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Stock Index Futures Close to Record Highs

by Archer Financial Services | Jun 20, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures advanced sharply after the Federal Reserve yesterday indicated it is ready to lower interest rates as soon as next month to offset the growing risks to global and U.S. economic growth.

The S&P 500 and the Dow Jones Industrial Average added to gains and are only 0.6% away from their record high closes.

Initial jobless claims decreased 6,000 to a seasonally adjusted 216,000 in the week ended June 15. Economists had expected 220,000 new claims.  

The Philadelphia Federal Reserve June business index was 0.3, which compares to the estimate of 9.3.

The 9:00 central time May leading indicators index is expected to be up .1%.

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.

CURRENCY FUTURES

The U.S. dollar posted its largest 2-day drop in a year due to yesterday’s dovish Federal Open Market Committee policy statement.

The British pound is higher after the Bank of England left its benchmark interest rate unchanged, as it warned that rising trade tensions cloud the outlook for the global economy.

The Japanese yen is higher even though the Bank of Japan maintained its ultra-loose monetary policy as trade tensions darken the global economic outlook.
 

INTEREST RATE MARKET FUTURES

The 30 year Treasury bond futures advanced to their highest level since October 2017.

The Federal Open market Committee agreed to hold steady their benchmark interest rate on Wednesday, but hinted it would reduce rates in the months ahead if the economic outlook weakens.

Nine of the 10 members of the rate-setting committee voted to maintain the federal funds rate in a range of between 2.25% and 2.50%. St. Louis Federal Reserve Bank President James Bullard dissented in favor of cutting rates.

Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its July 31 policy meeting. Yesterday the probability was 89%. A July rate cut would be the first reduction in a decade.

Longer term, higher prices are likely for the interest rate futures market in light of a coming new round of central bank easing of credit. 

 

SUPPORT AND RESISTANCE

September 19 S&P 500

Support    2927.00      Resistance    2970.00

September 19 U.S. Dollar Index

Support    96.000        Resistance    96.730

September 19 Euro Currency

Support    1.13030      Resistance    1.13980

September 19 Japanese Yen

Support    .93020        Resistance    .93750

September 19 Canadian Dollar

Support    .75360        Resistance    .76270

September 19 Australian Dollar

Support    .6893          Resistance    .6966

September 19 Thirty Year Treasury Bonds

Support    155^0         Resistance     156^24

August 19 Gold

Support    1358.0        Resistance     1403.0

September 19 Copper

Support    2.6900        Resistance     2.7450

August 19 Crude Oil

Support    54.28          Resistance     56.89


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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