By Alan Bush | Senior Financial Economist at ADMIS
U.S. housing starts ended 2018 on a soft note with starts tumbling in December. Housing starts dropped 11.2% in December from November to an annualized rate of 1.078 million, which is the lowest level in over two years. The median estimate called for starts to be 1.260 million.
Building permits, which is an indicator of future construction activity fell 0.3% in December to an annualized rate of 1.326 million. The median estimate called for permits to be 1.290 million.
The main event today will be at 8:45 central time when Federal Reserve Chairman Jerome Powel will deliver his semiannual monetary report to Congress before the Senate Banking Committee. Tomorrow Fed Chair Powell will give his semi-annual testimony before the House Finance Committee at 9:00.
There two 9:00 reports. The February consumer confidence report is expected to be 125 and the February Richmond Federal Reserve manufacturing index anticipated to be 3.
Stock index futures have been performing better than the news would suggest since the lows were made in late December, which should be viewed as a sign of long term strength.
I would not be surprised to see a recovery from the current lower levels to higher on the day.
The U.S. dollar fell when the weaker than expected housing starts report was released.
The British pound hit a four month high against the U.S. dollar and a 21 month high against the euro on hopes for a Brexit delay.
The Canadian dollar and the Australian dollar are a little lower today.
However, longer term, the Canadian dollar and the Australian dollar, the “commodity currencies,” will probably trend higher, as prices for most industrial commodities are likely to advance.
Futures advanced when the weaker than expected housing starts report was released.
The Treasury will auction seven year notes today.
Financial futures markets are predicting a 78% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 2% chance for a 25 basis point increase in 2019 and there is a 20% probability of a 25 basis point reduction this year.
The thirty year Treasury bond futures have remained in a broad trading range since the first week in January. A U.S.-China trade agreement, or strong hint of one, would be a catalyst to take futures lower.
March 19 S&P 500
Support 2780.00 Resistance 2802.00
March 19 U.S. Dollar Index
Support 96.050 Resistance 96.380
March 19 Euro Currency
Support 1.13570 Resistance 1.13980
March 19 Japanese Yen
Support .90110 Resistance .90600
March 19 Canadian Dollar
Support .75510 Resistance .75980
March 19 Australian Dollar
Support .7138 Resistance .7186
March 19 Thirty Year Treasury Bonds
Support 146^0 Resistance 146^28
April 19 Gold
Support 1323.0 Resistance 1336.0
March 19 Copper
Support 2.9300 Resistance 2.9650
April 19 Crude Oil
Support 54.93 Resistance 55.88
For more information about these markets, please contact Alan at 312.242.7911 or via email at firstname.lastname@example.org. 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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