September 11, 2019
STOCK INDEX FUTURES
Global equity markets firmed ahead of the expected easing of credit conditions from the European Central Bank and after China exempted some U.S. products from tariffs. China said higher tariffs wouldn't be levied against a variety of U.S. imports for a year, beginning on September 17, and that it would review additional products for exemption.
The producer price index increased a seasonally adjusted 0.1% in August from the previous month, as expected. Excluding the volatile food and energy categories, producer prices advanced 0.3%, which compares to the anticipated 0.2% increase.
The 9:00 central time September Atlanta Federal Reserve business inflation expectation is 2.0% and the 9:00 July wholesale trade report is anticipated to unchanged.
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 European Central Bank will hold its policy meeting tomorrow. Traders have scaled back their estimates of how much the ECB will likely lower interest rates at that meeting.
Analysts expect the ECB will cut 10 basis points from benchmark interest rates. Previously the market had been pricing in a 20-basis-points reduction.
Canada's industrial capacity utilization increased in the second quarter. Industries in Canada operated at 83.3% of their production capacity in the second quarter, which is a 2.2 percentage point increase from the revised 81.1% level in the first quarter. Market expectations were for capacity utilization to be 82% in the second quarter.
INTEREST RATE MARKET FUTURES
Global bond yields increased due to growing caution over the extent to which the European Central Bank will add stimulus to boost its economy tomorrow. Also undermining futures is a more optimistic outlook for a U.S.-China trade deal.
Market participants believe there is an 89% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting on September 17-18. Currently, there is only a 51% probability of another rate cut at the October meeting.
U.S. Treasury Department will sell 10-year notes today.
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
September 19S&P 500
Support 2970.00 Resistance 2992.00
September 19 U.S. Dollar Index
Support 98.200 Resistance 98.710
September 19Euro Currency
Support 1.09940 Resistance 1.10650
September 19Japanese Yen
Support .92670 Resistance .93130
September 19Canadian Dollar
Support .75900 Resistance .76180
September 19Australian Dollar
Support .6843 Resistance .6894
December 19 Thirty Year Treasury Bonds
Support 160^8 Resistance 161^14
Support 1492.0 Resistance 1505.0
Support 2.6100 Resistance 2.6450
October 19 Crude Oil
Support 57.34 Resistance 58.75
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