By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures advanced due to growing optimism that the U.S. and China will reach a trade agreement later this month, possibly at a summit around March 27, given the progress in talks between the two countries.
A senior Chinese official said the “substantive progress” China and the U.S. made in their trade talks has been “well received” in both countries and around the world.
The 9:00 December construction spending report is expected to show a .3% increase.
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.
The U.S. dollar firmed as investors search for higher yields.
The gap between the benchmark 10 year yields in the U.S. and Germany has widened to near a three month high of 257 basis points, which compares with 240 basis points at the start of this year.
The European Central Bank will hold its regularly scheduled policy meeting on Thursday. It is anticipated that ECB President Mario Draghi will deliver dovish commentary.
The British pound is higher in spite of news that U.K. construction sector activity contracted in February for the first time since March 2018, falling to 49.5 from 50.6 in January. Economists had forecast 50.5.
The Japanese yen firmed after Bank of Japan Governor Haruhiko Kuroda said the Japanese economy has escaped deflation and the central bank would convey its exit strategy from its stimulus program at the appropriate time.
The Australian dollar is higher due to increased optimism for a formal U.S.-China trade agreement.
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.
Financial futures markets are predicting a 94% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year and there is a 6% chance for a 25 basis point increase in 2019.
The thirty year Treasury bond futures are testing the bottom of a broad trading range that started in 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 2806.00 Resistance 2824.00
March 19 U.S. Dollar Index
Support 96.180 Resistance 96.750
March 19 Euro Currency
Support 1.13300 Resistance 1.13970
March 19 Japanese Yen
Support .89290 Resistance .89630
March 19 Canadian Dollar
Support .75030 Resistance .75450
March 19 Australian Dollar
Support .7071 Resistance .7121
March 19 Thirty Year Treasury Bonds
Support 144^4 Resistance 144^28
April 19 Gold
Support 1283.0 Resistance 1301.0
May 19 Copper
Support 2.8950 Resistance 2.9600
April 19 Crude Oil
Support 55.72 Resistance 57.34
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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