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Central Banks to Become More Accommodative

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February 14, 2020

STOCK INDEX FUTURES

S&P 500 and NASDAQ futures advanced to new record highs in the overnight trade.

Retail salesin the U.S. increased 0.3% on a monthly basis in January, which was as expected, and retail sales, excluding autos, also rose 0.3% in the same period, as anticipated.

Import prices held steady in January from December when economists estimated a 0.2% decline.

January industrial production was down 0.3%, as expected, and January capacity utilization was 76.8%, which was also as anticipated.

There are two 9:00 central time reports. The February consumer sentiment index is estimated to be 99.7 and the December business inventories report is expected to be up 0.1%.

My outlook remains unchanged in that stock index futures will end up higher in the first quarter.

CURRENCY FUTURES

The U.S. dollar advanced to a new four month high.

Recent gains in the greenback are linked to the belief that the Federal Reserve will be less aggressive in adding more accommodation to the banking system than other major central banks. In the longer term, higher prices are likely for the U.S. dollar, which remains my minority opinion.

The euro currency declined to the lowest level since May 2017 after a report showed fourth quarter gross domestic product in the euro zone increased 0.1%, as expected.

Higher crude oil prices supported the Canadian dollar and the Australian dollar.

INTEREST RATE MARKET FUTURES

Futures are higher on the belief that central banks around the world are coming under pressure to be more accommodative in an attempt to stem the negative consequences of the coronavirus on the global economy.

Based on financial futures markets, currently there is a 69% probability that the Federal Open Market Committee will lower its fed funds rate at its September 16, 2020 policy meeting. Yesterday the probability was 69%.

SUPPORT AND RESISTANCE

March 20S&P 500

Support 3368.00 Resistance 3390.00

March 20 U.S. Dollar Index

Support 98.820 Resistance 99.100

March 20Euro Currency

Support 1.08400 Resistance 1.08840

March 20Japanese Yen

Support .91040 Resistance .91320

March 20Canadian Dollar

Support .75320 Resistance .75600

March 20Australian Dollar

Support .6707 Resistance .6742

March 20 Thirty Year Treasury Bonds

Support 161^20 Resistance 162^30

April 20Gold

Support 1574.0 Resistance 1588.0

March 20 Crude Oil

Support 51.22 Resistance 52.55

March 20Copper

Support 2.5950 Resistance 2.6200

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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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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