Nasdaq 100 Flips into Positive Territory for the Week; Bonds Up for Second Day

Also, 10-year T-note, gold, crude oil and Euro futures

1. Nasdaq 100 E-mini futures (/NQ): +0.56% 
2. 10-year T-note futures (/ZN): +0.11% 
3. Gold futures (/GC): -0.27% 
4. Crude oil futures (/CL): +1.3% 
5. Euro futures (/6E): +0.12% 

The zig-zag price action that has defined the bulk of the week has continued into today. U.S. equity markets are poised to close the week mostly lower, although the Nasdaq 100 has swung back into positive territory and the S&P 500 has pared nearly all its weekly losses. Bonds are likewise trying to turn around their fortunes, with yields down across the curve for a second consecutive day. Softer yields are hurting the U.S. dollar, which is likewise down for the second consecutive day for the first time since Sept. 26-27. The Federal Reserve enters its communications blackout window tomorrow in the run-up to the Nov. 7 Federal Open Market Committee (FOMC) meeting. 

Nasdaq futures rose, with traders’ sentiment bolstered by upbeat economic data. Durable goods orders excluding transportation rose 0.4% in September from the month prior. DexCom (DXCM) fell about 1% in pre-market trading after posting subdued revenue growth. Colgate-Palmolive (CL) fell 2.5% despite beating estimates and raising guidance. Newell Brands (NWL) surged over 20% after raising its profit and margin outlooks.  

Treasuries rose for a second day, with the 10-year T-note futures contract (/ZNZ4) gaining about 0.11% this morning. Still, bonds are looking at posting weekly losses following steep declines from earlier in the week. Investors are pricing in a 25-basis-point rate cut for next month’s Fed meeting. Meanwhile, volatility from the upcoming election is likely to be reflected in the bond market over the next several weeks.  

A muted U.S. dollar and softer Treasury yields are not helping gold prices (/GCZ4) too much going into the end of the week. However, gold remains on track to record a modest gain for the week despite sharp gains for yields and the dollar earlier this week. Traders are likely to continue seeking the safety of gold as we move through the U.S. election.  

Crude oil prices (/CLZ4) rose over 1% this morning, extending the commodity’s weekly gain to over 3.5% following losses earlier in the week. Potential geopolitical risks out of the Middle East have subsided for now and traders remain uncertain about when and how much stimulus will come out of China in the coming months. Meanwhile, OPEC is readying to unleash some spare capacity onto the market as a rollback of voluntary production cuts approach. For now, oil prices are likely to move sideways until the market receives some clarity.  

Euro futures (/6EZ4) is set for another weekly decline despite a modest rise in prices going into the weekend. This would mark the fourth weekly decline, as traders ramp up their bets on interest rate cut bets from the European Central Bank (ECB). Traders are also worried over a potential Trump administration that would likely impose tariffs on European exports. Those could induce further weakness in the European economy and increase the strength of the dollar.  

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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