S&P 500 Higher Today as Oil Jumps after Israel-Hezbollah Skirmish

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

1. S&P 500 E-mini futures (/ES): +0.16% 

2. 30-year T-bond futures (/ZB): +0.33% 

3. Gold futures (/GC): +0.61% 

4. Crude oil futures (/CL): +3.39% 

5. Euro futures (/6E): -0.29% 

U.S. stocks and bonds are trading higher today as the final week of August begins. The U.S. macroeconomic calendar is thinner in the coming days, with the most important release of the week—the July U.S. personal consumption expenditures (PCE) price index—arriving Sept. Two-, five- and seven-year note auctions will keep bonds busy over the coming days. While the earnings calendar is thinner, none stands taller than Nvidia (NVDA), which will report on Wednesday after hours. Elsewhere, an exchange of missile barrages between Israel and Hezbollah has once again inflated geopolitical risk premia in precious metals and energy, although the bigger news may be that Libya's rival government announced it’s closing all oil fields, introducing a potentially new supply shock to markets.

S&P 500 contracts (/ESU4) pointed higher to start the week as traders digested the newest economic data. The July durable goods data shows that the U.S. continued to avoid a recession, which was good news for traders who are expecting a rate cut next month. Boeing (BA) fell over 1% in pre-market trading after NASA said it would tap SpaceX to return the astronauts from the International Space Station (ISS).  

Long-term bond yields fell this morning, continuing the move that has been in place over the past two weeks. The 30-year T-bond futures (/ZBZ4) rose 0.05% ahead of the New York open. The underlying yield remains above the August swing low of 3.99%, but that level could come into view if economic concerns continue to ease into the rate cutting environment. The Treasury has several potentially high-impact auctions on the schedule for this week, including a two-year note auction tomorrow.  

A weak dollar is clearing more upside for gold prices, with contracts (/GCZ4) up over 0.5% to start the week. The metal has outperformed the equity market over the past two months, which is attracting more attention from ordinary investors as headlines about record-high levels grab the attention of mainstream news outlets.  

The Benghazi government of Eastern Libya announced it would close all the oil fields within its sphere of control. The move threatens up to 1 million barrels of oil per day, which poses a serious potential supply shock to the global market. And given the political uncertainty in the country, it's hard to say when the issue could be resolved. In the meantime, traders will have their eyes on tomorrow’s inventory report from the American Petroleum Institute (API).  

Euro futures (/6EU4) are coming off the best weekly gain since 2023, rising 1.48% last week. Despite some weak economic news for the Euro Zone, inflation and wage data supports a slow path of cutting from the European Central Bank (ECB). That said, a lot of the upside in /6E is coming by way of dollar weakness, which should continue as we prepared for the Federal Reserve to start its interest rate cut cycle.  

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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