By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures were limit up in the overnight trade. The main reason appears to be reports that the Trump administration and Congress are close to agreeing to an economic support package in an effort to mitigate the negative impact of the coronavirus.
In addition, there are hopes of more central bank stimulus and government spending.
Also, President Donald Trump said coronavirus testing will soon happen on a very large scale basis.
Yesterday, China’s National Health Commission said China has passed the peak of the coronavirus epidemic.
U.S. import prices were down 0.5% in February from January when economists expected a 0.8% decline.
The 9:00 central time March consumer sentiment index is expected to be 98.
While traders focus on the negative bearish influence of the coronavirus, and rightly so, it will be the bullish impact of substantially easier credit from the world’s central banks that will dominate in the long term.
The U.S. dollar is higher, as it appears that the U.S. economy will recover earlier than elsewhere in the world.
In February, German consumer prices increased 0.4% compared with January, which was in line with forecasts.
Yesterday, the Bank of England cut its benchmark interest rate by 50 basis points to 25 basis points from 75 basis points. The BOE last cut its key interest rate in August 2016.
In light of the strong gains for stock index futures, flight to quality longs were liquidated today.
A week ago the yield curve was severely inverted at the short end. However, today the short end has flattened to some degree and the longer term part of the yield curve became more normal. This suggests there will be an economic recovery in the U.S. starting in the fall and into next year.
Based on financial futures markets, there is virtually a 25% probability of a 75 basis point cut in the fed funds rate to 25 to 50 basis points and a 75% probability of a 100 basis point cut to zero to 25 basis points at the March 18 Federal Open Market Committee meeting.
March 20 S&P 500
Support 2392.00 Resistance 2638.00
June 20 U.S. Dollar Index
Support 97.350 Resistance 98.270
June 20 Euro Currency
Support 1.11420 Resistance 1.12700
June 20 Japanese Yen
Support .93380 Resistance .96110
June 20 Canadian Dollar
Support .71630 Resistance .72680
June 20 Australian Dollar
Support .6252 Resistance .6328
June 20 Thirty Year Treasury Bonds
Support 172^2 Resistance 180^26
April 20 Gold
Support 1550.0 Resistance 1600.0
April 20 Crude Oil
Support 30.15 Resistance 33.98
May 20 Copper
Support 2.4000 Resistance 2.5350
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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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© 2018 Archer Financial Services, Inc.
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.