Nasdaq 100 Treads Water After Fed Warning on Rates

Also 30-year T-bond, gold, crude oil and Australian dollar futures

1. Nasdaq 100 E-mini futures (/NQ): -0.11% 

2. 30-year T-bond futures (/ZB): -0.16% 

3. Gold futures (/GC): +0.76% 

4. Crude oil futures (/CL): +1.70% 

5. Australian dollar futures (/6A): -0.48% 

U.S. equity markets are slightly lower today as the trading week gets ready to wrap early for Good Friday. Hawkish commentary from Federal Reserve Gov. Christopher Waller helped push yields higher, although revisions to the 4Q ’23 U.S. gross domestic product (GDP) report helped spark a rebound by bonds. Gold has continued its march higher, while crude oil has quickly ascended toward its yearly highs. The U.S. Dollar remains in positive territory on the session, though overnight gains have been fading. 

The Nasdaq 100 (/NQM4) is nearly unchanged as traders position their portfolios for the end of the quarter. Tomorrow will see major event risk with the personal consumption expenditures index (PCE) and comments from Fed Chair Jerome Powell, but the market will be closed for a U.S. holiday. That said, it would be unusual to see traders go risk-on, although next week will likely be a decisive week for equity markets that will have to pick a direction amid more event risks, including purchasing managers’ indexes and the March non-farm payroll report.  

Treasuries are falling across the curve after Fed Gov. Christopher Waller tempered expectations for three rate cuts this year, saying that he is in no rush and that the recent inflation data has been disappointing. Strong economic data on GDP and consumer spending also helped to pressure yields higher. 30-year T-Bond futures (/ZBM4) fell 0.16% this morning, propping up the long end of the curve. four- and eight-week bills are scheduled for Treasury auctions today.  

Gold futures (/GCM4) appear to be attracting some defensive flows amid quarter-end rebalancing. Precious metals traders are brushing aside higher Treasury yields and a stronger dollar ahead of heightened event risk, which will occur when U.S. markets are closed. A stronger-than-expected GDP report was also encouraging for the metal as it broke into fresh all-time highs. Speculators remain overall net long on gold but next week will be busy in terms of event risk. 

Crude oil prices (/CLK4) found support above the 82 handle despite yesterday’s report from the Energy Information Administration (EIA) that showed a build in stockpiles, both in crude oil and gasoline. However, refinery utilization rates rose, suggesting we may see stocks start to draw down in the coming weeks. Increasing brent prices overseas will also likely support U.S. export demand as global supplies remain tight amid OPEC’s ongoing production cuts. 

Risk-sensitive Australian dollar futures (/6AM4) fell this morning after comments from Federal Reserve members underpinned dollar strength. Australia also saw weaker-than-expected economic data in retail sales cross the wires overnight, but the driving force is likely traders de-risking ahead of tomorrow’s U.S. inflation report, which could charge the dollar if it comes in over expectations.  

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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