Russell 2000: Traders Await Tomorrow's September U.S. Nonfarm Payrolls Report

Also 30-year T-bonds, silver, crude oil and British pound futures

This Morning’s Five Futures in Focus:

1. Russell 2000 E-mini Futures (/RTY): -0.27%
2. 30-Year T-Bond Futures (/ZB): -0.28%
3. Silver Futures (/SI): -0.17%
4. Crude Oil Futures (/CL): -1.10%
5. British Pound Futures (/6B): -0.05%

An exciting first half of the week is giving way to more staid price action on today. Conflicting U.S. labor market data—a strong job openings and labor turnover survey, or JOLTs, and good jobless claims report and weak ADP employment—has set the stage for tomorrow's September U.S. nonfarm payrolls report, or NPF, to be the most important binary event (earnings or macro) of the week. Stocks are slightly lower, bonds are mixed, and crude oil (/CLZ3) continues to take it on the chin.

U.S. equity index futures remain tethered to the long-end of the bond market, and with long-end bonds falling back, a bout of softness is in play for stocks. The S&P 500 (/ESZ3) is the leader lower, shaving off a mere 0.27%, while the best performer is the Nasdaq 100 (/NQZ3) is down by 0.21%. Focus remains, however, on the Russell 2000 (/RTYZ3), which has taken a beating through the first three-plus days of October, losing nearly 3.50%. /RTYZ3 also retains the highest IVR (33.3) among the four equity index futures.

Bonds are mixed today following the release of the most recent U.S. jobless claims report, which came in better than expected (207K vs. 210K forecast). It marks the third day in a row of conflicting U.S. labor market data, which culminates with the release of the September U.S. nonfarm payrolls report tomorrow. Ultimately, attentions remains on the long-end of the curve, where 30s (/ZBZ3) and ultras (/UBZ3) trading lower, which if continues, could prove to be problematic today for U.S. equity markets and precious metals.

Despite some quiet trading in precious metals this morning, silver (/SIZ3) is looking at its worst week since June. Yesterday's U.S. jobs numbers from ADP slowed the bond market’s descent but traders are now awaiting Friday’s jobs report from the Bureau of Labor Statistics (BLS). Analysts see 170,000 jobs added in September. A number short of that, a rise in the unemployment rate, or a dip in earnings may weigh on Fed rate hike bets and perhaps clear a path higher for metals.

Economic concerns, reflected by still-rising long-term interest rates, continue to flatten the bull case for energy markets. Crude oil (/CLZ3) is tracking for its worst week since March despite OPEC+ recently committing to extended production cuts. Russia, on Thursday, said an export ban on fuel products has no deadline, with the Kremlin suggesting they will stay in place for now. The move will likely keep diesel prices in Europe elevated, which may exacerbate the bloc’s economic woes. It appears that Mr. Putin prefers to forego generous export revenues amid high wholesale fuel prices to assuage domestic concerns about energy bills.

A mixed performance in the bond market is helping pave the path for a mixed performance for the U.S. dollar today. Notably, with energy prices weighing on the Canadian dollar (/6CZ3), the only other loser is the British pound (/6BZ3), which continues to face stagflationary economic data. Despite yesterday’s rally, the British pound is trading at its weakest level since March. Yet that’s marginally better than the euro (/6EZ3), which is coming off of its 2023 low and lowest level since December 2022.

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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