Nasdaq 100 Shrugs Off Inflation Data as Focus Remains on Tariff Talk

Also, 30-year T-bond, gold, natural gas and Australian dollar futures

1. Nasdaq 100 E-mini futures (/NQ): +0.33% 
2. 30-year T-bond futures (/ZB): +0.69% 
3. Gold futures (/GC): +0.3% 
4. Natural gas futures (/NG): +4.57% 
5. Australian dollar futures (/6A): -0.39% 

The markets shrugged off the surprisingly hot January U.S. consumer price index (CPI) yesterday, and traders rolled their eyes at the release of the corresponding producer price index (PPI) today. Signs that prices at the factory gate aren’t rising faster than anticipated is allowing traders to focus their attention on what’s been a potent catalyst in recent weeks: tariff talk from the White House. President Donald Trump is expected to announce reciprocal tariffs this afternoon. Ahead of time, U.S. equity markets and bonds are both modestly stronger and, notably, FX markets are largely unmoved; traders seem to be of the mindset that the reciprocal tariffs are a negotiating tool. 

All four U.S. equity markets are higher today, with the Nasdaq 100 (/NQH5) attempting to break the downtrend from the December 2024 and January 2024 swing highs. Tech earnings continue to impress, with Cisco (CSCO) and AppLovin (APP) surging out of the gate on today. Measures of volatility across the four index futures remain quite low; no index has an IVR above 19. 

Treasuries have experienced a good deal of pain in recent days, with yesterday’s CPI release serving as the caper. But the lack of upside surprise in the PPI report is allowing for some modest relief. For both 10-year notes (/ZNH5) and 30-year bonds (/ZBH5), attempts at reclaiming the neck of inverse head and shoulders patterns are in play; failure to advance would suggest recent bottom attempts have failed. There is a 30-year bond auction later today. 

Metals continue to scratch and claw their way to the upside, with volatility increasing as yearly highs are in focus. Gold prices (/GCJ5) continue to linger above 2900, seemingly undeterred by shifts in rates or the U.S. dollar. Silver prices (/SIH5) are thus far still capped by the mid-December 2024 swing high, while copper prices (/HGH5) have yet to punch through the September 2024 high. 

The prospect of a ceasefire or end to the Russian invasion of Ukraine has obvious implications for energy markets, with locus points of supply and demand potentially shifting in the wake of sanctions being lifted. Continued drawdowns in natural gas inventories in Europe and North America are helping to prop up natural gas prices (/NGH5), which have quickly returned to their yearly highs. Elsewhere, a continued bump in crack spreads is proving good news for refiners, even as crude oil prices (/CLH5) slump toward 70. 

FX markets have proved the most sensitive to tariff talk, and FX futures have seen sustained levels of high IVRs more than other asset classes since the turn of the year. The biggest movers on today come from the Asia-Pacific region, with the Australian dollar (/6AH5) and Japanese yen (/6JH5) posting the most sizable moves. The British pound (/6BH5) is modestly firmer after preliminary U.K. gross domestic product (GDP) data for the end of 2024 showed stronger growth than anticipated. 

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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