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Thirty Year Treasury Bond Futures Hit New Lows

by Archer Financial Services | Oct 08, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Global equity markets are mostly lower. Stock markets in China fell the most since February, as fears of an escalating trade war with the U.S. could reduce China’s economic growth.

China's Shanghai composite fell 3.7%, which was the biggest one day drop since February. 

China’s stock markets were lower even though the People’s Bank of China on Sunday cut the level of cash that banks must hold as reserves, as policymakers continue to worry about the fallout from the tariff issues with the U.S.

The bearish stock market reaction to the bullish reserve requirement ratio cut suggests the market doesn’t believe the additional economic stimulus to China’s economy was enough to halt the slowdown in China’s economy.

European stock markets were lower as investors were unsettled by a weaker than expected industrial output report from Germany.

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 higher in a flight to quality bid in light of weaker global equity markets.

The euro currency is lower due to weak industrial output figures from Germany.

The euro was also pressured by renewed concerns over Italy’s budget deficit. Italy’s Deputy Prime Minister Matteo Salvini said the government would not cave to market pressure and backtrack from its plans to increase deficit spending in 2019.

 

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 mostly bullish news.

St. Louis Federal Reserve Bank President James Bullard today said that any further interest rate increases in U.S. this year should depend on data, but indicators were "looking good."

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 80%, which compares to 83% on Friday.

The long term trend for futures is lower, especially for the thirty year Treasury bond futures, 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    2875.00      Resistance    2901.00

 

December 18   U.S. Dollar Index

Support    95.180        Resistance    95.750

 

December 18   Euro Currency

Support    1.15110      Resistance    1.16010

 

December 18   Japanese Yen

Support    .88150        Resistance    .88850

 

December 18   Canadian Dollar

Support    .76900        Resistance    .77450

 

December 18   Australian Dollar

Support    .7037          Resistance    .7085

 

December 18   Thirty Year Treasury Bonds

Support    136^16       Resistance    137^16

 

December 18   Gold

Support    1184.0        Resistance    1211.0

 

December 18   Copper

Support    2.7300        Resistance    2.7800

 

November 18   Crude Oil

Support    73.02          Resistance    74.77


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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