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Best Place to Be Is in the Flight to Quality Vehicles

by Archer Financial Services | May 15, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

FLIGHT TO QUALITY VEHICLES

Because of the volatility and political uncertainties of the U.S.-China trade situation, now is a good time to avoid stock index futures and instead focus on the long side of flight to quality vehicles, such as the Swiss franc, the Japanese yen, the interest rate futures market and gold.

STOCK INDEX FUTURES

U.S. stock index futures declined after China reported surprisingly weaker growth in retail sales and industrial output for April. Overall retail sales in April rose 7.2% from a year earlier, which is the slowest pace since May 2003. This compares to 8.7% in March and forecasts of 8.6%.

U.S. retail sales declined 0.2% in April from a month earlier.   Economists predicted a 0.2% increase.

The Empire State manufacturing survey in May climbed to a six month high of 17.8 from 10.1 in April. The estimate was 9.

Industrial production fell 0.5% in April, which compares to expectations of unchanged and capacity utilization was 77.9 % in April, which compares to the estimate of 78.7%.

There are three 9:00 reports. The May Atlanta Fed business inflation expectations report, which was 1.9% last month. The May housing market index is expected to be 64 and the March business inventories report is anticipated to show a gain of .1%
 

CURRENCY FUTURES

The euro currency is lower in spite of a report that showed Germany's economy expanded by 0.4% in the three months to March from the previous quarter, after narrowly avoiding recession late last year.

Lower crude oil prices pressured the commodity currencies, the Canadian dollar and the Australian dollar.

There was some support for the Canadian dollar on news that the annual inflation rate in Canada accelerated slightly in April, increasing 2.0% on a year-over-year basis. The result was in line with market expectations.

INTEREST RATE MARKET FUTURES

Flight to quality buying is coming in across the board.

Richmond Federal Reserve Bank President Tom Barkin will give remarks on “Sentiment and the Real Economy” at 12:00.

Financial futures markets are predicting there is a 77% 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, which compares to 72% yesterday.

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2805.00      Resistance    2853.00

June 19 U.S. Dollar Index

Support    97.180        Resistance    97.550

June 19 Euro Currency

Support    1.12020      Resistance    1.12530

June 19 Japanese Yen

Support    .91320        Resistance    .91960

June 19 Canadian Dollar

Support    .74140        Resistance    .74440

June 19 Australian Dollar

Support    .6914          Resistance    .6954

June 19 Thirty Year Treasury Bonds

Support    149^2         Resistance     150^10

June 19 Gold

Support    1291.0        Resistance     1307.0

July 19 Copper

Support    2.7100        Resistance     2.7450

June 19 Crude Oil

Support    60.72          Resistance     62.03


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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