By Alan Bush | Senior Financial Economist at ADMIS
The flight to quality vehicles, the interest rate market futures, especially the 30 year Treasury bond futures, the Japanese yen, gold and silver would logically all trade lower in light of a better tone to the U.S.-China trade situation. However, some of these markets, gold and silver, are trading higher and those that are lower, interest rate market futures and the yen, are well off their lows.
Continue to trade the flight to quality vehicles from the long side.
U.S. stock index futures are higher due to renewed hopes for progress in the trade dispute between the U.S. and China.
China's Commerce Ministry said the U.S. needed to create the necessary conditions for trade negotiations to proceed, while noting that both countries remain in communication over possible new talks next month.
Initial jobless claims were up 4,000 to 215,000 in the week ended August 24. Economists expected jobless claims to rise to 215,000.
U.S. economic growth was slightly weaker during the second quarter than previously estimated, but corporate profits rebounded strongly.
The Commerce Department said second quarter gross domestic product increased at a seasonally adjusted annual rate of 2.0%, compared with the previous estimate of a 2.1% gain. Economists estimated the latest revision would show 2.0% growth.
Corporate profits advanced 4.8% from the prior quarter, which was the largest quarterly rise since the first quarter of 2018.
The 9:00 central time July pending home sales index is expected to be down .3%.
Now is a good time to stand aside in stock index futures and instead focus on the long side of the flight to quality vehicles, which are the interest rate futures market, especially the 30 year Treasury bond futures, the Japanese yen, gold and silver.
The euro currency is lower after a report showed Germany’s inflation rate eased more than expected in August. Consumer prices fell 0.2% on the month.
The British pound continued to decline, as a “no-deal Brexit” is becoming more likely.
Continue to trade the Japanese yen from the long side due to its perceived status as a flight to quality vehicle.
The main trend for the yen is higher.
The 30 year Treasury bond futures yesterday advanced to its highest level since November 2016. However, today prices are lower in light of a better tone to the U.S.-China trade situation.
The Treasury will auction seven-year notes today.
Market participants believe there is a 95% 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 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.
September 19 S&P 500
Support 2872.00 Resistance 2929.00
September 19 U.S. Dollar Index
Support 98.030 Resistance 98.380
September 19 Euro Currency
Support 1.10600 Resistance 1.11120
September 19 Japanese Yen
Support .94020 Resistance .94660
September 19 Canadian Dollar
Support .75060 Resistance .75400
September 19 Australian Dollar
Support .6715 Resistance .6763
September 19 Thirty Year Treasury Bonds
Support 165^20 Resistance 167^12
December 19 Gold
Support 1539.0 Resistance 1562.0
December 19 Copper
Support 2.5500 Resistance 2.6000
October 19 Crude Oil
Support 55.32 Resistance 56.83
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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.