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Lessened U.S.-China Trade Tensions Support Stock Index Futures for a Second Day

by Archer Financial Services | Aug 30, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures continued higher after yesterday China’s Foreign Ministry said its officials remained in communication with the U.S. over possible talks in September. 

July personal income increased 0.1% from June, which compares to the estimate of up 0.3% and consumer spending advanced 0.6% when a gain of 0.5% was anticipated. 

The 8:45 central time August Chicago PMI is expected to be 47.5 and the 9:00 August consumer sentiment index is anticipated to be 92.3.

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.
 

CURRENCY FUTURES

The British pound is higher in spite of the uncertainties of possible “no-deal Brexit.”

The Canadian dollar is higher after a report showed the Canadian economy rebounded in the second quarter with its best performance in two years.  Canada's gross domestic product increased at a 3.7% annualized rate in the second quarter.  Market expectations were for a 3.0% annualized gain.

Limiting gains in the currency of Canada was news that Canadian producer prices fell 0.3% in July.

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.

INTEREST RATE MARKET FUTURES

Market participants believe there is a 96% 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. 

FLIGHT TO QUALITY VEHICLES

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 and higher stock index futures.

However, most of these markets, gold, silver and the Japanese yen are trading higher, while the interest rate market futures are mixed to a little lower. Continue to trade the flight to quality vehicles from the long side.

SUPPORT AND RESISTANCE

September 19 S&P 500

Support    2917.00      Resistance    2952.00

September 19 U.S. Dollar Index

Support    98.290        Resistance    98.620

September 19 Euro Currency

Support    1.10380      Resistance    1.10780

September 19 Japanese Yen

Support    .93900        Resistance    .94420

September 19 Canadian Dollar

Support    .75060        Resistance    .75600

September 19 Australian Dollar

Support    .6705          Resistance    .6750

December 19 Thirty Year Treasury Bonds

Support    164^12       Resistance     165^26

December 19 Gold

Support    1528.0        Resistance     1545.0

December 19 Copper

Support    2.5550        Resistance     2.58500

October 19 Crude Oil

Support    55.55          Resistance     56.92




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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