By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures are higher following reports of progress in U.S.-China trade talks, specifically related to the sensitive issues of intellectual property theft and forced technology transfers, as Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrive in Beijing for negotiations.
Gross domestic product in the fourth quarter expanded at a 2.2% annualized rate, which was as expected. That was down from the 2.6% pace estimated in February. Consumer spending was lowered to 2.5% from 2.8%.
Initial weekly U.S. jobless claims fell 5,000 to a seasonally adjusted 211,000 in the week ended March 23. Economists expected 220,000 new claims last week.
U.S. stock index futures are headed for their best quarter in seven years despite rising fears of a slowing global economy.
My view is that the reflation story remains on track and easier credit conditions from most of the world’s central banks are coming and will be the dominant fundamental that supports stock index futures in the long term.
The U.S. dollar is higher and the euro currency is lower on news that German inflation remained below the European Central Bank's target level for a fourth consecutive month in March. German consumer prices increased 1.5% year-on-year after an increase of 1.7% in the previous month.
In the longer term view, interest rate differential expectations offer no clear advantage to either the U.S. dollar or the euro currency, since the Federal Reserve and the European Central Bank are both likely to move toward accommodation this year.
The British pound fell on news that an index for consumer sentiment in Britain dropped to -11.7 points in March from -10.8 in February. This reading was the lowest since November 2013.
Futures are mixed to lower, as supply remains an issue. The U.S. Treasury is auctioning approximately $113 billion in new debt this week, including seven year notes today.
Yesterday Kansas City Federal Reserve Bank President Esther George said the U.S. economy faces “notable” risks and the central bank can take a wait and see approach to monetary policy. George said the U.S. economy’s fundamentals still appeared to be sound and job growth would likely rebound from a weak performance last month.
Federal Reserve speakers today are Atlanta Federal Reserve Bank President Raphael Bostic at 10:30, New York Federal Reserve Bank President John Williams at 12:15 and St. Louis Federal Reserve Bank President James Bullard at 5:20.
Financial futures are predicting there is a 60% probability that Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its September 11 policy meeting.
Although there is a lot of talk about the inverted yield curve, which is an important sign of an economic slowdown, I believe that once a U.S.-China trade agreement is made, the yield curve after a while, will move back to normal.
June 19 S&P 500
Support 2792.00 Resistance 2824.00
June 19 U.S. Dollar Index
Support 96.310 Resistance 96.850
June 19 Euro Currency
Support 1.12850 Resistance 1.13450
June 19 Japanese Yen
Support .90850 Resistance .91520
June 19 Canadian Dollar
Support .74550 Resistance .74880
June 19 Australian Dollar
Support .7083 Resistance .7125
June 19 Thirty Year Treasury Bonds
Support 149^20 Resistance 150^24
June 19 Gold
Support 1295.0 Resistance 1323.0
May 19 Copper
Support 2.8500 Resistance 2.9000
May 19 Crude Oil
Support 58.05 Resistance 60.13
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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