Nasdaq Leads Markets Higher Ahead of Event Risks as FOMC Nears

Also 30-year T-Bond, Silver, Natural Gas, and Australian Dollar Futures

1. Nasdaq 100 E-mini futures(/NQ): +0.76%
2. 30-year T-Bond futures (/ZB): +0.72%
3. Silver futures (/SI): +1.15%
4. Natural Gas futures (/NG): +2.40%
5. Australian Dollar futures (/6A): +0.58%

Traders returned from the weekend with a renewed sense of optimism, pushing equity markets higher in U.S. trading after positive overnight sessions in Asia where stocks rose after the Prime Minister of Japan resigned, which weakened the Yen. A September interest rate cut is nearly fully priced in, but there is still inflation data due later this week which has an outside chance at injecting some volatility back into the rate cut forecast. The Tuesday data from the Bureau of Labor Statistics (BLS) is also in focus, as well as a series of Treasury auctions scheduled for later this week. 

Nasdaq futures (/NQU5) led equity markets higher to start the week, rising 0.79% through the first hour of U.S. trading. Nvidia (NVDA) rose 2% despite a price target cut from Citi (C). EchoStar (SATS) agreed to sell wireless spectrum licenses to Elon Musk’s SpaceX, which sent telecommunication stocks lower. AT&T (T) fell over 2% on the news. Robinhood Markets (HOOD) rose over 4% after S&P Global said it will be added to the S&P 500 index. Alibaba(BABA) rose 3% after leading a $140 million round of funding for X Square Robot. 

Bonds have a big week ahead, with the Bureau of Labor Statistics set to release preliminary payroll benchmark revisions on Tuesday. Thursday will bring inflation data, and we’ll also get several high-impact Treasury auctions. A 3-year note auction is scheduled for Tuesday. Wednesday, we’ll get a 10-year note auction, and Thursday the 30-year bond auction will occur. 30-year T-Bond futures (/ZBZ5) were up 0.54% through the first hour of trading. 

A decline in bond yields and a softer dollar opened up an avenue for precious metals to climb higher to start the week. Silver futures (/SIZ5) rose over 1% through the first hour of U.S. trading. This move puts the metal on track for its fourth consecutive weekly gain as prices traded near the highest levels since 2011. Meanwhile, silver borrowing costs in London are elevated after the price increase caused higher demand from exchange-traded funds (ETFs). Investors are also worried that silver could be tariffed by the United States after it added the metal to a list of assets that are vital to national security. 

Natural gas futures (/NGV5) rose over 2% to start the week, building on gains from the past two weeks of trading. Prices are now trading at the highest level since late July. Weather models for the U.S. show warmer than expected temperatures for much of the country over the next two weeks. Meanwhile, European inventory levels are uncomfortably low ahead of the winter, with imports lagging recently and lower-than-normal power generation from renewable sources. Prices are moving up toward the 50-day simple moving average (SMA), which may offer an exit point for longs who want to take profits. 

Australian dollar futures (/6AU5) rose 0.53% Monday morning amid the risk-on tone across financial markets. An upbeat session in Asia helped to prop up the currency, with Chinese and Japanese markets performing well in overnight trading. Higher gold and oil prices also helped lift the Aussie. The July swing high at 0.66315 is in focus for bulls, but it could also prove to be a resistance level for the currency. 

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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