S&P 500 Holds Ground After Harris-Trump Debate and August Inflation Report

Also, 10-year T-note, silver, crude oil and Japanese yen futures

1. S&P 500 E-mini futures (/ES): 0% 

2. 10-year T-note futures (/ZN): -0.18% 

3. Silver futures (/SI): +1.09% 

4. Crude oil futures (/CL): +1.89% 

5. Japanese yen futures (/6J): +0.13% 

The two big macro events of the week are now in the rearview mirror. The U.S. presidential debate appears to have resolved in favor of Vice President Kamala Harris, according to post-debate polls and betting markets like Polymarket and PredictIt. The August U.S. inflation report came in right on the screws, if not a touch warmer for reasons that won’t influence the Federal Reserve’s thinking (airline fares don’t get included in PCE, the Fed’s preferred gauge of inflation). Bond yields are up as 50-basis-point (bps) interest rate cut odds for next week have dropped. Elsewhere, energy prices are rallying as Hurricane Francine is expected to make landfall today in the southern U.S. 

S&P 500 contracts (/ESU4) slipped this morning as traders digested the latest inflation data. The market expects a cut next week but more aggressive bets for larger rate cuts scaled back following the inflation data, albeit just gradually. GameStop (GME) is down nearly 10% in pre-market trading after the company reported weak sales after the bell yesterday. 

Yields reacted to the upside on this morning’s inflation report, which was largely mixed for markets that are expecting the rate-cut cycle to start next week. The question is how aggressively the Fed will react to the recent shifts in price pressure and the broader economy. The Treasury will auction off 10-year notes today, offering the market a high-profile gauge for Treasury demand. Last month’s 10-year auction was met with soft demand, which pushed yields higher. With yields even lower now than last month, we could see another weak showing for the debt. 

A bump in yields isn’t stopping silver prices from rising this morning, with /SIZ4 up over 1%. Gold isn’t having the same luck. There isn’t much in the way of the dollar offering any upside, either. One could argue the reduced threat of a global trade war after last night’s presidential debate could be offering silver some upside, given its industrial applications. While pundits continue to argue, the betting markets sent a clear signal that Harris performed well, translating to the risk reduction around tariffs.  

Crude oil prices (/CLZ4) bounced back on this after the American Petroleum Institute (API) reported a surprise drop in oil stocks and a reduction in gasoline inventory for the United States. The report took the edge off fears over faltering demand in China. Hurricane’ Francine’s advance toward Louisiana is also disrupting supply lines from the Gulf, contributing to the upside price pressure. Today will bring inventory data from the Energy Information Administration (EIA).  

The currency markets are largely muted this morning, but the Japanese yen (/6JU4) caught a bit of upside after Bank of Japan (BOJ) officials commented on policy overnight. The BOJ’s Junko Nakagawa said that the bank will continue to hike rates if inflation trends higher. Core inflation, a key metric for the bank, has remained above the 2% target for over two years now. Traders are increasingly expecting another hike this year, which would likely support yen strength.  

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.