By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures advanced due to apparent progress in the U.S.-China trade talks. The latest round of trade discussions between Washington and Beijing have concluded.
U.S. Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs Ted McKinney today said he thought negotiations “went just fine.”
There are reports that the U.S. will release a "message" tomorrow concerning the trade talks.
China's Foreign Ministry hinted that the talks were a success and it would soon release a statement on the outcome.
Separately, auto sales in China, the world's largest vehicle market, saw their first annual decline in twenty years. Sales fell 6% to 22.7 million units in 2018, according to the China Passenger Car Association.
The minutes of the December 19 Federal Open Market Committee meeting will be released at 1:00 central time.
It may take a while, but downward pressure on interest rates globally, but not from the Fed in the short term, will ultimately rescue this market.
The euro currency is higher in spite of disappointing trade data out of Germany and a decline in consumer confidence in France.
The European Central Bank will not be able to hike its key interest rates until mid-2020, which is well past the timing suggested by the bank’s policy guidance.
The Canadian dollar and the Australian dollar were boosted by sharply higher crude oil prices and hopes for progress in the U.S.-China trade talks.
The Australian dollar is considered to be a barometer of sentiment towards China.
A better tone to the U.S.-China trade talks caused flight to quality long liquidation.
Today, Federal Reserve Bank of St. Louis President James Bullard said he’s concerned that any more interest rate increases could push the U.S. economy into a recession and Federal Reserve Bank of Atlanta President Raphael Bostic said it's time for Fed to be patient with monetary policy.
Boston Federal Reserve Bank President Eric Rosengren will speak at 10:30.
The Treasury will auction ten year notes today.
Financial futures markets are predicting a 68% probability of the fed funds rate remaining unchanged at the current level of 2.25%-2.50% this year.
There is a 24% chance of an increase the fed funds rate by 25 basis points and there is an 8% probability of a rate cut.
The increasing chance of a rate hike is primarily due to the recently increased optimism that the U.S. and China can reach a trade agreement.
Longer term, I expect the interest rate futures market will likely trend higher, led by the thirty year Treasury bond futures.
The long term trend for gold and silver is higher.
March 19 S&P 500
Support 2566.00 Resistance 2595.00
March 19 U.S. Dollar Index
Support 95.110 Resistance 95.590
March 19 Euro Currency
Support 1.14980 Resistance 1.15550
March 19 Japanese Yen
Support .92140 Resistance .92660
March 19 Canadian Dollar
Support .75360 Resistance .75830
March 19 Australian Dollar
Support .7137 Resistance .7188
March 19 Thirty Year Treasury Bonds
Support 145^10 Resistance 146^8
February 19 Gold
Support 1278.0 Resistance 1295.0
March 19 Copper
Support 2.6450 Resistance 2.6900
February 19 Crude Oil
Support 49.60 Resistance 51.75
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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