Nasdaq 100 Pushes Higher as Trump Weighs Iran Strike; FOMC Later Today

Also, 30-year T-bond, gold, crude oil,and Australian dollar futures

1. Nasdaq 100 E-mini futures (/NQ): +0.14% 
2. 30-year T-bond futures (/ZB): +0.38% 
3. Gold futures (/GC): -0.01% 
4. Crude oil futures (/CL): +0.37% 
5. Australian dollar futures (/6A): +0.57% 

Day 6 of the Israel-Iran war has seen intense bombing around Tehran, while President Donald Trump grapples with the decision of whether to formally jump into the fray. Traders are likewise in wait-and-see mode for today’s Federal Reserve decision on interest rates, even if markets are pricing in a 99% chance of no change in rates. VIXpiration has likewise arrived, and with the Juneteenth federal holiday tomorrow (US markets will be closed), traders will have to decide whether they want to hold risk during the window when President Trump may decide to bomb Iran. 

Nasdaq 100 futures (/NQU5) were slightly higher in early trading as the Federal Reserve’s interest rate decision approached. The determination comes ahead of a US federal holiday, with markets scheduled to be closed for Juneteenth. The conflict between Israel and Iran entered its sixth day and the US still hasn’t made a solid decision to join the war. Meanwhile, traders remain concerned about the economy amid tariffs and ongoing negotiations over President Trump’s tax and spending bill. Korn Ferry (KFY) jumped over 8% this morning after the company beat earnings estimates. Consumer discretionary stocks were in the lead this morning, and the health care sector was the laggard.  

Bonds rose for a second day, with 30-year T-bond futures (/ZBU5) up 0.33% in early trading. The US debt is attracting some safe-haven flows, as tensions in the Middle East remain high. Today’s Fed decision, which comes with updated economic projections, could influence the path of bonds. The long end of the curve came under pressure earlier this year as interest rate traders cut expectations for Fed rate cuts. Investors’ attention will likely shift back to the tax and spending bill in Congress once the Fed meeting is over.  

Gold prices (GCQ5) were slightly lower this morning as stocks advanced ahead of the Fed’s interest rate decision. Prices have stabilized as the US dollar moderates from a recent sell-off. Central banks have helped to prop up prices this year, but investors appear to be taking off some exposure as the Fed decision nears despite still-high tensions in the Middle East. The closely watched gold/silver ratio rebounded as silver losses (/SIN5) accelerated, but the ratio remains near the lowest levels traded since late March.  

Crude oil prices (/CLN5) trimmed earlier gains as US trading kicked off, with the commodity falling to the 72 handle after yesterday’s gain of over 4%. Oil has rallied as fears over oil disruptions increase amid the Israel-Iran conflict, with some expecting Iran’s proxy groups would target shipping lanes in the Strait of Hormuz. Yesterday’s report from the American Petroleum Institute (API) showed crude stocks in the US fell by over 10 million barrels for the week ended June 13. The Energy Information Administration's report for inventories is in focus for today as well as the Fed meeting. President Trump said this morning Iran has reached out and is willing to negotiate. 

Australian dollar futures (/6AU5) rose over 0.5% this morning as market sentiment improved slightly. The increase in oil prices has helped prop up the commodity-sensitive currency, but lingering fears over the conflict in the Middle East may cap some upside for the currency, especially if the situation escalates. Economic indicators in Australia remained weak, with the Leading Economic Index posting a 0.1% decline for May.  

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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