S&P 500 Losing Modest Gains after Trump Slams Fed Inaction

Also, 10-year T-note, silver, crude oil and British pound futures

1. S&P 500 E-mini futures (/ES): +0.26% 
2. 10-year T-note futures (/ZN): -0.06% 
3. Silver futures (/GC): -1.43% 
4. Crude oil futures (/CL): +1.26% 
5. British pound futures (/6B): +0.2% 

Traders woke up on today to a screed from U.S. President Donald Trump about Federal Reserve Chair Jerome Powell’s refusal to cut interest rates, saying that “Powell’s termination cannot come fast enough!” The silver lining is that Powell’s term is set to expire in May 2026, and until Humphrey’s Executor is overturned (currently in review at the Supreme Court), it would seem Powell’s job is safe. Otherwise, trade war is the topic du jour (again) as Trump has likewise publicized meetings with Japanese and Mexican officials over the past 24 hours. 

S&P 500 futures (/ESM5) rose about 0.5% in early trading after trimming some gains from the overnight session following a statement from Trump that called for the firing of Powell. Taiwan Semiconductor Manufacturing (TSM) lifted technology stocks after the company provided a rosy sales forecast. However, healthcare stocks fell after UnitedHealth (UNH) dropped 20% following weak earnings results and guidance. Despite today’s gains, the S&P 500 is on track to record a weekly loss of about 1% ahead of an extended holiday weekend.  

Bond prices rose to trim losses after U.S. labor market data disspelled some fears of an economic contraction. Yesterday, Powell pushed back on the notion that the Fed would step in to act quickly to calm markets. Bond investors remain focused on the trade war, which could benefit foreign bonds if the restrictions on trade don’t ease over the short term. Meanwhile, German bunds in Europe are performing well after the European Central Bank (ECB) removed the word “restrictive” in its policy statement.  

Silver futures (/SIK5) dropped, outpacing gold futures to the downside, as growth fears in the global economy accelerated. Freight shipping companies are seeing a reduction in shipments, signaling the U.S.-imposed trade restrictions are now having a material impact on the global economy. The move lower comes after gold prices hit a record high today. A reprieve for the dollar is also putting some pressure on precious metals today.  

Crude oil prices (/CLM5) rose to a two-week high, with traders pushing prices about 1.5% higher this morning, as the U.S. ramps up pressure on Iran. The United States imposed fresh sanctions on Iran that aim to curb its oil exports. The U.S. is also increasing enforcement measures against those who accept Iranian crude, evidenced by a move to sanction a Chinese refinery. Meanwhile, OPEC+ said that Iraq and other countries would move to reduce production after running above output quotas.  

British Pound futures (/6BM5) rose to six-month highs as the currency heads for an eigtht-day gain. Inflation data supported the Bank of England’s plan to continue cutting interest rates. Traders see the Pound as a preferred currency to avoid the impact of the U.S. trade war, along with the euro and the yen, all of which have outperformed against the dollar recently. Long positioning in the pound remains unremarkable when considering the recent gains, which could mean the pound can accept higher flows in the coming weeks.  

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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