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More Federal Reserve Commentary Less Hawkish

by Archer Financial Services | Nov 27, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

After sharp gains yesterday stock index futures are lower today.

U.S. stock index futures fell today after President Donald Trump in an interview with the Wall Street Journal said he expects to move ahead with raising tariffs on $200 billion in Chinese imports to 25% from the current 10% and repeated his threat to impose tariffs on all remaining imports from China.

President Donald Trump and Chinese President Xi Jinping are expected to hold trade talks at the G-20 meeting in Buenos Aires on November 30.

Stock index futures partially recovered when Federal Reserve Vice Chairman Richard Clarida said Federal Reserve policy is much “closer to neutral.” He also said inflation appears to be contained despite robust economic growth.

The 9:00 central time November consumer confidence index is expected to be 136.5.

 

CURRENCY FUTURES

The U.S. dollar firmed due to increasing probabilities of a fed funds rate hike in December.

The pound is lower in spite of a report that showed retail sales growth in the U.K. picked up in the year to November after growth stalled in October, according to the latest Confederation of British Industry survey.

The Australian dollar initially fell on news that President Trump indicated he expects to move ahead with increasing tariffs on $200 billion in Chinese imports. However, the Australian dollar was able to recover and trade higher in the European session.

 

INTEREST RATE MARKET FUTURES

The thirty year Treasury bond futures remain near a seven week high.

The Treasury will auction five year notes today.

There are three Federal Reserve speakers at 1:30; Atlanta Federal Reserve Bank President Raphael Bostic, Kansas Federal Reserve Bank President Esther George and Chicago Federal Reserve Bank President Charles Evans.

Tomorrow, Federal Reserve Chairman Jerome Powell will participate in luncheon at the Economic Club of New York.

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 79%, which compares to 76% yesterday.

If I am correct in my belief that the Federal Open Market Committee will increase its fed funds rate no more than two times next year, the thirty year Treasury bond futures will likely trend higher.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2653.00      Resistance    2688.00

 

December 18   U.S. Dollar Index

Support    96.750        Resistance    97.280

 

December 18   Euro Currency

Support    1.13180      Resistance    1.13740

 

December 18   Japanese Yen

Support    .88050        Resistance    .88350

 

December 18   Canadian Dollar

Support    .75240        Resistance    .75660

 

December 18   Australian Dollar

Support    .7210          Resistance    .7285

 

December 18   Thirty Year Treasury Bonds

Support    139^16       Resistance    140^8

 

December 18   Gold

Support    1219.0        Resistance    1229.0

 

December 18   Copper

Support    2.7100        Resistance    2.7550

 

January 19   Crude Oil

Support    50.55          Resistance    52.13

 


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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