S&P 500 Continues Churn as Jobless Claims, PPI Offer No Surprises

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

1. S&P 500 E-mini futures (/ES): -0.06% 
2. 10-year T-note futures (/ZN): +0.07% 
3. Gold futures (/GC): -0.75% 
4. Crude oil futures (/CL): +1.27% 
5. Japanese yen futures (/6J): -0.14% 

Today’s trading is producing more of the churn that has defined much of the week thus far. U.S. equity markets are continuing to bounce back and forth between modest gains and modest losses, although the spate of U.S. data this morning underscored the continued near-term momentum in the economy: Initial claims continue to trend lower, shaking off hurricane-related effects; prices at the factory gates are not increasing faster than anticipated. Net-net, bond yields are lower across the board, which is giving some breathing room for major currencies to claw back some of their intraday losses vs. the U.S. dollar. 

U.S. equity futures were slightly lower this morning after the latest round of inflation data crossed the wires. Stocks fell across Asia overnight, extending the week’s poor performance. Meanwhile, traders are assessing how President-elect Donald Trump’s trade policies will affect inflation and growth. Disney (DIS) rose nearly 10% after the company reported earnings and provided optimistic guidance. 

The 10-year T-note futures briefly hit a fresh multi-month low this morning before prices moderated ahead of the New York open. Despite the move off the overnight lows, the yield on the underlying is on track to rise over 3% this week. The hotter-than-expected core figure for producer prices kept some uncertainty around the path for rate cut bets. 

Gold futures (/GCZ4) fell over 1% today. That move extended its weekly loss to nearly 5%, which marks the biggest weekly percentage decline since June 2021. A post-election trade that sees a higher terminal Federal Reserve interest rate, along with a stronger dollar, has crushed the appeal of precious metals for investors. Meanwhile, the Bitcoin rally is also likely sapping some liquidity from the gold market, as more speculative-based traders shift funds into crypto. 

Crude oil futures (/ClZ4) bounced today, rising a bit more than 1%, but prices remain negative on the week amid a stronger dollar and concerns about the global economy. The International Energy Agency (IEA) said today that global supply will outstrip demand next year. The agency cited strong production from the United States as a key factor for the surplus, while also signaling concern about China’s economy. The Energy Information Administration (EIA) will report crude inventories later this morning.  

Japanese yen futures (/6JZ4) continued to struggle moving into the end of the week, with the contract down 0.14% in early U.S. trading. The yield premium on Treasuries widened further this week against their Japanese counterparts. That promoted yen selling in FX markets.

Meanwhile, Japan’s Takeshi Shina, a leader in the country’s primary opposition party, called for rates to be normalized. Shina cited concerns around low rates and the impact on the yen, such as higher import prices and pressure on real wages.  

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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