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Fed Chair Powell Speaks at 11:45


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January 10, 2019

STOCK INDEX FUTURES

Stock index futures are lower due to the lack of details of the U.S.-China trade talks.

U.S. filings for unemployment benefits fell to a four week low in spite of the partial federal government shutdown. Jobless claims declined 17,000 to 216,000 in the week ended January 5, which compares to expectations of 226,000.

The main event today will be at 11:45 central time when Federal Reserve ChairmanJerome Powellwill participate in a discussion at the Economic Club of Washington in Washington, D.C.

It may take a while, but downward pressure on interest rates globally, but not from the Fed in the short term, will ultimately rescue this market.

CURRENCY FUTURES

The U.S. dollar fell hard yesterday, with much of the pressure linked to the release of the minutes of the December 19 Federal Open Market Committee meeting, which showed the Fed is unlikely to increase rates for at least a few months while they assess the impact of recent market volatility on the economy.

Interest rate differential expectations are turning against the U.S. dollar.

The euro currency consolidated gains today after yesterday posting its biggest daily jump in more than six months, after FOMC minutes indicated a more cautious approach towards further rate hikes.

The European Central Bank warned of mounting economic risks, according to the minutes of its December 12-13 policy meeting.

Financial futures markets suggest the European Central Bank will not be able to hike its key interest rates until mid-2020, which is well past the timing suggested by the banks policy guidance.

Canadian new house prices were unchanged for a fourth consecutive month in November, matching market expectations.

China's inflation increased less than expected in December. The country's December producer inflation rose 0.9% year-on-year, which is lower than the 1.6% that economists were expecting.

INTEREST RATE MARKET FUTURES

Lower prices for stock index futures and the lack of details of U.S.-China trade talkssupported prices.

In addition to Fed Chair Powell, there are several other Fed speakers.

At 11:40 St. Louis Federal Reserve Bank PresidentJames Bullardwill give a presentation on U.S. economic and monetary policy.

Chicago Federal Reserve Bank PresidentCharles Evanswill deliver a speech and participate in a moderated question and answer session at 12:00.

Minneapolis Federal Reserve Bank PresidentNeel Kashkariwill speak about immigration and economic growthat 12:20 and at 6:00 this evening Federal Reserve Vice ChairmanRichard Claridawill give a speech on the economic outlook and monetary policy.

Financial futures markets are predicting a 72% probability of the fed funds rate remaining unchanged at the current level of 2.25%-2.50% this year.

There is a 15% chance of an increase in the fed funds rate by 25 basis points and there is a 13% probability of a 25 basis point rate cut.

Longer term, I expect the interest rate futures market will likely trend higher, led by the thirty year Treasury bond futures.

The long term trend for gold and silver is higher.

SUPPORT AND RESISTANCE

March 19S&P 500

Support 2558.00 Resistance 2591.00

March 19 U.S. Dollar Index

Support 94.530 Resistance 95.040

March 19Euro Currency

Support 1.15710 Resistance 1.16450

March 19Japanese Yen

Support .92770 Resistance .93290

March 19Canadian Dollar

Support .75510 Resistance .75890

March 19Australian Dollar

Support .7148 Resistance .7211

March 19 Thirty Year Treasury Bonds

Support 145^16 Resistance 146^20

February 19Gold

Support 1287.0Resistance 1300.0

March 19Copper

Support 2.6300 Resistance 2.6800

February 19 Crude Oil

Support 51.13 Resistance 52.70

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About the author


Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at alan.bush@admis.com.

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