S&P 500 Futures Dip Ahead of Apple WWDC; FOMC on Wednesday

Also, 10-year T-note, gold, crude oil, and euro futures 

1. S&P 500 e-mini futures (/ES): -0.23% 

2. 10-year T-note futures (/ZN): -0.16% 

3. Gold futures (/GC): -0.08% 

4. Crude oil futures (/CL): +0.71% 

5. Euro futures (/6E): -0.57% 

An important week beckons.

With the May U.S. inflation report and June Federal Reserve rate decision due for Wednesday, traders are waiting on tenterhooks—and perhaps a volatility expansion (options are pricing in just a +/-1.3% move in the S&P 500 (/ESM4) through Wednesday close) once we cross through mid-week.

Until then, all eyes are on Apple (AAPL), its Worldwide Developers Conference and whether the market’s second-largest company by market cap is making a more concerted push into AI.

S&P 500 falls

S&P 500 contracts fell Monday morning, drifting lower by about 0.23%. Traders will likely wait until Wednesday’s inflation report before making big moves.

Southwest Airlines (LUV) rose nearly 7% in pre-market trading after the Wall Street Journal reported that Elliot took a nearly $2 billion position in the company. GameStop (GME) rose over 5% to recover some losses from Friday’s 40% drop that came during Roaring Kitty’s livestream.  

Bond yields up

Bond yields started to rose overnight in Europe and U.S. yields followed.

The 10-year T-note contract (/ZNU4) was down 0.16%. Combined with Friday’s move, which puts the underlying 10-year yield at 4.457%—the highest since June 3. Wednesday will likely be a big day for bonds, with the consumer price index (CPI) and the Fed’s interest rate and economic projections due for an update.

The Treasury will hold a three-year note auction today and three- and six-month bill auctions.  

Gold prices (/GCQ4) moderated this morning, dropping about 0.08%, following Friday’s 2.76% selloff, which was the largest move since April 22.

The break below the late May swing low of 2,326 puts prices at risk of further declines, especially if Wednesday’s data pushes yields and the dollar higher. 

Friday’s Commitments of Traders report showed that speculator longs and shorts cut gold positions, trimming 2,171 and 2,888 contracts, respectively.  

Crude oil moves up

Crude oil prices (/CLN4) rebounded to start the week despite ongoing concerns around global supply.

Last week’s bearishness about growing OPEC supply later this year will likely linger until fuel demand in the United States recovers, which has been another concern for oil traders.

Gas demand in the United States remains below nine million barrels per day (mbpd). The next few weeks will likely show if U.S. gasoline demand can climb above that mark, which would likely trigger some strength in the oil market if it does pass it.  

Euro moves down

Euro contracts (/6EM4) sank overnight after French President Emmanuel Macron called for snap parliamentary elections, effectively dissolving the current government.

The surprise move sent the Euro lower, adding to losses from Friday when the Euro fell following a rate cut from the European Central Bank (ECB) and the dollar rose on the U.S. jobs report.

Exit polling in Germany showed a big defeat for Olaf Scholz’s Social Democrats. The national election usually serves as a referendum on current governments.  

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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