S&P 500 Reaching for New All-Time High

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

1. S&P 500 E-mini futures (/ES): +0.40%
2. 10-year T-N=note futures (/ZN): -0.07%
3. Copper futures (/HG): -0.48%
4. Crude oil futures (/CL): +0.76%
5. Japanese yen futures (/6J): -0.08%

Measures of equity market volatility continue to decline, thanks in part to the continued resiliency by a broad swath of stocks: the advance/decline ratio (ADR) has shifted back into positive territory this week, while both the S&P 500 and Nasdaq 100 have at least 70% of their constituents trading above their 200-SMA. Bond yields are slightly higher ahead of the 10-year note auction later today. The earnings calendar is thin the remainder of the day, with Alibaba (BABA) and Uber (UBER) having reported, and Disney (DIS) and PayPal (PYPL) due out after the closing bell.

S&P 500 futures (/ESH4) was approaching all-time highs this morning as investors shrugged off the recent repricing in Federal Reserve interest rate cut bets. It seems that traders don’t mind that policy will ease later than expected if they know it's coming. A rebound in regional banks is also helping to bolster sentiment, with traders setting aside distress in New York Community Bank (NYCB) stock.

10-year T-Note futures (/ZNH4) fell slightly ahead of a 10-year Treasury auction scheduled for today. That sale will offer a record $42 billion worth of notes, and traders expect solid demand following a three-year auction that was met with good results, yielding non-dealer bidding at 84.3%. Bond traders also have their eyes on a slew of Federal Reserve officials set to speak over the next 24 hours.

Copper futures (/HGH4) fell 0.5% ahead of the Wall Street open as concerns about China’s economy continue to weigh on sentiment for industrial metals. China has taken several steps to assuage markets in recent months but structural problems around its housing market are far too ingrained into its economy to hand wave away. Despite a still-resilient U.S. economy, it’s hard to get bullish on copper while China is grappling with these problems.

Energy markets are rebounding for a third consecutive day following a slew of commentary from public and private sector market participants regarding supply and demand for oil. The U.S. Energy Information Administration (EIA) released a report suggesting U.S. oil production would not grow in 2024 and that the recent uptick in U.S.-based supply may no longer weigh on markets. Crude oil prices (/CLH4) have now recouped their losses since the close last Thursday.

Despite the small push higher in U.S. Treasury yields, the U.S. dollar is down across the board today. The one standout is the Japanese yen (/6JH4), which may be slumping under the pressure of modestly wider interest rate differentials. The rebound in energy markets and move to near all-time highs in stocks has diminished demand for liquid, safe haven currencies: the yen, Swiss franc, and U.S. dollar are the three worst-performing major currencies this morning.

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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