Nasdaq 100, 30-year T-Bond, Gold, Crude Oil, and Japanese Yen Futures

This Morning’s Five Futures in Focus:

1. Nasdaq 100 E-mini futures (/NQ): +0.59%
2. 30-Year T-bond futures (/ZB): -0.08%
3. Gold futures (/GC): +0.56%
4. Crude oil futures (/CL): +1.16%
5. Japanese yen futures (/6J): +0.57%

U.S. jobs day did not disappoint. Signs of moderation in the U.S. labor market served as a healthy dose of confirmation bias for price action this week, which has seen a continuation of the rally in stocks and bonds. The U.S. nonfarm payrolls report showed solid jobs growth, while a slew of unique factors (strikes by unions, return to school by teachers) helped produce a rise in the unemployment rate–a desired outcome for the Federal Reserve. For the full readout on the August U.S. jobs report, read our initial reaction.

U.S. equity markets are pushing higher to end the week and to start September, led higher by the Russell 2000 (/RTYU3). However, the S&P 500 (/ESU3) and the Nasdaq 100 (/NQU3) are not that far behind. Price action in recent days has served to reinforce the technical bottoming efforts that have been coming together in recent days, and some significant technical hurdles are being cleared in the process: /ESU3 is back above the trendline from the March and May swing lows; and /NQU3 has broken the downtrend from July’s intramonth swing highs.

A further decline in Fed rate hike odds for November, and a nudge higher for a rate cut in March 2024, is guiding U.S. Treasury markets higher at the end of the week. Bond prices are mostly higher, led by the belly of the curve. The rebound in the 2-year T-note (/ZTU3) has seen the 2-year yield fall below 4.800%; technically speaking, it appears that 2-year T-note yields have topped for the cycle. Meanwhile, options markets are priced such that the high in yields and the low in prices at the long end (/ZBU3 and /UBU3) have been reached.

Gold prices (/GCV3) shot higher after the U.S. jobs report crossed the wires this morning, lifting to around the 1,980 level. The jobs data, which highlighted slowing wage growth, tempered expectations that the Federal Reserve will continue to hike interest rates. If the post-NFP move holds, it would put /GC on track for its best weekly percentage gain since April. Silver prices (/SIU3) are showing similar strength this morning, and copper (/HGU3) is benefiting as well, with traders expecting economic growth in lieu of more hikes.

Crude oil (/CLV3) is up about +1% this morning and on track to record its best weekly gain in percentage terms since early April. Bloomberg data shows that Saudi Arabia’s crude exports slowed in August, dropping to about 5.6 million barrels a day. That is the lowest since March 2021. Traders are putting those supply forces above the potential slowdown in demand.

Meanwhile, natural gas prices (/NGU3) are rising after planned industrial actions at liquefied natural gas (LNG) facilities in Australia appear to be moving forward after workers rejected Chevron’s most recent offer. The planned industrial action at the Gorgon LNG and Wheatstone LNG facilities will begin at 22:00 GMT on Wednesday.

Aside from the Canadian dollar (/6CU3), which has been weighed down by a disappointing 2Q’23 Canada GDP report, all the other major currencies are performing well on Friday. The decline in U.S. Treasury yields has weighed on the U.S. dollar, with the DXY Index down -0.26% at the time this note was written. The price action comports with the technical signal issue earlier this week that the U.S. dollar rally has ended.

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.