April 18, 2017
Watch my video commentary here:https://youtu.be/IppKE_-lNhE
STOCK INDEX FUTURES
March housing starts fell 6.8% to 1.215 million, which compares to the estimate of 1.250 million and building permits increased 3.6% to 1.260 million, when 1.250 million were anticipated.
March industrial production increased .5%, as expected and March capacity utilization was 76.1%, which is also as anticipated.
Once the bearish geopolitical influence subsides this market will be rescued by improving growth prospects for the global economy and the still historically low domestic and global interest rate structure.
In addition, stock index futures tend to rebound immediately in the two weeks following the April 15 tax day (Tax Day is April 18 this year).
Recent declines are not the beginning of any new bear market for stock index futures.
There were only temporary gains in the U.S. dollar after Treasury Secretary Mnuchin said strength in the U.S. dollar was a “good thing” longer term. This comment appears to contradict recent comments from President Donald Trump when he said the U.S. dollar "is getting too strong" and he would prefer the Federal Reserve keep interest rates low.
Our opinion remains that the Trump administration is not interested in a strong U.S. dollar policy in spite of the recent comments from Treasury Secretary Mnuchin.
Geopolitical problems apparently have not worsened over the past few days, which caused flight to quality longs in the greenback to be liquidated.
The U.S. dollar has recently shown a tendency to underperform the news.
The British pound jumped to a four month high after U.K. Prime Minister Theresa May announced that she wants to hold the next U.K. general election on June 8. This would be well ahead of the next scheduled elections in 2020. The House of Commons will vote on the PM's proposal tomorrow.
The Australian dollar fell after the Reserve Bank of Australia said in the minutes of its April policy meeting that underemployment “remained high.”
INTEREST RATE MARKET FUTURES
Lower stock index and crude oil futures supported the interest rate futures market.
Yesterday Federal Reserve Vice Chairman Stanley Fischer said the U.S. central bank was "near the beginning" of starting the process to shrink the balance sheet, but he offered no direct guidance as to when that might take place.
Today Kansas City Federal Reserve Bank President Esther George said the U.S. central bank needs to press ahead with rate increases, adding that it should also begin reducing its massive balance sheet later in the year.
The probability of a rate hike at the Federal Open Market Committee’s May 3 policy meeting is 4%, which is unchanged from Monday and the probability of a rate increase at the June 14 meeting is 44%, which compares to 48% yesterday.
While flight to quality buying has recently supported the 30 year Treasury bond futures, along with President Trump’s interest rate comments, the dominant bearish global inflation influence, will put pressure on futures in the longer term.
SUPPORT AND RESISTANCE
June 17 S&P 500
Support 2331.00 Resistance 2349.00
June 17 U.S. Dollar Index
Support 99.610 Resistance 100.370
June 17 Euro Currency
Support 1.06550 Resistance 1.07450
June 17 Japanese Yen
Support .91700 Resistance .92390
June 17 Canadian Dollar
Support .74730 Resistance .75300
June 17 Australian Dollar
Support .7515 Resistance .7598
June 17 Thirty Year Treasury Bonds
Support 153^10 Resistance 154^16
June 17 Gold
Support 1280.0Resistance 1296.0
May 17 Copper
Support 2.5350 Resistance 2.6000
May 17 Crude Oil
Support 52.03 Resistance 53.05
For more information about these markets, please contact Alan at 312.242.7911 or via email at email@example.com. Thank you.
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