Nasdaq 100 is Off Highs After Hot CPI and Jump in Jobless Claims

Also 30-year T-bond, silver, crude oil and Japanese yen futures

1. Nasdaq 100 E-mini futures (/ES): -0.5% 
2. 30-year T-bond futures (/ZB): -0.41% 
3. Silver futures (/SI): +0.99% 
4. Crude oil futures (/CL): +1.3% 
5. Japanese yen futures (/6J): +0.56% 

Weekly U.S. jobless claims and the September U.S. consumer price index (CPI) both came in on the wrong side of expectations, showcasing an unexpected jump in claims while price pressures were warmer than forecasted. Neither stocks nor bonds are particularly fond of the data mix, with both down across the board (with notable underperformance by the Russell 2000). Commodities are swinging higher again on the back of a weaker U.S. dollar, which is down against most of its major counterparts. 

U.S. equity futures declined after the inflation report, with Nasdaq futures (/NQZ4) falling 0.5% ahead of the New York open. Delta Airlines (DAL) fell 1% in pre-market trading after the airline said it expects lower demand around the election. 10X Genomics (TXG) plummeted nearly 30% after offering preliminary revenue figures that showed year-over-year sales declines. Generac Holdings (GNRC) trimmed 3% from its weekly gain this morning after Milton passed through Florida. 

Bonds fell after today’s consumer price index (CPI) data further complicated the Federal Reserve’s rate cut path. The 30-year T-Bond futures contract (/ZBZ4) fell near the 120 handle, which marks levels not traded since July. While CPI isn’t the Fed’s official inflation barometer, the data will likely weigh on policymakers’ decisions. A 30-year Treasury auction is scheduled for later today. The higher yields could help to attract some international demand for the offering.  

Silver futures (/SIZ4) brushed off this morning’s inflation report, rising about 0.34% in morning trading. Still, the metal remains down nearly 5% this week, on track for the biggest loss since July. A higher dollar and rising Treasury yields have punished the long side of the trade despite some tailwinds from geopolitical tensions in the Middle East. The 30 handle may offer some support, and the long-term outlook for the metal remains intact. Traders were excited earlier this week by a report that Russia, for the first time ever, would add silver to its reserves.  

Crude oil futures (/CLX4) rose this morning to bring the commodity’s weekly performance to a nearly unchanged level. Hurricane Milton crossed Florida overnight. The evacuation helped fuel demand for gasoline this week, with many stations running out. Yesterday’s inventory figures from the Energy Information Administration (EIA) showed a 5-million-barrel increase in crude oil stocks for last week, with that build likely coming from a bottleneck on exports from the previous week when storm activity interrupted shipping lanes.  The EIA, earlier this week, also cut its demand growth forecast for next year, reflecting a slightly softer economic outlook.  

Japanese yen futures (/6JZ4) bounced after hitting a fresh three-month low, rising about 0.5% ahead of the U.S. opening bell. Japan reported higher wholesale inflation overnight, helping to firm up bets on the Bank of Japan’s monetary policy stance. The rebound cut the weekly loss for the currency. With little data left from Japan this week, the dollar will likely drive price action, and several Fed speakers are scheduled to speak before the weekend, which could spark some swings in price action.  

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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