S&P 500 Futures Modestly Lower as Oil Dips

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

1. S&P 500 E-mini futures (/ES): -0.09% 

2. 10-year T-note futures (/ZN): 0% 

3. Gold futures (/GC): +0.37% 

4. Crude oil futures (/CL): -0.48% 

5. Japanese yen futures (/6J): +0.09% 

A full five-day week is ahead as summer trading conditions continue to set in: outside of isolated bouts of event risk (see: European elections), markets are relatively quiet as trading volumes are modest and volatility remains pinned lower. A busy week on the Treasury auction calendar (two-, five- and seven-year note auctions) should keep plenty of attention on the bond market, which in turn provides meaningful catalysts for both precious metals and foreign exchange (FX). To the latter point, intervention watch is on in the Japanese yen after a quick 90-pip drop this morning over the span of 10 minutes. 

S&P 500 futures (/ESU4) were soft on this morning, up about 0.03% following a winning week for the U.S. benchmark. While there are concerns around the recent decline of Nvidia (NVDA), likely driven by some profit taking, the broader sentiment around artificial intelligence should continue to provide a tailwind for markets. Earnings are due this week for Micron (MU), which could help bolster that narrative if the chip maker reports strong sales. 

10-year T-Note futures (/ZNU4) were modestly higher, with yields across the curve falling after Chicago Federal Reserve President Austan Dean Goolsbee questioned whether rates should be this high if inflation continues to come down. There are a few key Treasury auctions this week but today we will see 13- and 26-week bills offered.  

Precious metals gained to start the week as the dollar declined against some of its key peers, particularly the euro. That, along with some downward pressure on yields, is helping to lift gold prices. The metal remains on track to record its first monthly loss since February, with prices down 0.25% with a week left of trading in June. Speculators decreased their short positions on gold for another week, according to Friday’s commitments of traders report (COT). Inflation data due later this week could decide if gold locks in the loss for the month.  

Crude oil prices (/CLQ4) rose to start the week as geopolitical tensions in the Middle East and Russia bolster fear of an escalating conflict. Ukraine attacked several Russian oil refiners last week, and Israel is preparing to push into Southern Lebanon. Oil rigs fell to their lowest since January 2022, according to Baker Hughes (BKR). Inventory data from the American Petroleum Institute (API) is due tomorrow.  

Japanese yen futures (/6JU4) were slightly firmer this morning after the currency slipped in overnight trading during the European session. The Bank of Japan’s minutes showed some policymakers now support rate hikes, but the fact that the BOJ declined to adjust its bond buying in its last meeting has kept a headwind in place for the Japanese currency. If the yen continues to decline from here, it could bring intervention risks back into play.  

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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