header_img

Apparent U.S.-China Trade Talks Progress

by Archer Financial Services | Mar 29, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures are higher following reports of progress in the U.S.-China trade talks. U.S. Treasury Secretary Steven Mnuchin said he held “constructive” discussions in Beijing, which concludes the latest round of talks. There will be another round in Washington next week.

Personal consumption expenditures increased 0.1% in January from the prior month, which compares to expectations of a 0.3% rise.

The 8:45 central time March Chicago PMI is expected to be 60.3.

There are two 9:00 reports. The February new home sales report is anticipated to be 615,000 and March consumer sentiment is estimated to be 97.8.

In spite of a slowing global economy, the S&P 500 has gained 12.3% so far this quarter, which would mark its best quarterly performance since September 2009.

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.

 

CURRENCY FUTURES

The U.S. dollar is lower and the euro currency is higher on news that the German jobless rate fell to a record low.

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 Canadian dollar and the Australian dollar are higher due to strong gains in crude oil futures, which today advanced to a four month high.

There was additional support for the currency of Canada on news that the Canadian economy expanded 0.3% in January, beating expectations.

Also, Canada's industrial product price index rose 0.3% in February, following a 0.3% decline in January.

  

INTEREST RATE MARKET FUTURES

Futures are lower as a result of upbeat talk on U.S.-China trade.

Federal Reserve speakers today are New York Federal Reserve Bank President John Williams 8:25, Dallas Federal Reserve Bank President Robert Kaplan at 9:30 and Federal Reserve Board Vice Chairman for Supervision Randal Quarles at 11:05.

Financial futures are predicting there is a 52% probability that Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its September 11 policy meeting.

The better tone to the U.S.-China trade talks caused the inverted U.S. yield curve to become less inverted today.

I believe that once a U.S.-China trade agreement is made the yield curve, after a while, will move back to normal. 

 

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2817.00      Resistance    2846.00

 

June 19 U.S. Dollar Index

Support    96.430        Resistance    96.960

 

June 19 Euro Currency

Support    1.12760      Resistance    1.13370

 

June 19 Japanese Yen

Support    .90600        Resistance    .91110

 

June 19 Canadian Dollar

Support    .74480        Resistance    .75210

 

June 19 Australian Dollar

Support    .7080          Resistance    .7125

 

June 19 Thirty Year Treasury Bonds

Support    149^0         Resistance     150^4

 

June 19 Gold

Support    1288.0        Resistance    1311.0

 

May 19 Copper

Support    2.8700        Resistance    2.9550

 

May 19 Crude Oil

Support    59.32          Resistance    60.89


For more information about these markets, please contact Alan at 312.242.7911  or via email at alan.bush@admis.com. Thank you.

Would you like to open an account with us? Go to our interactive New Account application at Open an Account. It is fast, saves on postage and it’s green.

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.

Offers