S&P 500 Continues Push Higher, Tuns Positive Year-to-Date

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

1. S&P 500 E-mini futures (/ES): +0.72% 
2. 30-year T-bond futures (/ZB): -0.36% 
3. Silver futures (/SI): +1.49% 
4. Crude oil futures (/CL): +1.79% 
5. Euro futures (/6E): +0.66% 
   

Turmoil no longer engulfs global markets. The taxation of trade routes between China and the US are no longer in dispute — at least for the next 89 days. We’ll see what happens in August. Until then, the runway is clear: Economic data may not matter because it reflects a world that no longer exists; monetary policy is seemingly stuck in a holding pattern until the data points in a clear direction. As the dust settles on the trade war détente, traders are expecting just two 25-basis-point (bps) rate cuts in 2025. Ironically, a Federal Reserve that doesn’t feel the need to cut imminently may be better for market confidence than a central bank that feels compelled to ease rapidly. 

US equity markets rose today as market sentiment improved following news that the US will announce a deal that will allow Saudi Arabia to buy semiconductors and graphic processing units (GPUs) to boost the country’s artificial intelligence infrastructure. S&P 500 futures (/ESM5) rose 0.74% in early trading. Nvidia (NVDA) rose over 5% on the news and Advanced Micro Devices (AMD) gained over 3%. Meanwhile, Wall Street has had a positive earnings season. Walmart (WMT) is scheduled to report earnings later this week.  

Long-term Treasuries fell following this morning’s inflation report. Traders are now pricing in only two rates cuts through the end of this year. Combined with positive news flows around trade, the economic outlook has recovered in a dramatic turnaround. 30-year T-bond futures (/ZBM5) were down 0.39% in early trading. There are no notable Treasury auctions until next week when 20-year bonds and 10-year Treasury Inflation Protected Securities (TIPS) will be issued.  

Silver prices (/SIN5) rose 1.5% in early trading to outpace gains seen in gold futures (/GCM5), which were up 0.67%. The gains come after a big loss yesterday that drove silver prices down to a congestion zone marked by swing highs and swing lows from April and May. The headway on negotiations with China are likely helping silver via its industrial demand component. The gold/silver ratio dropped below 99 for the first time since April 24, as silver prices outpaced gold prices.  

Crude oil prices (/CLM5) rose nearly 2% today to extend gains from the past week. Traders see the demand outlook for the commodity improving as the US and China hash out a trade agreement. The late April swing high at 64.87 poses the next technical barrier for crude prices. The American Petroleum Institute (API) will release inventory data later today. Meanwhile, indicators for the physical crude market, like the prompt spread, remain strong.  

The drop in US inflation reduced rate cut expectations for the Federal Reserve. That helped to boost euro futures (/6EM5), which rose 0.75% this morning. Fed officials have signaled that the effects of the trade war could be softer than they previously expected. For now, the current environment doesn’t bode well for the strength of the dollar.  

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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