September 20, 2019
STOCK INDEX FUTURES
U.S. stock index futures are higher due to increasing global economic stimulus efforts. Today China became the third country to reduce interest rates in the past few weeks.
China cut its new one-year benchmark lending rate for the second month in a row today, after the Federal Reserve and the European Central Bank recently lowered borrowing costs and left the door open for additional monetary stimulus.
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.
Interest rate differential expectations are slightly bullish for the U.S. dollar due to the belief that the Federal Reserve may be slower to ease monetary conditions than other major central banks.
The Japanese yen is steady after a report showed Japans August core consumer price index increased 0.5% on the year, as expected.
The Canadian dollar is lower after a report showed retail sales in Canada rose less than estimated in July. Retail sales in Canada increased 0.4% on a monthly basis in July, falling short of the market expectation of a 0.6% gain.
INTEREST RATE MARKET FUTURES
James Bullard, president of the Federal Reserve Bank of St. Louis, said the U.S. central bank this week should have lowered its fed funds rate by more than it did. Bullard said, Lowering the target range for the federal funds rate by 50 basis points at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks.
Other Federal Reserve speakers today are Boston Federal Reserve Bank PresidentEric Rosengrenat 10:20 and Dallas Federal Reserve Bank PresidentRobert Kaplan at 12:00.
Market participants believe there is a 45% probability that the FOMC will lower its fed funds rate by another 25 basis points at the October 30 policy meeting.
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 likely to embark on a new round of easier credit policies.
SUPPORT AND RESISTANCE
December 19S&P 500
Support 3002.00 Resistance 3023.00
December 19 U.S. Dollar Index
Support 97.680 Resistance 98.190
December 19Euro Currency
Support 1.10740 Resistance 1.11440
December 19Japanese Yen
Support .93020 Resistance .93380
December 19Canadian Dollar
Support .75250 Resistance .75550
December 19Australian Dollar
Support .6793 Resistance .6835
December 19 Thirty Year Treasury Bonds
Support 160^0 Resistance 161^4
Support 1501.0 Resistance 1518.0
Support 2.6000 Resistance 2.6350
November 19 Crude Oil
Support 58.05 Resistance 59.55
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