header_img

SP 500 and Dow Futures at Record Highs

by AFS Archer Financial Svcs | Jul 12, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

S&P 500 and Dow futures advanced to record highs today on limited news. Much of the recent gains can be linked to Federal Reserve Chairman Jerome Powell’s congressional testimony earlier this week, which set the stage for the central bank to lower interest rates.    

The June producer price index was up .1% as expected and the producer price index, excluding food and energy, advanced .3% when a gain of .2% was anticipated.

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 index fell for a third day now that interest rate differential expectations have turned slightly bearish for the greenback in light of Fed Chair Powell’s dovish congressional testimony.

The Australian dollar showed little reaction to reports that China’s exports dropped less than expected in June. China's exports were down 1.3% from a year earlier when a 2.0% decline was anticipated and imports fell 7.3% when down. 3.8% was estimated. 

The Canadian dollar advanced due to rising crude oil prices, as oil production in the Gulf of Mexico has been reduced by Tropical Storm Barry that threatened the area. 

INTEREST RATE MARKET FUTURES

Yesterday’s 30 year Treasury bond auction was not well received.

There are no Fed speakers today.

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 30-31 policy meeting. A second rate cut is anticipated by financial futures markets later this year.

In the longer term, higher prices are likely for futures, as most major central banks are likely to embark on a new round of accommodation. 

GOLD

Futures appear to be building a symmetrical triangle congestion pattern on the daily chart. The rule of thumb is that prices come out of a congestion pattern in the same direction that they came into the pattern approximately 60% to 65% of the time.

Higher prices are likely for gold futures in the long term. 

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