S&P 500 Futures Rebound as Focus Turns from Germany to Nvidia

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

1. S&P 500 E-mini futures (/ES): +0.52% 
2. 10-year T-note futures (/ZN): -0.16% 
3. Gold futures (/GC): +0.67% 
4. Crude oil futures (/CL): +0.1% 
5. Euro futures (/6E): +0.03% 

After the worst sell-off of the year for stocks on Friday, there is only modest relief on the other side of the weekend. U.S. equity markets traded higher overnight as traders digested the results of the German elections, which, in-line with polls ahead of Sunday’s contest, produced a CDU/CSU victory (and in turn, will keep AfD out of government). Instead, attention is quickly turning to the biggest event of the week, Nvdia (NVDA) will announce earnings after the market closes on Wednesday. A Microsoft channel check from TD Cowen is causing some unease, with a report over the weekend that data center contracts are being canceled. Elsewhere, gold briefly hit a fresh all-time high. 

U.S. equity markets were poised to open higher to start the week despite some selling pressure overnight in Asia-Pacific trading. Besides keeping their eyes on Nvidia this week, traders will get a better picture of consumer spending when Home Depot (HD) and Lowes (LOW) report quarterly results.  

The 10-year T-note futures (/ZNH5) were slightly lower to start the week. Economic data as of late has been weaker than expected, which has supported the case for more Federal Reserve interest rate cuts. The underlying 10-year yield was trading near the lowest level since mid-December. Consumer confidence data for the U.S. is due tomorrow, and then we’ll get personal consumption expenditures (PCE) inflation data on Friday, which could affect bond prices.  

The 3,000 level is in focus for gold traders as today’s price action guides it higher toward the psychologically important level. The recent weakness in the dollar and softer yields has helped propel sentiment in the metal as global uncertainty around trade and the situation in Ukraine keep traders on edge. Inflation data due on Friday may offer gold prices their biggest factor for the week.  

Crude oil futures (/CLJ5) moderated following Friday’s sell-off that saw prices drop nearly 3%. All of the gains from the start of the year have been wiped out as traders focus on a potential end to the war in Ukraine. While an end to the war wouldn’t see Russian oil immediately return to the global market, the pullback in geopolitical risk could sway sentiment. Traders also expect supply from Iraq to increase shortly. Tomorrow, the American Petroleum Institute (API) will report inventory data.  

German election results that were widely anticipated have provided little staying power for a relief rally in the euro (/6EH5). Incoming German Chancellor Fredrich Merz has taken a strong line in support of Ukraine and distancing Europe from America, which may be setting the stage for a more significant global realignment in the coming months and years—which will almost certainly have implications in FX markets. A relatively light macro calendar in the week ahead means attention will remain on Washington, D.C. for news around upcoming tariff deadlines, which leaves the Canadian dollar (/6CH5) and Mexican peso (/6MH5) at risk, particularly in the back half of the week. 

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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