S&P 500 Softer as VIX Opens Higher; Jackson Hole Later This Week

Also 10-year T-Note, Silver, Crude Oil, and Euro Futures

1. S&P 500 E-mini futures (/ES): -0.09%
2. 10-year T-Note futures (/ZN): +0.01%
3. Silver futures (/SI): +0.34%
4. Crude Oil futures (/CL): -0.5%
5. Euro futures (/6E): -0.24%

Traders are barely reacting to headlines over the weekend of the Trump-Putin summit, instead awaiting news of the meeting in Washington, D.C. today where a host of European leaders will meet with U.S. President Donald Trump. Volatility has inched up, with spot VIX rising above 15 after a small gap open higher. It’s thus far been minorly problematic for U.S. equity index futures, which are barely in the red. Elsewhere, Treasury yields are mostly flat across the curve, while commodities are mixed amid a more resilient U.S. Dollar at the start of the week. While the earnings calendar is thinner, it does have a particular focus on the U.S. consumer, which serves as a runway into Fed Chair Jerome Powell’s speech later this week at the Jackson Hole Economic Policy Symposium.

S&P 500 futures (/ESU5) were steady early Monday to start the week after prices hit record high levels last week. Traders are awaiting the FOMC minutes and commentary from Federal Reserve Chair Jerome Powell later this week. Novo Nordisk (NOVO) rose 5% after its obesity drug Wegovy received approval from the Food and Durg Administration (FDA) to treat liver fibrosis. The company also announced that it would reduce the cash price for Ozempic. Palo Alto Networks (PANW) is scheduled to report earnings after the bell today. Tomorrow morning, investors are waiting for earnings from Home Depot (HD) to assess the health of the U.S. consumer.  

Treasuries were little changed to start the week as traders await several events that can alter the trajectory of Fed rate cut bets. The FOMC minutes are due later this week, and a speech from Jerome Powell is in focus as the Jackson Hole Economic Summit is set to kick off this weekend. The Treasury will auction 30-year Treasury Inflation Protected Securities (TIPS) and 20-year bonds this week, which will help to gauge appetite for U.S. debt. Treasury Department data showed that foreign holdings of Treasuries rose to $9.13 trillion for June, a record high.

Silver prices (/SIU5) ticked higher to start the week following losses from the prior week. Technically, silver is holding at its 9- and 21-day exponential moving averages, which is encouraging ahead of several risk events that could alter the outlook for precious metals. The metal could see some pain if traders view the Fed as less willing to cut in September. Mr. Powell’s speech later this week will likely be the deciding factor for markets to strengthen or weaken the chances for a September rate cut, which currently sits at about 90%, according to Fed Funds futures.

Crude oil prices (/CLV5) fell about 0.5% in early trading to put prices near intraday lows traded last week. The commodity is down sharply from where it traded at the start of the month, and if last week’s lows are breached, it would put prices at the lowest levels since June. President Trump and Ukrainian President Volodymyr Zeleskyy are set to meet today following Trump’s meeting with Russian President Vladimir Putin on Friday.

There’s no meaningful movement in global bond yields but the U.S. Dollar ($DXY) is finding its footing on the other side of the weekend nonetheless. Questions linger around the future of American and European sanctions against Russia following the Trump-Putin summit and forthcoming gathering in D.C. with the various heads of state. At the end of the week, traders shouldn’t be surprised if Fed Chair Powell is less committal to a September rate cut than what rates markets are currently implying (83% chance per the /SR3U5-/SR3Z5 spread).

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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