Nasdaq 100 Points to Modest Open After Yields Surge

Also five-year T-note, silver, crude oil and euro futures

1. Nasdaq 100 E-mini futures (/NQ): +0.19%
2. Five-year T-note futures (/ZF): +0.08%
3. Silver futures (/SI): +0.06%
4. Crude oil futures (/CL): +0.73%
5. Euro futures (/6E): -0.09%

Exhaustion may be the theme today, with futures across the board—from equities to bonds to precious metals—barely changed in either direction through the first half of the trading day. A thinner earnings and macroeconomic calendar over the coming days means catalysts are lacking, keeping focus on the bevy of speeches from Federal Reserve policymakers this week. A surge in Chinese equities ahead of tomorrow’s Alibaba (BABA) earnings report is helping to bolster sentiment.

Mixed earnings reports and unsupportive cross-asset flows may be holding back U.S. equities, of which the S&P 500 (/ESH4) and Nasdaq 100 (/NQH4) are both loitering just a stone’s throw from all-time highs. The kick higher in U.S. yields over the prior two trading sessions may be the limiting factor, serving as an albatross of sorts for the Russell 2000 (/RTYH4). Toyota (TM) and Amgen (AMGN) report earnings after the closing bell.

A brutal two-day sell-off in bonds rooted in rapidly shifting Fed interest rate cut odds is finding some reprieve today. Yields are lower across the curve, with the long-end outperforming the short-end. Focus today is on the short-end of the curve, with Two-year Treasury Yields (/ZTH4) and F-ve-year (/ZFH4) in the spotlight because of the Treasury’s three-year note auction set to conclude at 1 p.m. EST or 12 p.m. CST. Three Fed policymakers will provide remarks later today as well.

A modest pullback in U.S. yields and the greenback are proving supportive for metals early today. For the better part of the past two months, neither gold (/GCJ4) nor silver prices (/SIH4) have been able to make any significant directional progress. A thin macroeconomic calendar this week leaves metals grasping for a catalyst. Copper prices (/HGH4) may prove more interesting in the coming days thanks to the release of the January China inflation report due tomorrow night.

Rumors of a potential Israel-Hamas ceasefire last week may have spurred a meaningful pullback in energy markets, but the lack of progress on that front—and apparent rejection of the deal by Hamas—has put the brakes on the squeeze lower. Crude oil prices (/CLH4) are stabilizing in a familiar area around 72 that provided support all through January.

The U.S. dollar is mostly weaker across the board today with four of the five majors posting modest gains. The one laggard is the euro (/6EH4), which has seen a number of technical breaks in recent days that leave it on weaker footing. Yesterday’s close produced a move below the uptrend from the October and November 2023 swing lows, as well as the December 2023 low near 1.0770. Firm bearish momentum in /6EH4 suggests it’s too soon to rule out further U.S. dollar strength in the short-term (which has implications for the bond market).

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

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.