By Alan Bush | Senior Financial Economist at ADMIS
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.
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.
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.
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 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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