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Nonfarm Payrolls Weaker, but Hourly Earnings Up

by Archer Financial Services | Sep 06, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Global equity markets were support by news that China's central bank moved to support the economy by reducing reserve requirements for lenders.     

U.S. stock index futures are higher in spite of the overall weaker than expected U.S. employment numbers.      

The U.S. economy added 130,000 payrolls in August, which compares to the anticipated 163,000 gain. The unemployment rate was unchanged at 3.7% for the third consecutive month, as expected, and remains near a 50-year low. Average hourly earnings increased .4% when up .3% was estimated.

Federal Reserve Chairman Jerome Powell will deliver a speech entitled “Economic Outlook and Monetary Policy” at the University of Zurich in Zurich, Switzerland at 11:30 AM.   

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 U.S. dollar index came under pressure when the on balance weaker than expected employment report was released. 

The euro currency is higher in spite of news that the euro zone economy grew at an annualized rate of 0.8% in the second quarter, which is down from 1.7% in the three months through March. 

The Canadian dollar is higher on news that the Canadian economy added a net 81,100 jobs in August. Market expectations were for a 15,000 increase.  

The People’s Bank of China said it is cutting banks’ reserve requirements for the third time this year, which supported the Australian dollar.

INTEREST RATE MARKET FUTURES

Futures were lower in the overnight trade. However, prices quickly advanced when the overall weaker than anticipated U.S. employment numbers were released.

Market participants believe there is a 93% 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. Currently there is only a 56% probability of another rate cut at the October meeting.

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.
 

SUPPORT AND RESISTANCE

September 19 S&P 500

Support    2965.00      Resistance    2992.00

September 19 U.S. Dollar Index

Support    98.200        Resistance    98.530

September 19 Euro Currency

Support    1.10200      Resistance    1.10680

September 19 Japanese Yen

Support    .93370        Resistance    .93880

September 19 Canadian Dollar

Support    .75360        Resistance    .75970

September 19 Australian Dollar

Support    .6800          Resistance    .6859

December 19 Thirty Year Treasury Bonds

Support    163^2         Resistance     164^20

December 19 Gold

Support    1507.0        Resistance     1539.0

December 19 Copper

Support    2.6150        Resistance     2.6500

October 19 Crude Oil

Support    54.73          Resistance     56.87

 




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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