By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures are higher due to an easing of geopolitical tensions in Hong Kong, the U.K. and in Italy.
At 1:00 central time, the Federal Reserve will release its Beige Book, which is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Federal Reserve district bank compiles anecdotal evidence of economic conditions from each of the 12 Federal Reserve districts.
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.
However, in the short term I believe traders should stand aside in the 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, gold, silver and the Japanese yen.
The U.S. dollar index is lower by default.
The euro currency is higher, as some doubts about the scale of an anticipated stimulus package from the European Central Bank emerge.
The ECB's likely next president, Christine Lagarde, said highly accommodative monetary policy for a prolonged period is necessary, but the central bank needs to be aware of the potential negative side effects. The next ECB policy meeting is scheduled for September 12.
In light of an easing of some global geopolitical tensions, the Japanese yen is lower today. In spite of lower prices today, the main trend for the yen is higher.
Futures are a little higher at the front of the yield curve, while flight to quality longs were liquidated at the long end of the curve.
Federal Reserve speakers today New York Federal Reserve Bank President John Williams at 8:30, Dallas Federal Reserve Bank President Robert Kaplan at 9:00, Federal Reserve Member of the Board of Governors Michelle Bowman at 11:30, St. Louis Federal Reserve Bank President James Bullard at 11:30, Minneapolis Federal Reserve Bank President Neel Kashkari at 12:00 and Chicago Federal Reserve Bank President Charles Evans at 2:15.
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 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 2900.00 Resistance 2939.00
September 19 U.S. Dollar Index
Support 98.430 Resistance 98.860
September 19 Euro Currency
Support 1.09720 Resistance 1.10400
September 19 Japanese Yen
Support .94050 Resistance .94630
September 19 Canadian Dollar
Support .74870 Resistance .75200
September 19 Australian Dollar
Support .6755 Resistance .6798
December 19 Thirty Year Treasury Bonds
Support 164^30 Resistance 166^8
December 19 Gold
Support 1540.0 Resistance 1562.0
December 19 Copper
Support 2.5250 Resistance 2.5850
October 19 Crude Oil
Support 53.75 Resistance 55.92
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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.