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More Accommodation Coming from the Federal Reserve?

by Archer Financial Services | May 12, 2020

By Alan Bush | Senior Financial Economist at ADMIS   
 

STOCK INDEX FUTURES

Price movements in financial futures markets today are telling us that traders believe more accommodation is coming from the Federal Reserve.  The best explanation for higher stock index futures, a lower U.S. dollar, mostly higher interest rate market futures and a higher gold price is the anticipation of easier credit policies from the Federal Reserve.

NASDAQ futures advanced for a seventh day and remain substantially higher for the year.

The April National Federation of Independent Business small business optimism index was 90.9 when 84.8 was expected.

April retail sales fell 0.8%, as anticipated. 

Higher crude oil prices were supportive. Recently Saudi Arabia said it will unilaterally reduce crude oil production by one million barrels a day in June.

In recent weeks stock index futures have overperformed the news. 

CURRENCY FUTURES

The U.S. dollar is lower but remains in a trading range.

The British pound is higher even though the Bank of England’s deputy governor said more easing will be needed.

The Japanese yen is higher despite news that a key economic indicator in Japan fell at the fastest rate since 2011 in March and the government warned of a recession. 
The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales, dropped a preliminary 4.9 points to 90.5 in March from February. 

The Canadian dollar and the Australian dollar are higher due to stronger crude oil prices. 

The Australian dollar is higher in spite of news that Australia’s business conditions weakened further.

INTEREST RATE MARKET FUTURES 

The Treasury will auction ten-year notes today.

The Treasury is auctioning $96 billion across the 3-year, 10-year, and the 30-maturities this week. The Treasury also unveiled its 20-year bond that will go on auction next week. 

Federal Reserve speakers today are Patrick Harker at 9:00, Randal Quarles at 9:00 and Loretta Mester at 4:00 PM. 

Federal Reserve Chairman Jerome Powell will provide his outlook on the economy at a webcast event at 8:00 AM on Wednesday.

SUPPORT & RESISTANCE


June 20 S&P 500
Support    2892.00    Resistance    2945.00 

June 20 U.S. Dollar Index
Support    99.730       Resistance    100.550

June 20 Euro Currency
Support    1.07880     Resistance    1.08860 

June 20 Japanese Yen
Support    .92840        Resistance    .93290

June 20 Canadian Dollar
Support    .71040        Resistance    .71660 

June 20 Australian Dollar
Support    .6428           Resistance    .6545

June 20 Thirty Year Treasury Bonds
Support    178^16       Resistance     179^20

June 20 Gold
Support    1693.0         Resistance    1717.0 

July 20 Copper
Support    2.3600         Resistance    2.3900 

July 20 Crude Oil
Support    24.95            Resistance    27.03

 



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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