S&P 500 Takes Breather After Hitting All-Time High

Also, 30-year T-bond, silver, natural gas and euro futures 

1. S&P 500 e-mini futures (/ES): +0.05% 

2. 30-year T-bond futures (/ZB): +0.29% 

3. Silver futures (/SI): +0.19% 

4. Natural gas futures (/NG): +0.91% 

5. Euro futures (/6E): -0.186 
   
   

U.S. equity markets surged yesterday after the April U.S. inflation report, with each of the S&P 500 (/ESM4) and Nasdaq 100 (/NQM4) closing at record highs. The quick return to all-time highs – a rally of more than +7% in /ESM4 since the April 19 low begets the contrarian notion that maybe the move has been "too far too fast." Indeed, price action thus far on Thursday has been quiet, with equity markets taking a breather.

Similarly, bonds are relatively stable across the curve, which has deprived precious metals of the catalyst yesterday that sparked the sharp move higher. Elsewhere, the U.S. dollar is clawing back gains after its worst day since Dec. 14, 2023.

S&P 500 changes little

S&P 500 futures (/ESM4) traded nearly unchanged Thursday morning ahead of the opening bell after the index closed above 5,300 for the first time ever on Wednesday. U.S. jobless claims fell from last week but were above estimates, and continuing jobless claims edged up. Those prints suggest some more softening in the labor market, which could help to clear a path for Fed rate cuts.

Walmart (WMT) was up more than 6% in pre-market trading after the U.S. retail giant raised its earnings outlook for the year.  

T bonds rise

Long-end 30-year T-bond futures (/ZBM4) rose on this morning’s weak labor market data, although the velocity from yesterday has eased, with prices seeing resistance at a range carved out in early April.

The underlying yield dropped to 4.5% on the move, the first time it's traded under that mark since April 10. The Treasury will auction four- and eight-week bills today.  

Silver gets a boost

Silver futures (/SIN4) stopped short of the April swing high, which likely serves as an area ripe for profit taking after this week’s rally.

Silver got a boost from yesterday’s CPI data that showed prices are cooling. The resulting downside in the dollar and yields helped push silver prices higher. This morning’s labor data, while encouraging, didn’t have the same effect, signaling that some exhaustion is coming into the price for the short term.  

Natural gas rises

Natural gas futures are up again as warm weather moves into the Southern United States, boosting energy demand.

This comes alongside a drop in production that was brought on by low prices over the winter. The Energy Information Administration (EIA) releases a weekly update on natural gas inventory today, with analysts expecting to see stockpiles build by 76 billion cubic feet (bcf). A smaller-than-expected increase would likely help natural gas to move higher into the weekend.  

The U.S. dollar breaks with other currencies

The U.S. dollar’s worst day in five months was consequential for another reason: It constituted a major technical break in almost all the major currencies.

The Australian dollar (/6AM4) broke through resistance dating back to March. The British pound (/6BM4) broke its downtrend from the March and April highs; and the Euro (/6EM4) broke the downtrend from the December 2023 and March 2024 highs.

Notably, the Canadian Dollar (/6CM4) achieved no such things, holding within the downtrend from the December 2023 and March 2024 highs while failing to climb above support that was in place from mid-February to mid-April. 

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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