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Treasury Yields Decline

by Archer Financial Services | Dec 04, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures declined as investors turned skeptical of the chances of a breakthrough in the U.S.-China trade talks.

There are no major economic reports scheduled for today.

A less hawkish FOMC has long term bullish implications for stock index futures.

 

CURRENCY FUTURES

The U.S. dollar continued to weaken due to the decline in U.S. Treasury yields, while the euro currency rallied above $1.14.

Also, a less hawkish Federal Reserve is likely to put a cap on the greenback.

The trade linked currencies such as the Australian dollar and the Japanese yen advanced.

The Swiss franc is higher in spite of news that the Swiss consumer price index in November fell .3%.

The Australian dollar continued to advance against the U.S. dollar after the Washington and Beijing deal for a ceasefire in their trade war encouraged investors to sell the U.S. dollar and buy riskier assets.

The Reserve Bank of Australia left interest rates on hold at its policy meeting today.  The official cash rate was left unchanged at a record low 1.5% where it has been since the middle of 2016. In addition, the RBA continued to indicate that it has no near term plans to raise interest rates. 

   

INTEREST RATE MARKET FUTURES

Increasing indications of a slowing global economy continue to support the interest rate futures markets.

New York Federal Reserve Bank President John Williams will speak at 9:00 central time.

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 85%, which is unchanged from yesterday.

Financial futures markets suggest the FOMC will increase its fed funds rate only one time in 2019 with a 40% probability of a second increase.  

I expect the interest rate futures market will likely trend higher longer term, led by the thirty year Treasury bond futures.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2765.00      Resistance    2795.00

 

December 18   U.S. Dollar Index

Support    96.210        Resistance    96.930

 

December 18   Euro Currency

Support    1.13550      Resistance    1.1434

 

December 18   Japanese Yen

Support    .88030        Resistance    .88880

 

December 18   Canadian Dollar

Support    .75690        Resistance    .76050

 

December 18   Australian Dollar

Support    .7345          Resistance    .7404

 

March 19   Thirty Year Treasury Bonds

Support    140^24       Resistance    141^30

 

February 19   Gold

Support    1233.0        Resistance    1253.0

 

March 19   Copper

Support    2.7900        Resistance    2.8350

 

January 19   Crude Oil

Support    52.95          Resistance    54.66

 


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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