A More Optimistic Tone Ahead of U.S.-China Trade Talks
Alan Bush of ADM Investor Services - InsideFutures.com - Wed Oct 09, 8:32AM CDT

October 9, 2019

STOCK INDEX FUTURES

U.S. stock index futures are higherafter the latest media reports reduced concerns over escalating trade tensions between the U.S. and China ahead of high-level trade talks tomorrow and Friday. China indicated that it is still open to agreeing to a partial trade deal with the U.S.

The 9:00 central time August Job Openings and Labor Turnover Survey is expected to be 7.186 million. The Labor Department's JOLTS report tracks monthly changes in job openings and offers rates on hiring and quits.

The 9:00 August wholesale trade report is anticipated to show a .4% gain.

At 10:00 Federal Reserve ChairmanJerome Powellwill co-host a roundtable session with Kansas City Federal Reserve President Esther George discussing labor market conditions and local banking in Kansas City, Missouri.

Yesterday, Federal Reserve Chairman Jerome Powell said the central bank will soon announce plans to increase the amount of short-term Treasury securities it buys in an effort to avoid a repeat of last month's unexpected pressures in wholesale funding markets.

Mr. Powell said that rather than purchase longer-dated securities, Federal Reserve officials are now contemplating buying shorter-dated Treasury bills.

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.

CURRENCY FUTURES

The U.S. dollar is slightly lower and the euro currency is a little higher after Fed Chair Powells dovish comments yesterday.

In the longer term, the U.S. dollar is likely to trend higher against the euro, since interest rate differential expectations remain slightly bullish for the greenback in spite of Powells comments yesterday.

It is my opinion that the Federal Reserve may be slower to ease monetary conditions than other major central banks.

INTEREST RATE MARKET FUTURES

The Treasury will auction ten year notes today.

The minutes from the Federal Open Market Committees September 18 policy meeting will be released at 1:00.

Market participants believe there is an 84% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at the October 30 policy meeting. Yesterday the probability was 82%.

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 2885.00 Resistance 2936.00

December 19 U.S. Dollar Index

Support 98.520 Resistance 98.920

December 19Euro Currency

Support 1.10000 Resistance 1.10500

December 19Japanese Yen

Support .93400 Resistance .94000

December 19Canadian Dollar

Support .75000 Resistance .75300

December 19Australian Dollar

Support .6736 Resistance .6770

December 19 Thirty Year Treasury Bonds

Support 163^24 Resistance 165^0

December 19Gold

Support 1502.0 Resistance 1520.0

December 19Copper

Support 2.5550 Resistance 2.5850

November 19 Crude Oil

Support 52.13 Resistance 53.89

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.


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