By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures are lower after the Organization for Economic Co-Operation and Development lowered forecasts again for the global economy in 2019 and 2020, following previous downgrades in November.
The OECD forecast the world economy would grow 3.3% in 2019 and 3.4% in 2020. Those forecasts represent cuts of 0.2 percentage points for 2019 and 0.1 percentage points for 2020, compared to the OECD’s last series of forecasts in November.
The February Automatic Data Processing employment change report showed an increase of 183,000, which compares to expectations of a gain of 185,000.
Stock index futures have been performing better than the news would suggest since late December.
The U.S. dollar firmed as investors search for higher yields, as foreign major central banks have turned more cautious about increasing interest rates.
The greenback is higher in spite of a widening trade gap in December. The international trade deficit in goods and services increased 19% in December from the prior month.
The European Central Bank will hold its regularly scheduled policy meeting tomorrow. It is anticipated that ECB President Mario Draghi will deliver dovish commentary.
Traders believe the ECB will signal a delay in raising interest rates until 2020.
My personal belief is that the central bank of the euro zone will not be able to hike rates next year.
The Canadian dollar is lower after a report showed Canadian labor productivity declined 0.4% in the fourth quarter after two consecutive quarterly gains. Market expectations were for a 0.3% decrease.
Federal Reserve speakers today are Cleveland Federal Reserve Bank President Loretta Mester at 11:00 and New York Federal Reserve Bank President John Williams at 11:10.
At 1:00 the Federal Reserve will release its “Beige Book” on the state of the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. The next FOMC meeting is scheduled for March 19-20.
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. There is a 5% chance for a 25 basis point increase and there is a 1% probability of a decline in 2019.
The thirty year Treasury bond futures recently tested 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 2781.00 Resistance 2801.00
March 19 U.S. Dollar Index
Support 96.650 Resistance 96.980
March 19 Euro Currency
Support 1.12920 Resistance 1.13360
March 19 Japanese Yen
Support .89350 Resistance .89630
March 19 Canadian Dollar
Support .7462 Resistance .75010
March 19 Australian Dollar
Support .7020 Resistance .7097
June 19 Thirty Year Treasury Bonds
Support 144^4 Resistance 144^26
April 19 Gold
Support 1283.0 Resistance 1296.0
May 19 Copper
Support 2.9200 Resistance 2.9600
April 19 Crude Oil
Support 55.69 Resistance 56.57
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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