By Alan Bush | Senior Financial Economist at ADMIS
STOCK INDEX FUTURES
U.S. stock index futures fell after President Donald Trump today said he was in “absolutely no rush” to finalize a trade agreement with China, as negotiators from both countries prepared to continue talks in Washington.
There are reports that exports that have already left Chinese ports before May 10 will not be subject to the tariff increase. This creates an unofficial window, possibly lasting a couple of weeks, which keeps hope alive that there still could be a deal.
The consumer price index increased 0.3% in April, which compares to expectations of a .4% gain and the consumer price index, excluding the volatile food and energy categories or core prices, advanced 0.1%, when up .2% was anticipated.
A new leg up for stock index futures is likely once the U.S. and China reach an agreement.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks are coming and will be the dominant fundamental that supports stock index futures in the long term.
The British pound is steady as the bearish influence of the Brexit situation is being offset by the bullish influence of stronger than expected economic numbers.
The U.K. economy rebounded in first quarter. Growth was 0.5% in the quarter, which is up from 0.2% in the previous three months. The manufacturing sector grew at its fastest rate since 1988.
The Canadian dollar was supported by news that Canadian building permits increased 2.1% in March and on a report that employment in Canada surged in April, posting record jobs gains.
The Canadian economy added 106,500 jobs in April when market expectations were for an increase of 15,000. In addition, Canada's jobless rate was 5.7%, which is down from 5.8% in the previous month. Market expectations were for Canada's unemployment rate to remain unchanged at 5.8%.
INTEREST RATE MARKET FUTURES
Futures advanced when the smaller than expected increase in the U.S. consumer price index was reported. However, futures came off the highs when stock index futures bounced from its lows.
New York Federal Reserve Bank President John Williams will speak at 9:00.
Financial futures are predicting there is a 64% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points, or more at its December 11 policy meeting, which compares to 59% yesterday.
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.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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