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IMF Cuts Global Economic Growth Estimate

by Archer Financial Services | Oct 09, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Global equity markets are mostly lower as the International Monetary Fund cut global growth forecasts due to trade risks. In addition, higher U.S. interest rates remain a concern.

The September National Federation of Independent Business small business optimism index was 107.9 when 108 was expected. The index fell slightly from August’s survey record breaking high of 108.8.

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 fell to a seven week low as concerns persist over Italy’s proposed expanded budget deficit.

The currency of the euro zone was also pressured by news that German exports fell for the second consecutive month in August.

The Canadian dollar is lower after a report showed weaker than anticipated Canadian housing starts in September.

 

INTEREST RATE MARKET FUTURES

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

However, Treasury bond futures are higher now in response to lower stock index futures.

Any recovery gains in futures are likely to be limited ahead of $230 billion in fresh supply this week, including three year, 10 year and 30 year paper.

Federal Reserve speakers today are Chicago Federal Reserve Bank President Charles Evans at 9:00 and New York Federal Reserve Bank President John Williams at 8:15 and again at 9:35 this evening.

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 83%, which compares to 80% yesterday.

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    2872.00      Resistance    2896.00

 

December 18   U.S. Dollar Index

Support    95.270        Resistance    95.920

 

December 18   Euro Currency

Support    1.14860      Resistance    1.15710

 

December 18   Japanese Yen

Support    .88550        Resistance    .88990

 

December 18   Canadian Dollar

Support    .76930        Resistance    .77400

 

December 18   Australian Dollar

Support    .7050          Resistance    .7102

 

December 18   Thirty Year Treasury Bonds

Support    136^16       Resistance    137^16

 

December 18   Gold

Support    1186.0        Resistance    1198.0

 

December 18   Copper

Support    2.7500        Resistance    2.8100

 

November 18   Crude Oil

Support    74.05          Resistance    75.21


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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