S&P 500 Aims at Weekly Gain Amid Fedspeak Focus

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

1. S&P 500 e-mini futures (/ES): +0.24% 

2. 10-year T-note futures (/ZN): -0.30% 

3. Gold futures (/GC): +1.42% 

4. Crude oil futures (/CL): +0.33% 

5. Japanese yen futures (/6J): -0.21% 

S&P 500 contracts (/ESM4) are on track to record a third week of gains after prices rose Friday morning.

This morning brings consumer sentiment data for May but outside of that there is little event risk in terms of economic data. Zeekr (ZK), a Chinese-based EV company, is set to debut on the New York Stock Exchange today.  

Traders are still cheering yesterday’s labor data that showed rising unemployment claims—something that could help the Fed ease, although we’ll need inflation to show signs of colling as well. The dollar is slightly higher this morning.  

Grains traders will be dialed in to today’s World Agriculture Supply and Demand Estimates (WASDE) report. Wheat prices (/ZW) have made steady progress as of late amid damaging crop weather. Corn prices (/ZC) rose this morning as wet weather across the U.S. corn belt slows planting progress.  

Equity traders are in a risk-on mood, with U.S. equity contracts looking at a weekly gain. Earnings season is nearly over but we still have a couple big names left to report next week.

Home Depot (HD) is scheduled to announce earnings on Tuesday, May 14, before the bell. Otherwise, traders are waiting to hear from several Federal Reserve speakers today, with Chicago’s Austan Goolsbee set to speak at the Economic Club of Minnesota Luncheon.

Also, in focus today will be the Commitments of Traders report (COT), which will unveil if equity shorts continued to cut their positions.  

Bonds move down

Bonds pulled back following yesterday’s climb from the 30-year bond auction, which saw decent demand for the U.S. debt and wrapped up a week of high-profile offerings.

Fedspeak may move rate bets, which bonds—especially along the short-end—are sensitive to. However, this morning’s higher yields aren’t dampening market sentiment, which will likely prevail into the weekend with little event risks on tap. We return to a light week of auction activity next week.

Gold contracts (/GCM4) are up about 1.5% at the opening bell as rate cut hopes rise following yesterday’s jobless claims data.

The fact that precious metals gained amid rising yields and a slightly stronger dollar shows that metal bulls are confident in the outlook, but they will have to clear April’s swing high to gain broader market conviction.

Next week’s consumer price index (CPI) could be the catalysts that make or break that case, with a reading below expectations boding well for the bull case.  

Crude oil continues upward trend

Crude oil futures (/CLM4) are up for a third day as recent data out of China dents fading demand signals that have dragged prices lower over the past month.

The prompt spread has increased alongside oil prices this week, but crack spreads have lagged, which suggests that the rally may be hard to sustain over the short term.  

|

The Japanese yen falls

The battle of the Japanese yen continues, with /6JM4 contract down again on the week nearly 2%.

Traders remain with a large short position and today’s COT report will be closely watched to evaluate how funds are positioning after the Ministry of Finance’s intervention last week. We likely have more downside before intervention levels come back into play (likely around 0.0063) but meanwhile next week’s GDP numbers out of Japan—due May 15—are in focus.  

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.