FOMC Likely to Cuts Rates Again at the October 30 Policy Meeting

October 18, 2019

STOCK INDEX FUTURES

U.S. stock index futures are mixed, coming back from lower prices in the overnight trade.

The 9:00 central time September leading indicators report is expected to show a gain of 0.2%.

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.

CURRENCY FUTURES

The euro currency rallied to its highest levels in almost two months against the U.S. dollar after yesterday the E.U. and Britain reached a Brexit agreement.

However, underlying sentiment for the deal was a bit subdued due to doubts about the merits of U.K. Prime Minister Boris Johnson's Brexit plan and about the likelihood of the agreement getting passed by the British parliament.

The Japanese yen is higher even though the Bank of Japan deputy governor said the central bank must patiently continue its powerful monetary stimulus to maintain momentum toward achieving 2.0% inflation, as the downside risks from overseas economies mount.

INTEREST RATE MARKET FUTURES

Futures firmed when Dallas Federal Reserve Bank PresidentRobert Kaplan today said global growth is decelerating and he strongly supported the Fed's July and September rate cuts.

Other Federal Reserve speakers today are Kansas City Federal Reserve Bank PresidentEsther George at 9:00, Minneapolis Federal Reserve Bank PresidentNeel Kashkariat 9:30 and Dallas Federal Reserve Bank PresidentRobert Kaplan at 4:30.

Market participants believe there is an 83% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at the October 30 policy meeting. The probability yesterday was 88%.

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 under pressure to become more accommodative.

SUPPORT AND RESISTANCE

December 19S&P 500

Support 2985.00 Resistance 3009.00

December 19 U.S. Dollar Index

Support 97.100 Resistance 97.450

December 19Euro Currency

Support 1.11500 Resistance 1.11980

December 19Japanese Yen

Support .92210 Resistance .92600

December 19Canadian Dollar

Support .76040 Resistance .76250

December 19Australian Dollar

Support .6827 Resistance .6868

December 19 Thirty Year Treasury Bonds

Support 159^20 Resistance 160^20

December 19Gold

Support 1485.0 Resistance 1504.0

December 19Copper

Support 2.5800 Resistance 2.6450

December 19 Crude Oil

Support 53.65 Resistance 54.75

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.


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