Better Tone to US China Trade Deal


STOCK INDEX FUTURES

U.S. stock index futures were lower in the overnight trade. However, there was a quick reversal when the South China Morning Post reported that U.S. tariffs on Chinese imports that are scheduled for December 15 could be delayed even if a trade agreement was not signed by then.

The Organisation for Economic Co-operation and Development forecast global economic growth will be a decade-low 2.9% this year and also next year, reducing its 2020 forecast from an estimate of 3.0% in September.

Initial jobless claims were unchanged at 227,000 in the week ending November 16 when economists expected jobless claims would be 217,000.

The Philadelphia Federal Reserve November business index was 10.4 when 5.0 was anticipated.

Two 9:00 central time reports are scheduled. The October existing home sales report is estimated to show 5.48 million and the October leading indicators index is expected to be down 0.2%.

My view remains that the global reflation scenario will continue and easier credit conditions, although likely at a slower pace, from most of the worlds central banks are coming and will be the dominant fundamental that supports stock index futures.

Expect higher prices through the balance of the year.

CURRENCY FUTURES

The euro currency is higher in spite of news that Moodys has downgraded its outlook for German banks to negative from stable, as profitability and overall creditworthiness decline in a low interest rate environment.

European Central Bank officials warned at their October policy meeting that low interest rates could hurt the region's banks and increase risks in the financial sector.

The Canadian dollar is lower due to news that Canada lost 22,600 jobs in October, according to a report from payroll services provider ADP.

INTEREST RATE MARKET FUTURES

Flight to quality longs were liquidated in light of a better tone to the U.S.-China trade situation.

Minneapolis Federal Reserve Bank PresidentNeel Kashkariwill speak at 9:10.

The Federal Open Market Committees next policy meeting will be held on December 10-11. No change in policy is likely at the Feds last meeting of this year.

Financial futures markets are suggesting there is a 57% probability that the FOMC will lower its fed funds rate by 25 basis points at its July 29, 2020 policy meeting. Yesterday the probability was 57%.

Interest rate market futures are likely to trade only sideways in the longer term, although the flight to quality influence will probably reemerge from time to time.

SUPPORT AND RESISTANCE

December 19S&P 500

Support 3089.00 Resistance 3116.00

December 19 U.S. Dollar Index

Support 97.560 Resistance 97.880

December 19Euro Currency

Support 1.10800 Resistance 1.11200

December 19Japanese Yen

Support .92030 Resistance .92550

December 19Canadian Dollar

Support .75000 Resistance .75400

December 19Australian Dollar

Support .6785 Resistance .6825

December 19 Thirty Year Treasury Bonds

Support 159^16 Resistance 160^30

December 19Gold

Support 1462.0 Resistance 1478.0

December 19Copper

Support 2.6200 Resistance 2.6550

January 20 Crude Oil

Support 56.45 Resistance 58.13

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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