Nasdaq 100 Drops to Six-Month Lows as Trump Talks Economic “Transition”

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

1. Nasdaq 100 E-mini futures (/NQ): -2.17% 
2. 10-year T-note futures (/ZN): +0.52% 
3. Gold futures (/GC): -0.16% 
4. Crude oil futures (/CL): -0.63% 
5. Japanese yen futures (/6J): +0.72% 

A series of comments from President Donald Trump and Treasury Secretary Scott Bessent have traders feeling hot under the collar today. The former noted there would be a “period of transition” for the U.S. economy while the latter said the economy was going to go through a “detox” phase, both of which sound like fancy phrasing for “what we’re doing will lead to recession.” U.S. equity markets aren’t fans of recessions, but bonds are, which explains much of today’s price action. Meanwhile, the ongoing decline in U.S. Treasury yields amid spikes in global bond yields elsewhere continues to weigh on the U.S. dollar. 

Nasdaq futures (/NQH5) fell by more than 2% in this morning’s trading after a weekend interview with Trump revealed he wasn’t ruling out the possibility of a recession, or rather, a "transition." Tesla (TSLA) fell 6%, completing its retracement of post-election day gains. The technology and financial sectors of the U.S. market were leading the losses in early trading, as economic slowdown fears continued to drag down market sentiment. Coinbase (COIN) fell 6% after missing out on being added to the S&P 500. DoorDash (DASH) trimmed its pre-market gains to trade negative after the open despite news the company would join the S&P 500.  

Fear that the U.S. economy will be heading toward recession drove bond prices higher on the expectation that the Federal Reserve will have to cut rates at a faster pace later this year. Bond traders continue to seek certainty on U.S. trade policies, and business leaders have started to pressure the Trump administration to provide more clarity on trade measures. Those concerns are being brushed aside by the administration. This week’s inflation data and retail sales may move bond prices. There are three-year note, 10-year note and 30-year bond auctions this week.  

Gold prices (/GCJ5) treaded lower to start the week despite a softer dollar and lower Treasury yields. Inflation data in China missed expectations, and concern about the global economy remained strong among traders. U.S. inflation data later this week could provide a catalyst for the metal, but the modest pullback doesn’t present a big problem just yet. Technically, prices remain in a constructive position trading above the one-month exponential moving average (daily 21-EMA). As an interesting aside, the Atlanta Fed GDPNow blog post over the weekend suggested gold imports are the main reason why net-exports are weighing so heavily on GDP estimates for 1Q ’25.  

Crude oil prices (/CLJ5) fell to start the week, dropping about 0.5% in early trading. The commodity is coming off its seventh weekly loss, which marked the longest losing streak in over a year. Concern about a global economic slowdown is overshadowing the threat of tariffs likely being placed on Iranian oil. The U.S. is reportedly investigating how to ease sanctions on Russia, a move that could help to release more supply into the global market. OPEC’s monthly oil market report (MOMR) will drop on Wednesday.  

Japanese yen futures (/6JH5) surged to the highest level since October to start the week. Traders flocked to safe-haven currencies as economic concern in the United States grows amid the ongoing uncertainty around trade measures and, moreover, the Yen is garnering favor amid a push to 16-year highs in JGB yields. Yen outperformance is likely to continue as wage data in the country strengthens, reinforcing bets that the Bank of Japan (BOJ) will increase interest rates later this year.  

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
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and #tastyliveTrending for stocks, futures, forex & macro. 

Trade with a better broker, open a tastytrade account today. tastylive Inc. and tastytrade Inc. are separate but affiliated companies.