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Central Banks Pushed toward Accommodation

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March 27, 2019


Global stocks edged lower today due to lingering concerns about the possibility of a global economic slowdown.

Equity markets got a reminder of global growth risks after Chinese data showed industrial profits shrank by the most since late 2011, falling 14% in the first two months of this year.

Some of the bearish impact of a weakening global economy is being offset by optimism that a trade agreement could be reached between the U.S. and China, possibly next month.

My view is that the reflation story remains on track and easier credit conditions from most of the worlds central banks are coming and will be the dominant fundamental that supports stock index futures in the long term.


The euro currency is lower after European Central Bank President Mario Draghi signaled more assistance for banks through a cheap loans program.

Interest rate differential expectations offer no clear advantage to either the U.S. dollar, or the euro currency, since the Federal Reserve and the European Central Bank are both likely to move toward accommodation this year.

The British pound is lower after a report showed U.K. retail sales fell by the most in 17 months in March.


Futures are a little higher, although supply remains an issue. The U.S. Treasury is auctioning approximately $113 billion in new debt this week, including five year notes today.

Kansas City Federal Reserve Bank PresidentEsther Georgewill deliver a speech on the economic outlook and monetary policy at 6:00 central time this evening.

Some Federal Reserve officials are saying its too soon to consider cutting U.S. interest rates. However, this is counter what financial futures markets are suggesting.

Financial futures are predicting there is a 27% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 73% chance for a 25 basis point or more decline in the fed funds rate in 2019.

Currently there is a lot of talk about the inverted yield curve.

Although an inverted yield curve is an important sign of an economic slowdown, I believe that once a U.S.-China trade agreement is made, the yield curve after a while, will move back to normal.


June 19S&P 500

Support 2811.00 Resistance 2834.00

June 19 U.S. Dollar Index

Support 96.110 Resistance 96.550

June 19Euro Currency

Support 1.13180 Resistance 1.13770

June 19Japanese Yen

Support .90850 Resistance .91400

June 19Canadian Dollar

Support .74550 Resistance .74960

June 19Australian Dollar

Support .7083 Resistance .7152

June 19 Thirty Year Treasury Bonds

Support 148^20 Resistance 150^4

June 19Gold

Support 1315.0 Resistance 1332.0

May 19Copper

Support 2.8500 Resistance 2.8800

May 19 Crude Oil

Support 59.33 Resistance 60.55

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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 risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. 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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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

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