Alan Bush

ADM Investor Services, Inc.

Alan has been a commodity analyst since 1976, focusing on the fundamental and technical aspects of precious metals, stock index, interest rate and foreign currency markets.  He has authored several articles for Futures magazine and Stocks Futures and Options magazine.  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 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 is currently the Senior Financial Economist with ADM Investor Services, Inc.


Tel: 312-242-7911
Email: alan.bush@admis.com


Commentary by Alan Bush

February 20, 2018

STOCK INDEX FUTURES
 

Last week's rally saw the S&P 500 enjoy its largest weekly gain since 2013. 

However, stock index futures are lower today, as traders are concerned with a heavy slate of Treasury offerings this week and prospects of higher interest rates. 

With approximately two thirds of the companies in the S&P 500 reporting fourth quarter earnings so far this season, some analysts are expecting earnings to grow 15% from the same period in 2016.

In spite of the recent correction, I am not seeing the beginning of any new long term bear market for stock index futures.  

CURRENCY FUTURES

The U.S. dollar is higher today after last week it traded at its lowest level since January 2015.

In the longer term, lower prices are likely for the greenback, as interest rate differential expectations are likely to undermine the U.S. dollar.

The euro currency is lower on news that German investor sentiment fell. The ZEW index declined to 17.8 in February, which compares to the estimate of 16.

The double top resistance at the 1.2579 area in the March euro currency is likely to be taken out in the next few weeks.

Longer term, the euro will be supported by the belief that the European Central Bank will remove some of its accommodation later this year and may actually hike interest rates in 2019. 

In spite of lower prices today, the main trend for euro currency is higher. 

The British pound is lower after a report showed U.K. manufacturers scaled back their expectations of output prices in February.

INTEREST RATE MARKET FUTURES

There are no major U.S. economic reports scheduled for today.

The U.S. Treasury is preparing to sell $258 billion in new debt this week, which could push yields higher.

Today the Treasury will auction $179 billion in Treasury bills and two year notes.

The probability of a fed funds rate increase at the Federal Open Market Committee’s March 21 policy meeting is 83%, which is unchanged from Friday.  

The March thirty year Treasury bond futures recently made a double bottom at 143^4. 

I would expect this double bottom to be taken out. 

Futures are likely to work lower, as commodity and wage inflation accelerates this year.

The information and comments contained herein are provided as general commentary of market conditions and are not and should not be interpreted as trading advice or recommendation.  The information and comments contained herein are not and should not be interpreted to be predictive of any future market event or condition.  The information and comments contained herein is provided by ADM Investor Services, Inc. and not Archer Daniels Midland Company.  Copyright © ADM Investor Services, Inc.

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