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Fed Chair Powell Speaks at 11:45

by Archer Financial Services | Jan 10, 2019

By Alan Bush | Senior Financial Economist at ADMIS   
 

STOCK INDEX FUTURES

Stock index futures are lower due to the lack of details of the U.S.-China trade talks. 

U.S. filings for unemployment benefits fell to a four week low in spite of the partial federal government shutdown. Jobless claims declined 17,000 to 216,000 in the week ended January 5, which compares to expectations of 226,000. 

The main event today will be at 11:45 central time when Federal Reserve Chairman Jerome Powell will participate in a discussion at the Economic Club of Washington in Washington, D.C.

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.

 

CURRENCY FUTURES

The U.S. dollar fell hard yesterday, with much of the pressure linked to the release of the minutes of the December 19 Federal Open Market Committee meeting, which showed the Fed is unlikely to increase rates for at least a few months while they assess the impact of recent market volatility on the economy.

Interest rate differential expectations are turning against the U.S. dollar.

The euro currency consolidated gains today after yesterday posting its biggest daily jump in more than six months, after FOMC minutes indicated a more cautious approach towards further rate hikes.

The European Central Bank warned of mounting economic risks, according to the minutes of its December 12-13 policy meeting.

Financial futures markets suggest 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.

Canadian new house prices were unchanged for a fourth consecutive month in November, matching market expectations.  

China's inflation increased less than expected in December. The country's December producer inflation rose 0.9% year-on-year, which is lower than the 1.6% that economists were expecting. 

 

INTEREST RATE MARKET FUTURES

Lower prices for stock index futures and the lack of details of U.S.-China trade talks supported prices.

In addition to Fed Chair Powell, there are several other Fed speakers.

At 11:40 St. Louis Federal Reserve Bank President James Bullard will give a presentation on U.S. economic and monetary policy.

Chicago Federal Reserve Bank President Charles Evans will deliver a speech and participate in a moderated question and answer session at 12:00.

Minneapolis Federal Reserve Bank President Neel Kashkari will speak about immigration and economic growth at 12:20 and at 6:00 this evening Federal Reserve Vice Chairman Richard Clarida will give a speech on the economic outlook and monetary policy.

Financial futures markets are predicting a 72% probability of the fed funds rate remaining unchanged at the current level of 2.25%-2.50% this year.

There is a 15% chance of an increase in the fed funds rate by 25 basis points and there is a 13% probability of a 25 basis point rate cut.

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.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2558.00      Resistance    2591.00


March 19 U.S. Dollar Index

Support    94.530        Resistance    95.040

 

March 19 Euro Currency

Support    1.15710      Resistance    1.16450

 

March 19 Japanese Yen

Support    .92770        Resistance    .93290

 

March 19 Canadian Dollar

Support    .75510        Resistance    .75890

 

March 19 Australian Dollar

Support    .7148          Resistance    .7211

 

March 19 Thirty Year Treasury Bonds

Support    145^16       Resistance    146^20

 

February 19 Gold

Support    1287.0        Resistance    1300.0

 

March 19 Copper

Support    2.6300        Resistance    2.6800

 

February 19 Crude Oil

Support    51.13          Resistance    52.70


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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