Nasdaq 100 Steadies and the Yield Curve Twists as the Dollar Stages a Rebound

Also, 30-year T-bond, silver, crude oil and British pound futures

1. Nasdaq 100 E-mini futures (/NQ): +0.16% 
2. 30-year T-bond futures (/ZB): -0.13% 
3. Silver futures (/SI): -1.72% 
4. Crude oil futures (/CL): +0.3% 
5. British pound futures (/6B): -0.8% 

Another wild week is taking a breather today, with much of the price action of the previous days reversed: Precious metals are weaker; the Treasury curve is twisting; and the U.S. dollar is attempting to stave off a significant top. U.S. equity markets, on the other hand, are meandering near yesterday’s closing levels, unmoved by the latest spate of earnings releases. Attention is shifting in D.C., however, from 1600 Pennsylvania Avenue to 2 Massachusetts Avenue, as the Bureau of Labor Statistics is set to release the January U.S. jobs report tomorrow morning. 

Traders are refocusing on earnings as trade war tensions from earlier this week faded away. The drop in Treasury yields is also clearing some upside for equities. European equities performed well overnight, extending a positive move from the Asian session. Nasdaq futures (/NGH5) rose 0.35% in early trading despite some disappointing results from Qualcomm (QCOM) and Arm Holdings (ARM) that crossed the wires yesterday after the close. Philip Morris (PM) rose over 8% after reporting a beat in earnings. Tapestry (TPR) surged 15% after the luxury brand reported a jump in sales.  

Bonds rose after Treasury Secretary Scott Bessent signaled President Trump wants to focus on bringing down Treasury yields as opposed to forcing the Federal Reserve to cut interest rates. Secretary Bessent said in a Fox Business interview that Trump is not calling on the Fed to lower rates. The 30-year T-bond futures (/ZBH5) rose 0.13% this morning, which pushed the underlying yield to 4.649%, nearly the lowest level since December. Several Fed members are scheduled to speak today, but the prevailing narrative driving lower yields will likely be unaffected by this. Meanwhile, bonds traders have their eyes on tomorrow’s non-farm payrolls report.  

A rebound in the dollar that is likely a technical bounce harmed precious metals prices today, with silver futures (/SIH5) dropping nearly 2% in early Thursday trading. The metal is moving lower after hitting the highest level since early December. That move was driven by a pullback in the dollar and Treasury yields. However, silver has lagged gold recently, with the metal’s industrial applications likely holding prices back on concern that trade tensions could hurt China’s economy—a major consumer of silver.  

Crude oil futures (/CLH5) bounced today, rising about 0.3% in early trading. However, the commodity remains on track to record a loss for the week. Saudi Arabia’s Aramco raised prices for its oil for March deliveries, signaling it expects demand to strengthen next month. Today’s buying is likely being driven by profit taken from short sellers following this week’s losses. The market will remain focused on potential escalations in trade talks between the U.S. and China.  

British pound futures (/6BH6) were on track for their biggest one-day decline since January following a rate decision from the Bank of England (BOE). The BOE cut its benchmark interest rate and cut growth forecasts, which injected fear of stagflation into the British economy. Two BOE members called for a deeper 50-basis-point (bps) rate cut, which implied policymakers are growing more concerned about economic growth. Interest rate cut bet odds for the BOE increased after the meeting, weighing on 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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