Nasdaq 100 Futures Dip as Traders Await AMZN Earnings

Also, five-year T-note, silver, crude oil and Australian dollar futures

1. Nasdaq 100 e-mini futures (/NQ): -0.51% 

2. Five-year T-note futures (/ZF): -0.25% 

3. Silver futures (/SI): -3.21% 

4. Crude oil futures (/CL): +0.62% 

5. Australian dollar futures (/6A): -1.01% 

U.S. equity markets are pointing lower on Tuesday as traders await the start of the earnings and macro deluge over the coming days, kicking off with Amazon (AMZN) earnings after the closing bell.

A rarely cited data report released morning—the first-quarter U.S. employment cost index—sparked a leg lower in both stocks and bonds.

Higher precious metals trading margins on Chinese exchanges may be provoking some deleveraging in the space. Elsewhere, weakness in metals is weighing on the commodity currencies, while lackadaisical intervention efforts by Japanese officials has traders punishing the Japanese Yen again. 

Equities move lower

Nasdaq futures (/NQM4) followed the broader equity futures market lower Tuesday morning after wage data roiled inflation concerns. Markets remain sensitive to any data that suggests prices could remain higher for longer.

Tomorrow brings the Federal Reserve rate decision, which should keep investors mostly on the sidelines until the data drops. Advanced Micro Devices (AMD) reports earnings after the closing bell. 

Bond futures fall

Bond futures fell following the U.S. wage data update, pushing investors further into the camp that believes rate cuts will come later rather than sooner.

Yesterday’s refunding announcement from the Treasury came as a surprise to budget watchers, many of whom expected a reduction in the borrowing estimate. The five-year T-note futures (/ZFM4) fell 0.25% ahead of the opening bell. There are no auctions today from the Treasury.  

Silver drops

A stronger dollar and higher yields dented silver prices (/SIN4). The July contract was down 3.21%—its second biggest percentage drop of the year. The move probably will cause investors to reassess the outlook for the metal with nearly all the gains from April wiped out.

Speculators remain massively net long the commodity, according to data from the Commodity Futures Trading Commission (CFTC). While high borrowing costs, surging government debt and strong demand from the east has helped fuel a bullish backdrop for silver, the technicals have turned to support a bearish trend.  

Oil inventory data coming today

Crude oil futures (/CLM4) are feeling the same weight as other assets, as higher yields and a stronger dollar dent the commodity’s backdrop.

Traders have their eyes on inventory data from the American Petroleum Institute (API) due today, and there is a sharp focus on fuel products like gasoline and diesel, which are often seen as a proxy for demand that leads crude oil slightly. Meanwhile, analysts expect Saudi Arabia to raise its prices for most of its crude grades to Asia.  

Australian dollar hurt by retail sales

A pullback in commodity prices coupled with weaker March Australia retail sales figures are weighing heavily on the Australian dollar (/6AM4) on Tuesday.

A lack of conviction behind the latest intervention efforts by Japanese policymakers, in context of an environment of still-elevated energy prices and bond yields, has traders selling the Japanese yen (/6JM4) back to last week’s closing level. Volatility remains elevated in FX markets (/6JM4 IVR: 95.6; /6AM4 IVR: 80.8), more so than in other asset classes currently. 

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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