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U.S. Retail Sales Stronger than Expected

by Archer Financial Services | Jul 16, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

S&P 500 and NASDAQ futures advanced to record highs today.

U.S. retail sales increased 0.4% in June from a month earlier, which compares to expectations of a 0.1% gain.   

Prices for foreign-made goods imported to the U.S. declined 0.9% in June, which is the latest indication that inflationary pressures remain limited. Economists expected prices to fall 0.8%. 

Industrial production in June was unchanged when a .1% increase was expected and capacity utilization in June was 77.9%, which compares to the anticipated 78.2%.

Two 9:00 central time reports are scheduled. May business inventories are expected to be up .4% and the July housing market index is anticipated to be 65.

Federal Reserve Chairman Jerome Powell will speak at 12:00.

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 advanced when the stronger than expected U.S. retail sales report was released.

The British pound fell to its lowest level against the U.S. dollar since June of 2017 due to Brexit uncertainties and increasing prospects of easier credit policies from the Bank of England.

The Australian dollar is lower after the Reserve Bank of Australia, in the minutes of its July 2 policy meeting, left open the prospect of additional interest rate cuts in coming months, if conditions in the labor market do not improve. 
 

INTEREST RATE MARKET FUTURES

In addition to Fed Chair Powell, Federal Reserve speakers today are Atlanta Federal Reserve Bank President Raphael Bostic at 9:05, Dallas Federal Reserve Bank President Robert Kaplan at 11:20 and Chicago Federal Reserve Bank President Charles Evans at 2:30.

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.

I expect at least a partial price recovery now that the bearish U.S. retail sales report is out of the way.


SUPPORT AND RESISTANCE

September 19 S&P 500

Support    3009.00      Resistance    3027.00

September 19 U.S. Dollar Index

Support    96.500        Resistance    97.000

September 19 Euro Currency

Support    1.12580      Resistance    1.13240

September 19 Japanese Yen

Support    .92800        Resistance    .93230

September 19 Canadian Dollar

Support    .76600        Resistance    .76880

September 19 Australian Dollar

Support    .7030          Resistance    .7064

September 19 Thirty Year Treasury Bonds

Support    153^4         Resistance     154^12

August 19 Gold

Support    1408.0        Resistance     1423.0

September 19 Copper

Support    2.7000        Resistance     2.7300

August 19 Crude Oil

Support    59.07          Resistance     60.13



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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