More Accommodation Coming from the Federal Reserve?
by Alan Bush
STOCK INDEX FUTURES
Price movements in financial futures markets today are telling us that traders believe more accommodation is coming from the Federal Reserve. The best explanation for higher stock index futures, a lower U.S. dollar, mostly higher interest rate market futures and a higher gold price is the anticipation of easier credit policies from the Federal Reserve.
NASDAQ futures advanced for a seventh day and remain substantially higher for the year.
The April National Federation of Independent Business small business optimism index was 90.9 when 84.8 was expected.
April retail sales fell 0.8%, as anticipated.
Higher crude oil prices were supportive. Recently Saudi Arabia said it will unilaterally reduce crude oil production by one million barrels a day in June.
In recent weeks stock index futures have overperformed the news.
The U.S. dollar is lower but remains in a trading range.
The British pound is higher even though the Bank of England’s deputy governor said more easing will be needed.
The Japanese yen is higher despite news that a key economic indicator in Japan fell at the fastest rate since 2011 in March and the government warned of a recession.
The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales, dropped a preliminary 4.9 points to 90.5 in March from February.
The Canadian dollar and the Australian dollar are higher due to stronger crude oil prices.
The Australian dollar is higher in spite of news that Australia’s business conditions weakened further.
INTEREST RATE MARKET FUTURES
The Treasury will auction ten-year notes today.
The Treasury is auctioning $96 billion across the 3-year, 10-year, and the 30-maturities this week. The Treasury also unveiled its 20-year bond that will go on auction next week.
Federal Reserve speakers today are Patrick Harker at 9:00, Randal Quarles at 9:00 and Loretta Mester at 4:00 PM.
Federal Reserve Chairman Jerome Powell will provide his outlook on the economy at a webcast event at 8:00 AM on Wednesday.
SUPPORT & RESISTANCE
June 20 S&P 500
Support 2892.00 Resistance 2945.00
June 20 U.S. Dollar Index
Support 99.730 Resistance 100.550
June 20 Euro Currency
Support 1.07880 Resistance 1.08860
June 20 Japanese Yen
Support .92840 Resistance .93290
June 20 Canadian Dollar
Support .71040 Resistance .71660
June 20 Australian Dollar
Support .6428 Resistance .6545
June 20 Thirty Year Treasury Bonds
Support 178^16 Resistance 179^20
June 20 Gold
Support 1693.0 Resistance 1717.0
July 20 Copper
Support 2.3600 Resistance 2.3900
July 20 Crude Oil
Support 24.95 Resistance 27.03
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