More Accommodation Coming From Central Banks

by Alan Bush

STOCK INDEX FUTURES

The S&P 500 is higher for a third day and is at its highest level since March 9.

Stock index futures have recovered more than 30% from the March lows.

Prices are higher despite lower crude oil prices.

There are two 9:00 central time reports scheduled. The April consumer confidence index is expected to be 90 and the April Richmond Federal Reserve manufacturing index is anticipated to be negative 38.

The two-day Federal Open Market Committee meeting begins today.

Stock index futures are performing well for the news, as the technical pictures brightens.

CURRENCY FUTURES

The U.S. dollar is lower for a third day after falling under an eight-day uptrend line yesterday.

Traders may be liquidating longs ahead of the upcoming Federal Open Market Committee meeting just in case the tone of the FOMC is more accommodative.

The European Central Bank will hold its regularly scheduled policy meeting on Thursday.

The Canadian dollar and the Australian dollar are higher despite lower crude oil prices.

In the longer-term analysis there are no major disparities in interest rate differential expectations in the currency markets with all the major central banks adding more accommodation to their banking systems in one form or another.

INTEREST RATE MARKET FUTURES

The thirty-year Treasury bond futures are higher in spite of higher stock index futures.

Usually the thirty-year Treasury bond futures and stock index futures move in opposite directions. However, higher prices for both markets today suggest traders believe more accommodation is coming from the world’s major central banks, which is bullish for both stock index futures and the interest rate market futures.

The Treasury will auction seven-year notes today.

The 30-year Treasury bond futures remain in a broadly based congestion pattern, as the main fundamental influences affecting the long end of the curve are offsetting.

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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 ADM.  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.