By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures are under pressure due to a variety of geopolitical issues, including trade war fears, Hong Kong protests, political turmoil in Italy, elections in Argentina and global economic growth worries.
The National Federation of Independent Business small business optimism index recovered in July to 104.7 from June's sharp downtick to 103.3. The median estimate called for 103.0.
The U.S. consumer price index increased a seasonally adjusted 0.3% last month from June. Economists had expected prices to rise 0.2% on the month. The core consumer price index, which excludes the volatile food and energy categories, was up 0.3% in July from June. Economists forecast a 0.2% gain.
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.
In light of ongoing geopolitical worries, the flight to quality currencies, the Japanese yen and the Swiss franc are higher.
The euro currency is lower after a report showed the German ZEW economic sentiment survey plunged to -44.1 points in August, which compares to expectations of -28.5.
The German 10 year bund yields hit a record low.
The British pound is a little higher after a report showed wages in the U.K. increased in the second quarter at their fastest pace after inflation for four years.
Trade the flight to quality currencies, the Japanese yen and the Swiss franc, from the long side.
The 30 year Treasury bond futures are higher due to a variety of geopolitical worries, which are causing flight to safety capital flows.
Policymakers voted to lower the fed funds rate by a quarter percentage point on July 31. Market participants believe 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 17-18.
Another rate cut after that is very likely before the end of the year.
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 market futures from the long side, especially the 30 year Treasury bond futures.
September 19 S&P 500
Support 2860.00 Resistance 2893.00
September 19 U.S. Dollar Index
Support 97.040 Resistance 97.500
September 19 Euro Currency
Support 1.12020 Resistance 1.12620
September 19 Japanese Yen
Support .94900 Resistance .95500
September 19 Canadian Dollar
Support .75210 Resistance .75640
September 19 Australian Dollar
Support .6747 Resistance .6788
September 19 Thirty Year Treasury Bonds
Support 163^0 Resistance 164^4
October 19 Gold
Support 1511.0 Resistance 1542.0
September 19 Copper
Support 2.5650 Resistance 2.6100
September 19 Crude Oil
Support 54.13 Resistance 55.34
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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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This is not a solicitation of any order to buy or sell, but merely a collection of information related to Archer Financial services and commodities trading provided by Archer Financial services. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such element, nor with respect to any expression of opinion herein contained.
The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.