By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures in the U.S., Asia and in Europe fell as weak data in Asia and Europe heightened fears of a global economic slowdown, while the U.S. partial government shutdown continues.
China’s factory activity contracted for the first time in 19 months in December.
The China Caixin manufacturing purchasing managers index fell to 49.7 in December. That is the first time the sector has been in contraction territory, which is under 50, since May 2017.
Also, euro zone manufacturing activity barely avoided contraction territory, declining for the fifth month and taking the reading to its lowest level since February 2016.
The 9:30 central time U.S. December PMI manufacturing index is expected to be 53.9.
It may take a while, but downward pressure on interest rates globally, of course not from the Fed in the short term, will ultimately rescue this market.
It is better to trade other markets where the fundamentals are more lined up in the same direction, as is the case for gold and the thirty year Treasury bond futures.
After making a ten week low in the overnight trade, the U.S. dollar was able to recover and trade higher.
Strength in the U.S. dollar today is primarily due to weaker economic data overseas.
The British pound is lower in spite of news that the U.K. manufacturing PMI rose to a six month high, which is stronger than all forecasts.
Futures are higher in response to lower stock index futures, with the thirty year Treasury bond futures hitting a nine month high.
In spite of the Federal Open Market Committee, at its December 19 policy meeting saying it plans to hike its fed funds rate two times in 2019, the financial futures markets believe the Fed may not be able to hike rates even one time in 2019.
Can the Federal Open Market Committee continue to pencil in two rate hikes this year?
Financial futures markets are predicting there is only a 15% probability of a 25 basis point rate hike from the FOMC in 2019 from the current rate of 2.25%-2.50% and a 12% chance of a reduction in the fed funds rate by 25 basis points to 2.00%-2.25%.
On Friday, January 4, Federal Reserve Chairman Jerome Powell will participate in a panel on a to-be-announced topic in monetary policy and central banking at the American Economic Association meeting in Atlanta, Georgia.
Longer term, I expect the interest rate futures market will likely trend higher, led by the thirty year Treasury bond futures.
Continue to trade the interest rate futures from the long side.
Gold futures advanced to a seven month high. The yellow metal is now closing in on psychological resistance at the $1,300.00 level. Gold is likely to continue to advance in the longer term.
Also, silver prices hit a six month high overnight.
March 19 S&P 500
Support 2449.00 Resistance 2525.00
March 19 U.S. Dollar Index
Support 95.310 Resistance 96.370
March 19 Euro Currency
Support 1.14250 Resistance 1.15740
March 19 Japanese Yen
Support .91580 Resistance .92590
March 19 Canadian Dollar
Support .73310 Resistance .73930
March 19 Australian Dollar
Support .6984 Resistance .7078
March 19 Thirty Year Treasury Bonds
Support 145^16 Resistance 146^30
February 19 Gold
Support 1278.0 Resistance 1295.0
March 19 Copper
Support 2.6000 Resistance 2.6850
February 19 Crude Oil
Support 44.27 Resistance 46.13
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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This is not a solicitation of any order to buy or sell, but merely a collection of information related to Archer Financial services and commodities trading provided by Archer Financial services. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such element, nor with respect to any expression of opinion herein contained.
The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.