October 21, 2019
STOCK INDEX FUTURES
U.S. stock index futures are higher on limited news. However, it appears that recent strength in stock index futures is partially due to the surprisingly better than expected third quarter corporate earnings reports despite the slowing global economy.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the worlds central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.
The euro currency rallied to its highest level in almost two months against the U.S. dollar after Germanyssaid the economy might have contracted again in the third quarter, but a deep recession is not in the cards.
The British poundadvanced to a 5-1/2 month high after earlier losses when the Northern Irish Democratic Unionist Party said it would not support any amendments to the Brexit agreement for a customs union with the E.U.
The Japanese yen is lower on news that Japan's exports declined for the tenth consecutive month in September. Japan's exports fell 5.2% on the year last month, which was weaker than the 4.0% contraction that was forecast.
The Bank of Japan will hold a policy setting meeting on October 31 and will release an outlook report on the economy and prices.
The Bank of Japan Governor Haruhiko Kuroda recently said it could certainly cut rates again if needed.
The Australian dollar is higher even though the International Monetary Fund, in its World Economic Outlook report, said the Chinese economy could grow at 5.8% next year, which is slower than the 6.1% forecast for 2019. Australia and China are major trading partners.
INTEREST RATE MARKET FUTURES
Futures are lower in response to higher stock index futures.
Federal Reserve Member of the Board of GovernorsMichelle Bowman will speak at 10:40.
Market participants believe there is a 91% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at the October 30 policy meeting. On Friday the probability was 83%.
In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are under pressure to become more accommodative.
SUPPORT AND RESISTANCE
December 19S&P 500
Support 2981.00 Resistance 3008.00
December 19 U.S. Dollar Index
Support 96.850 Resistance 97.200
December 19Euro Currency
Support 1.11860 Resistance 1.12280
December 19Japanese Yen
Support .92250 Resistance .92680
December 19Canadian Dollar
Support .76100 Resistance .76440
December 19Australian Dollar
Support .6844 Resistance .6898
December 19 Thirty Year Treasury Bonds
Support 159^8 Resistance 160^20
Support 1488.0 Resistance 1505.0
Support 2.6300 Resistance 2.6600
December 19 Crude Oil
Support 52.60 Resistance 54.33
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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 information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. 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.