By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures are higher after President Donald Trump today said the U.S. was doing well in trade talks with China and that Beijing wants to make a deal with Washington.
The June 28-29 G-20 summit in Japan could provide the markets with relief, as the U.S. and China could use the meeting to begin negotiating again on trade.
The U.S. gross domestic product in the first quarter grew at a 3.1% on an annual pace. Economists expected first quarter GDP to be revised down to 3%.
Initial jobless claims increased by 3,000 to 215,000 in the week ended May 25. Analysts had estimated new claims would total a seasonally adjusted 215,000.
The 9:00 central time April pending home sales index is expected to be up .5%.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.
But, first we need to get past the U.S.-China trade hurdle.
Now is a good time to stand aside on stock index futures and focus on the long side of flight to quality vehicles, especially the thirty year Treasury bond futures.
The flight to quality currencies, the U.S. dollar index, the Japanese yen and the Swiss franc are all mixed today after modest gains yesterday.
Yesterday, the European Central Bank, in its financial stability report said that while growth slowed in the euro zone in the first half of this year, “the available data suggest that the economic recovery in the euro area has been delayed, but not derailed.”
Federal Reserve Board of Governors Vice Chairman Richard Clarida will speak at the Economic Club of New York Signature Luncheon on the topic of “Sustaining Maximum Employment and Price Stability” at 11:00.
Trade tensions have raised concerns about the economy, leading traders to believe the Federal Reserve will be forced to cut rates to boost economic growth.
U.S. money markets are pricing in two interest rate cuts by January 2020.
Financial futures markets are predicting there is a 67% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its October 30 policy meeting, which compares to 70% yesterday.
I expect the flight to quality vehicles, especially the thirty year Treasury bond futures, to trade higher in this atmosphere of U.S.-China trade uncertainties.
June 19 S&P 500
Support 2774.00 Resistance 2800.00
June 19 U.S. Dollar Index
Support 97.970 Resistance 98.190
June 19 Euro Currency
Support 1.11350 Resistance 1.11660
June 19 Japanese Yen
Support .91090 Resistance .91550
June 19 Canadian Dollar
Support .73920 Resistance .74250
June 19 Australian Dollar
Support .6912 Resistance .6944
June 19 Thirty Year Treasury Bonds
Support 152^0 Resistance 153^0
June 19 Gold
Support 1271.0 Resistance 1289.0
July 19 Copper
Support 2.6350 Resistance 2.6800
July 19 Crude Oil
Support 58.55 Resistance 59.89
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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