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Jobless Claims at Lowest in 50 Years

by AFS Archer Financial Svcs | Apr 11, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures traded higher in the overnight trade due to the latest developments in the U.S.-China trade talks.    

U.S. Treasury Secretary Steven Mnuchin said on Wednesday the U.S. and China have mostly agreed on a mechanism to monitor any trade agreement they reach, including establishing new “enforcement offices.” In addition, Mnuchin said progress continues to be made in the talks and the discussions would be continued early on Thursday.

Jobless claims fell below 200,000 for first time since 1969. Claims fell by 8,000 to 196,000 in the week ended April 6 when economists had forecast 210,000.  

U.S. producer prices increased 0.6% in March, which compares to expectations of up .3%, as energy prices soared.  

Excluding the often volatile food and energy categories, producer prices were up 0.3% when a gain of .2% was anticipated.    

My view is that the global 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 advanced following the U.S. producer price index and jobless claims reports. 

The British pound is steady after European Union leaders agreed to postpone Brexit until October 31 to allow U.K. Prime Minister Theresa May additional time to attempt to get the U.K.'s parliament to approve the country's divorce agreement. 

Lower crude oil prices pressured the Canadian dollar and the Australian dollar. 

INTEREST RATE MARKET FUTURES  

The Federal Reserve on Wednesday released the minutes from its March 19-20 policy meeting at which policymakers indicated they would not raise rates in 2019.

The Treasury will auction 30 year bonds today, which is the last of three auctions scheduled this week.           

Federal Reserve Chairman Jerome Powell will speak on the economy at the House of Representatives Democrat’s three day annual retreat in Leesburg, Virginia.

Other speakers from the Fed are Federal Reserve Board of Governors Vice Chair Richard Clarida 8:30, New York Federal Reserve Bank President John Williams at 8:35, St. Louis Federal Reserve Bank President James Bullard at 8:35 and Federal Reserve Member of the Board of Governors Michelle Bowman at 3:00 this afternoon.

Financial futures are predicting there is a 49% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its December 11 policy meeting. Yesterday the probability was 50%.

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