Nasdaq 100 Sees Sluggish Start as Gold, Silver Continue Lift-Off

Also 30-year T-Bond, Silver, Crude oil, and Japanese yen futures 

1. Nasdaq 100 E-mini futures (/NQ): -0.33% 
2. 30-year T-bond futures (/ZB): -0.78% 
3. Silver futures (/SI): +3.58% 
4. Crude oil futures (/CL): +1.98% 
5. Japanese yen futures (/6J): -0.35% 

Festering tensions between Israel and Iran have traders back in familiar territory at the start of the week: Bonds are down, precious metals are bid and stocks are seemingly indifferent. Earnings season continues to press forward, with some 86% of S&P 500 companies yet to report (among those that have, 79% have beaten earnings-per-share forecasts). The macroeconomic calendar is relatively quiet this week, and a lonely 20-year bond sale marks the Treasury auction calendar this week. 

Nasdaq futures (/NQZ4) slipped to start the week this morning, dropping by about 0.18% at the open. Boeing (BA) rose nearly 4% after the aircraft builder reached a deal with its machinists union. United Parcel Service (UPS) fell over 2% after a downgrade from Barclays. Spirit Airlines (SAVE) rose nearly 40% after getting an extension on its debt refinancing. 

Treasuries extended lower Monday, as traders look ahead to speeches from several members of the Federal Reserve, including Minneapolis Fed President Neel Kashkari. Dallas Fed President Lorie Logan said this morning she supports lower rates, although she also urged caution in the way it's done. The 30-year T-Bond futures (/ZBZ4) traded about 0.75% lower in the first hour of New York trading.   

Silver prices (/SIZ4) broke above the May swing high at 33.5 to mark a victory for bulls as they push the metal into the highest levels traded since October 2012. A move by Chinese policymakers to cut the one-year loan prime rate (LPR) and 5five-year LPR confirmed to markets that China would move to ease monetary conditions. While that is a positive for silver, as it owes more of its demand to industrial applications vs. gold, there is still a demand-side problem that needs to be tackled in China. For now, the move is a short-term positive for silver prices. 

Crude oil prices (/CLZ4) are rebounding after last week’s heavy losses. Crude closed last week with a 9.09% loss, the largest decline of 2024. Prices are hovering around $70 per barrel with demand concerns around the globe. That’s combined with the expectation that OPEC will soon release some of its spare capacity by rolling back voluntary production cuts, which has plagued the commodity over the last several months. China’s refineries processed 14.29 million barrels per day (bpd) of crude oil last month, according to government data released last week. That is up from 13.91 million bpd in August. While it marks a month-over-month increase, it is down from a year ago. Traders have their eyes on data from the American Petroleum Institute (API) due out tomorrow. 

The yen carry trade continues to prevail in the market, as prices move lower this morning. Recent comments from Japan’s prime minister, a previous Bank of Japan (BOJ) critic, has put the currency on a decline. Meanwhile, expectations for the pace of interest rate cuts in the United States has slowed in recent weeks. That is widening interest rate differentials between the two countries, a major driver of FX prices. 

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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