to 3.7% from 3.9% in August, the lowest rate since December 1969, according to the Labor Department. The unemployment rate was anticipated to be 3.8%.

Average hourly earnings were up 0.3% on the month and 2.8% on the year, which were both in line with analysts’ expectations.

The Labor Department said it’s possible that employment in some industries was adversely affected by Hurricane Florence, which struck the Carolinas last month. 

The 2:00 central time August consumer credit report is estimated show an increase of $15 billion.

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 U.S. dollar is lower in response to the weaker on balance U.S. employment numbers.

Higher crude oil prices supported the “commodity currencies,” the Canadian dollar and the Australian dollar.

Also, there was support for the currency of Canada on news that the Canadian economy added more jobs than expected in September. The economy added 63,300 jobs in September when market expectations called for an increase in employment of 25,000.

Canada's jobless rate was 5.9%, matching market expectations and was down slightly from 6.0% in the previous month.

 

INTEREST RATE MARKET FUTURES

In the overnight trade the thirty year Treasury bond futures fell to the lowest level since August 2014.

Futures are lower today in spite of the bullish weaker than expected U.S. employment report.

Federal Reserve speakers today are Dallas Federal Reserve Bank President Robert Kaplan 11:30 and Atlanta Federal Reserve Bank President Raphael Bostic, also at 11:30.

According to the financial futures markets, the probability of a fed funds rate hike at the Federal Open Market Committee’s December 19 policy meeting is 87%, which compares to 85% yesterday.

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 this year and in 2019.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2896.00      Resistance    2921.00

 

December 18   U.S. Dollar Index

Support    95.120        Resistance    95.700

 

December 18   Euro Currency

Support    1.15350      Resistance    1.16110

 

December 18   Japanese Yen

Support    .88010        Resistance    .88420

 

December 18   Canadian Dollar

Support    .77210        Resistance    .77770

 

December 18   Australian Dollar

Support    .7051          Resistance    .7101

 

December 18   Thirty Year Treasury Bonds

Support    137^2         Resistance    138^4

 

December 18   Gold

Support    1199.0        Resistance    1213.0

 

December 18   Copper

Support    2.7400        Resistance    2.8000

 

November 18   Crude Oil

Support    74.09          Resistance    75.13


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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