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FOMC is Main Event Today


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March 20, 2019

STOCK INDEX FUTURES

According to press reports, the U.S. and China are moving closer to a formal trade agreement. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer reportedly are traveling to China next week, and Chinese negotiators are heading to Washington after that for high-level discussions in an attempt to get a trade deal wrapped up. Some analysts are speculating that an agreement will be reached, but it wont include important demands from the U.S. that address theft of intellectual property.

The two-day Federal Open Market Committee meeting concludes today. A statement will be released at 1:00 central time, and Fed Chair Powell will hold a press conference at 1:30.

Following a 13% rally this year, the benchmark S&P 500 is now 3.5% away from its record closing high that was registered in September.

Since the lows were made in late December, stock index futures have been performing better than the news would suggest, which should be viewed as a sign of long term strength.

CURRENCY FUTURES

Much of todays trade appears to be evening up ahead of the FOMC statement.

Germany's producer price inflation was unchanged in February when an acceleration was expected, after slowing in the previous two months.

The producer price index increased 2.6% year-on-year, which was the same as in January. Economists had expected a higher rate of 2.9%.

The British pound is lower due to the uncertainties of the Brexit situation.

U.K. Prime Minister May is expected to ask for only a short extension, as the March 29 Brexit deadline fast approaches. This would allow the British Parliament to vote for a third time on a version of Mays Brexit agreement.

The pound is lower in spite of news that U.K. consumer price inflation unexpectedly accelerated in February for the first time in six months.

Consumer prices in the U.K. rose 1.9% in the year through February, which compares with an annual gain of 1.8% in the previous 12 months. Economists had expected the inflation rate to remain unchanged.

INTEREST RATE MARKET FUTURES

The Federal Open Market Committee is expected to keep its fed funds rate unchanged.Analysts anticipate the Fed will maintain the dovish tone it struck at its January meeting when it put its rate increasing plan on hold and became data dependent.

In addition, it is anticipated that the policy statement will shed light on the long awaited details of the Feds plans to stop reducing its holdings of Treasury bonds.

A flurry of downbeat economic data this month has supported market expectations that the FOMC may reinforce a halt to further increases in interest rates.

Financial futures markets are predicting there is a 71% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 28% chance for a 25 basis point or more decline in the fed funds rate in 2019 and a 1% chance of a rate increase.

SUPPORT AND RESISTANCE

June 19S&P 500

Support 2821.00 Resistance 2852.00

June 19 U.S. Dollar Index

Support 95.650 Resistance 96.200

June 19Euro Currency

Support 1.14070 Resistance 1.14680

June 19Japanese Yen

Support .90010 Resistance .90580

June 19Canadian Dollar

Support .75010 Resistance .75390

June 19Australian Dollar

Support .7052 Resistance .7123

June 19 Thirty Year Treasury Bonds

Support 145^12 Resistance 146^16

April 19Gold

Support 1300.0 Resistance 1316.0

May 19Copper

Support 2.9050 Resistance 2.9400

May 19 Crude Oil

Support 58.33 Resistance 59.88

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For more information about these markets, please contact Alan at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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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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