The U.S. government and central bank and global counterparts appear to be intervening with stimulative global reflation activities, as the story is told through the positive gains in today’s global equity markets. The simple truth is that all global economies, including the U.S., left unprotected from real world political and economic realities, sooner or later would drift into recession or worse if governments did not intervene to prevent a major economic downturn.  

A U.S. recession or a paralyzing global slowdown is not likely to happen in 2019 or 2020, given the aggressive oversight of global governments or central banks. My articles tend to build upon each other, as I write about ongoing dynamic economic, social, political and military events, so read my previous articles to gain a cumulative understanding of today’s economic, market, and policy realities at the following link: https://bit.ly/2WX8c5R

Please download the accompanying chart book at the end of this article and follow along:

Evidence of global reflation

First, now that the U.S. Federal Reserve has move from a tightening to an accommodative mode the U.S. 10-Year Treasury Yields, or interest rates appear to be moving sideways with a downside bias providing a tailwind for economic growth, Charts A1 to A4.

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Second, the dollar appears to be defying the global economic downturn by moving sideways with a potential further move to the downside, which would help realign global currencies and provide a more equitable global trade environment and advance global economic activity, Charts A5 to A8.

Third, dollar weakness, coupled with other factors, allows U.S. equities, for the most part, to remain on a sideways to up journey for several reasons with global demand at the top of the list, Charts A14 to A18.

Fourth, the question is: are global equities about to breakout? See charts A19A to A19D. The near-term answer appears to be yes, so, now we watch closely to see if global equity markets can maintain momentum and we watch for signs of building demand for commodities.

Fifth, always obvious in hindsight, and happens unexpectedly, global equity markets will elevate and then contract to remain in balance and these actions will occur generally when pessimism or optimism moves to extremes, but never overlook government or governments’ intervention influence, which in today’s world is all important.      

Market Outlook for the Week Beginning April 8, 2019

10-Year U.S. Treasury Yield: The trend is sideways to down.

Presently, my contention is the 10-Year U.S. Treasury Yield has the potential to revisit the July 2016 low of 1.43. The recent November 2018 high was 3.24 and the April 5, 2019, yield or interest rate is at 2.50. With global investors remaining fixated on both global strengths and weaknesses, the demand will remain for short duration safe-haven U.S. sovereign or government debt in the near term; therefore, 10-Year Treasury Yields should remain sideways with a downside bias, Charts A1 to A4.

U.S. Dollar Index: Sideways remaining in its multi-month range since the beginning of 2019 of 94.64 to 97.6.

The dollar is currently at 96.49, which is likely the best near-term expectation. If the dollar breaks to the upside, the U.S. policymakers will likely intervene in a serious way. A neutral to lower dollar should be supportive of current U.S. economic activity and global economies in general. This is one key factor limiting the likelihood of a U.S. recession in 2019, Charts A5 to A8.

$CRB Index: Trend remains sideways to up, April 5, 2019 close 187.68, Range (172.15 to 188.73).

With global deflationary forces remaining problematic, with most of the world’s commodities at surplus, and with the ongoing global realignment of the world’s currency, bond, equity, and commodity markets simply limitations to this index’s near-term upside remain. Charts B1 to B5.

$WTIC Light Crude Oil: Near term light crude oil remains bullish, April 5, 2019 close $63.08 per barrel.

Fundamentals and political intervention seem to be at odds with each other. This market may be signaling the obvious, with its sustained price strength, that reflation, due to political compromise is the order of the day. Charts B6 to B9.

Soybeans: Near term, soybeans remain in a sideways trading range with a downside bias. The potential trading range is $7.95 to $9.39 per bushel, April 5, 2019 close $8.99 per bushel. Charts B10 to B13.

Corn: Near term, corn remains in a sideways trading range with a downside bias. The potential trading range is $3.05 to $3.78 per bushel, April 5, 2019 close $3.63 per bushel, Charts B14 to B17.

Long Grain Rice: Weather defines final U.S. planted acres, so we wait. My primary trading range presently is $10.13 to 11.13 per cwt. or $4.56 to $5.01 per bushel, April 5, 2019 close $10.52 per cwt. or $4.73 per bushel, Charts B18 to B20. I will do a separate article and slide show on 2019 acreage intentions and supply and demand. Fundamentals are weighing heavily on this market.

Cotton: First, my primary trading range is .7341 to .7870 cents per pound with an upside bias. Second, if prices close below .7842 cents per pound the week of April 8, 2019, my primary range will likely become .7842 to .6856 cents per pound with a downside bias, April 5, 2019 close .7825-cents per pound, Charts B21 to B24.

Wheat: Wheat appears to be displaying a downside trading range of $4.78 to $4.05 per bushel with an April 5, 2019 close $4.70 per bushel. We will adjust our estimates as market dynamics unfold, Charts B25 to B28.

Rice Webinar: U.S. Rice Exports Free Trade - Fair Trade, Thursday, April 11, 10AM CST

Riceland Foods, Inc. Senior Vice President of Operations Terry Harris draws on his 43-years of experience in the global rice industry and will discuss the challenges the U.S. rice industry faces selling rice in a world increasingly focused on food security, protectionism, and nationalism.

Harris will provide an in-depth discussion on NAFTA 2.0, Chinese trade and policy disputes, European Union economic and trade challenges, Brexit, and other issues impacting today’s U.S. rice trade.

Rice, Grain, and Cotton Market Outlook Webinar Video

Webinar Video: Zwinger and Hackett Rice, Grain, and Cotton Market Webinar Video, 04/04/19.

Rice trader Jeremy Zwinger and commodities expert Shawn Hackett provided insight into the impacts of rapidly changing global weather patterns, trade and other policy disputes, and global supply and demand fundamentals on rice, grain, and cotton commodity market outlook.

Source: Bobby Coats is a professor and extension economist in the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service. E-mail: [email protected]. and is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

Download Slide Show for charts and expanded details, Click Download Link

No Crystal Ball: Since no one has a crystal ball, always consult an investment professional or professionals before making investment decisions.   

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