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Flight to Quality Vehicles Trade Higher

by Archer Financial Services | May 22, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are lower, as fears of a possible escalation in the trade war between the U.S. and China were rekindled after reports that Washington could impose sanctions on another Chinese technology company.

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.

But, first we need to get past the U.S.-China trade hurdle.
 

CURRENCY FUTURES

The euro currency is lower in spite of concerns about upcoming European parliamentary elections.

Investors sought safety in the Japanese yen and the Swiss franc, which are likely to continue to advance while the U.S.-China trade issues simmer.

The British pound is lower in spite of news that U.K. core inflation accelerated to a 2.1% annual rate in April, moving ahead of the Bank of England’s 2% target and putting pressure on the central bank to hike interest rates.

The Canadian dollar is higher on news that retail sales in Canada increased for the second consecutive month, rising 1.1% in March from February.
 

INTEREST RATE MARKET FUTURES

St. Louis Federal Reserve Bank President James Bullard, a voter in the rate-setting committee this year, late Tuesday said the central bank could lower its short term interest rate to help to achieve the Fed’s 2% inflation target even if economic growth maintains its momentum.

Federal Reserve speakers today are New York Federal Reserve Bank President John Williams at 9:00 central time, Atlanta Federal Reserve Bank President Raphael Bostic at 9:10, Dallas Federal Reserve Bank President Robert Kaplan at 9:15 and Atlanta Federal Reserve Bank President Raphael Bostic at 3:00.

The Federal Open Market Committee will release the minutes of its April 30-May 1 policy meeting at 1:00.

The minutes from the Fed should provide additional information on how its members assessed an unexpected downtick in inflation during the first quarter and could provide hints on future policy changes.      

Financial futures markets are predicting there is a 68% 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 is unchanged from yesterday.

I expect the flight to quality vehicles to trade higher in this atmosphere of U.S.-China trade uncertainties.

 

SUPPORT AND RESISTANCE

June 19 S&P 500

Support    2844.00      Resistance    2872.00

June 19 U.S. Dollar Index

Support    97.710        Resistance    97.990

June 19 Euro Currency

Support    1.11660      Resistance    1.12090

June 19 Japanese Yen

Support    .90550        Resistance    .90890

June 19 Canadian Dollar

Support    .74530        Resistance    .74960

June 19 Australian Dollar

Support    .6872          Resistance    .6906

June 19 Thirty Year Treasury Bonds

Support    149^0         Resistance     149^24

June 19 Gold

Support    1269.0        Resistance     1281.0

July 19 Copper

Support    2.6750        Resistance     2.7300

July 19 Crude Oil

Support    62.00          Resistance     63.13


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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