Slightly Better Tone to U.S.-China Trade Situation

May 24, 2019

STOCK INDEX FUTURES

U.S. stock index futures are higher due to a slightly better tone to the U.S.-China trade situation.

President Donald Trump repeated previous reports that he would meet with China's President Xi in June at the G-20 meeting, which boosted hopes for progress in the U.S.-China trade talks.

Orders for durable goods in April, which are products that are designed to last at least three years, fell 2.1% from the prior month. Economists had expected a 2.0% drop in the month.

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.

But, first we need to get past the U.S.-China trade hurdle.

Now is a good time to focus on the long side of flight to quality vehicles, especially the thirty year Treasury bond futures.

CURRENCY FUTURES

Yesterday the U.S. dollar index hit its highest level since June 2017. Today the greenback is lower as some flight to quality longs are liquidated.

After a record 14 days of consecutive declines, the British pound is higher today after U.K. Prime Minister Theresa May announced her resignation.

U.K. retail sales were unchanged in April after several months of strong growth. The figures were better than economists were expecting.

INTEREST RATE MARKET FUTURES

Yesterday the thirty year Treasury bond futures advanced to the highest level since February 2018.

Futures are lower today due to optimistic comments on trade made by President Trump.

Financial futures markets are predicting there is a 62% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its October 30 policy meeting.

I expect the flight to quality vehicles, especially the thirty year Treasury bond futures, to trade higher in this atmosphere of U.S.-China trade uncertainties.

SUPPORT AND RESISTANCE

June 19S&P 500

Support 2818.00 Resistance 2844.00

June 19 U.S. Dollar Index

Support 97.480 Resistance 97.820

June 19Euro Currency

Support 1.11910 Resistance 1.12340

June 19Japanese Yen

Support .91200 Resistance .91580

June 19Canadian Dollar

Support .74140 Resistance .74500

June 19Australian Dollar

Support .6877 Resistance .6928

June 19 Thirty Year Treasury Bonds

Support 150^24 Resistance 151^10

June 19Gold

Support 1278.0 Resistance 1288.0

July 19Copper

Support 2.6800 Resistance 2.7100

July 19 Crude Oil

Support 57.93 Resistance 59.13

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