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Analysts Scaling Back Estimates of Extent of Likely ECB Easing

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September 10, 2019


Global equity markets were pressured, as traders moderated their expectations about how much central banks are likely to lower interest rates in the coming days.

The U.S. National Federation of Independent Business small business sentiment index fell 1.6 points to 103.1 in August, which compares to the median estimate of 103.5.

At 9:00 central time, the U.S. Labor Department will release its July job openings and labor turnover survey (JOLTS). The JOLTS report tracks monthly changes in job openings and offers rates on hiring and quits.The median estimate is 7.311 million.

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


The European Central Bank will hold its policy meeting on Thursday. Traders are scaling back their estimates of how much the ECB will likely lower interest rates at that meeting.

Analysts expect the ECB will cut 10 basis points from benchmark interest rates. As of mid-September, the market had been pricing in a 20-basis-points reduction.

The British pound is higher after a report showed the U.K. unemployment rate held at a 45 year low. The unemployment rate held steady at 3.8% in the three months through July, remaining at its lowest level since 1974. The median estimate was 3.9%. Average earnings, including bonuses, increased 4.0% from last year, compared to the expected increase of 3.7%.

Canadian housing starts unexpectedly increased in August compared to the July report.


Global bond yields increased due to growing caution over the extent to which the European Central Bank will add stimulus to boost its economy this week. Also undermining futures is a more optimistic outlook for a U.S.-China trade deal.

Market participants believe there is a 93% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting on September 17-18. Currently there is only a 56% probability of another rate cut at the October meeting.

U.S. Treasury Department will sell $38 billion of 3-year notes today.

In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are likely to embark on a new round of easier credit policies.


September 19S&P 500

Support 296100 Resistance 2987.00

September 19 U.S. Dollar Index

Support 98.150 Resistance 98.500

September 19Euro Currency

Support 1.10310 Resistance 1.10680

September 19Japanese Yen

Support .93020 Resistance .93400

September 19Canadian Dollar

Support .75770 Resistance .76050

September 19Australian Dollar

Support .6846 Resistance .6877

December 19 Thirty Year Treasury Bonds

Support 162^2 Resistance 163^4

December 19Gold

Support 1492.0 Resistance 1513.0

December 19Copper

Support 2.6000 Resistance 2.6450

October 19 Crude Oil

Support 57.55 Resistance 58.85

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at Thank you.

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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 information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. 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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