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Continue to Trade Interest Rate Market Futures from the Long Side

by Archer Financial Services | Aug 07, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are lower as investors worry about lingering trade tensions between Washington and Beijing.

The 2:00 PM central time June consumer credit report is expected to show an increase of $16 billion.

Over the next few weeks there will be calls for easier credit conditions from the Federal Reserve, which will place a bottom on this market.

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 euro currency is a little higher in spite of news that Germany posted the steepest year-on-year decline in industrial production since 2009.

Lower crude oil prices pressured the Canadian dollar and the Australian dollar.

There was additional pressure on the Australian dollar, as probabilities increased that the Reserve Bank of Australia will lower interest rates at its September 3 meeting.

INTEREST RATE MARKET FUTURES

The thirty year Treasury bond futures are sharply higher, advancing to their highest level since November 2016.

There will be increased pressure on the Federal Reserve to ease credit conditions with, according to the U.S. Treasury, China being a currencymanipulator.

In addition, several overseas central banks lowered their key interest rate recently, which exerts pressure on other central banks to do the same, including the Federal Reserve. 

Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting on September 18.

The Treasury will auction 10 year notes today.

In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are likely to embark on a new round of easier credit policies.

Continue to trade the interest rate futures from the long side, especially the 30 year Treasury bond futures.

SUPPORT AND RESISTANCE

September 19 S&P 500

Support    2830.00      Resistance    2893.00

September 19 U.S. Dollar Index

Support    97.100        Resistance    97.570

September 19 Euro Currency

Support    1.12060      Resistance    1.12600

September 19 Japanese Yen

Support    .94120        Resistance    .94880

September 19 Canadian Dollar

Support    .74900        Resistance    .75480

September 19 Australian Dollar

Support    .6678          Resistance    .6797

September 19 Thirty Year Treasury Bonds

Support    161^12       Resistance     163^24

October 19 Gold

Support    1475.0        Resistance     1513.0

September 19 Copper

Support    2.5400        Resistance     2.5750

September 19 Crude Oil

Support    51.43          Resistance     54.03



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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