April 19, 2017
STOCK INDEX FUTURES
Mortgage applications in the week ended April 14 fell 1.8%, which compares to the 1.5% increase that was reported in the previous week.
At 1:00 central time the Federal Reserve will release its “Beige Book” on the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee and contains anecdotal evidence on the economic situation in each of the 12 Federal Reserve districts.
The bearish geopolitical influences appear to not be getting any worse, which helped stock index futures to advance.
Recent declines are not the beginning of any new bear market for stock index futures.
After yesterday’s sharp decline in the U.S. dollar, there is limited recovery today. There was almost no bullish reaction recently when Treasury Secretary Mnuchin said strength in the U.S. dollar was a “good thing” longer term.
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.
The U.S. dollar has recently shown a tendency to underperform the news.
The euro currency is lower in spite of news that the euro zone’s trade balance with the rest of the world returned to surplus in February after a rare deficit in the previous month.
After making a six month high yesterday the British pound is slightly lower today. Yesterday 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.
INTEREST RATE MARKET FUTURES
Higher stock index futures pressured the interest rate futures market.
Boston Federal Reserve Bank President Eric Rosengren will speak at 11:30.
The probability of a rate hike at the Federal Open Market Committee’s May 3 policy meeting is 4%, which is unchanged from Tuesday and the probability of a rate increase at the June 14 meeting is 44%, which is the same as yesterday.
After a huge decline in the 30 year Treasury bonds from the July 2016 high of 177^11 to the 147^7 low made in March of this year, flight to quality buying in April has supported the 30 year Treasury bond futures. This flight to quality buying has more than offset the bearish influences of rising global inflation and an expanding world economy.
It is better to buy gold futures on breaks now than to be in the interest rate futures markets, since rising global inflation levels and geopolitical worries, while are opposites for Treasury futures markets, they are both bullish for gold.
SUPPORT AND RESISTANCE
June 17 S&P 500
Support 2334.00 Resistance 2351.00
June 17 U.S. Dollar Index
Support 99.250 Resistance 99.700
June 17 Euro Currency
Support 1.07300 Resistance 1.07780
June 17 Japanese Yen
Support .91706 Resistance .92570
June 17 Canadian Dollar
Support .74350 Resistance .75020
June 17 Australian Dollar
Support .7491 Resistance .7566
June 17 Thirty Year Treasury Bonds
Support 154^0 Resistance 155^12
June 17 Gold
Support 1280.0Resistance 1296.0
July 17 Copper
Support 2.5350 Resistance 2.5800
June 17 Crude Oil
Support 52.50 Resistance 53.21
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