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E-mini S&P (September) / NQ (September)

S&P, yesterday’s close: Settled at 3793.50, up 53.25

NQ, yesterday’s close: Settled at 11,629.00, up 282.50

Fundamentals: U.S. equity benchmarks were bludgeoned overnight in another post-Fed reversal. This time, market participants did not wait for today’s opening bell and reacted to a barrage of central bank tightening. Price action was firm into yesterday’s close after the Federal Reserve hiked rates by 75-basis points, the largest such move since 1994. Check out yesterday’s post-Fed Midday Market Minute for more details. However, sentiment began to deteriorate through Asian hours when the Hong Kong Monetary Authority hiked rates by 75 basis points, bringing their benchmark rates to 2%. The Hang Seng finished -2.17%. Next up was the Swiss National Bank which surprised by hiking 50 basis points to -0.25%, in their first raise in 15 years. The Swiss Market Index fell by -2.61%. In May, the Bank of England shocked markets, not because of the 25 basis point hike alone, but because it was coupled with such negativity. Their May statement exuded dissent while calling for a recession and 10% inflation. Today, the Bank of England hiked for the fifth straight meeting but showed restraint by only lifting 25 basis points. Given such extreme and coordinated moves across central banks, currency and rate markets will remain of the utmost importance. Yes, risk assets cannot hold ground if the U.S. Dollar and Treasury yields continue their leg higher. Did such restraint by the Bank of England pave the way for a reprieve in both and therefore an improvement across risk assets? The S&P was trading at 3700 upon the policy announcement. As the session unfolds, it is imperative for price action to hold this psychological mark heading into tomorrow’s Quadruple Witching.

From the U.S., Jobless Claims, Philly Fed Manufacturing, Building Permits, and Housing Starts all missed expectations. In the aftermath of these releases, the U.S. Dollar has so far traded lower, and the 10-year yield has backed off by about 10-basis points.

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NQ (September)

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Crude Oil (August)

Yesterday’s close: Settled at 115.31, down 3.62

Fundamentals: August Crude Oil is now front month. After hitting a high of 120.88 on Tuesday, the August contract slipped nearly $10 to a low of 110.91 early this morning. While a broader risk-off sentiment has acted as an undertow, we view the retreat as positioning dynamics. Sharp swings and reversals have become common upon mounting Open Interest at options expiration (yesterday July options expired). Still, the headline SPR release Tuesday and bearish inventory report yesterday certainly played a role. Broadly, builds were larger than expected, Net Imports were down and estimated production hit the highest levels since April 2020. Overnight, Russia’s Energy Minister Novak said he expected production to rise by 600,000 bpd in June from May.

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Gold (August) / Silver (July)

Gold, yesterday’s close: Settled at 1819.6, up 6.1

Silver, yesterday’s close: Settled at 21.42, up 0.466

Fundamentals: Gold and Silver are showing signs of life, so far this morning. Despite a firm finish to yesterday’s session post-settlement, both retreated sharply through this morning’s central bank news. Gold reversed quickly off a low of 1816.3, upon the Bank of England’s announcement at 6:00 am CT (discussed in the S&P/NQ section). The U.S. Dollar Index has pulled back about 1% from its 2:00 am CT high at the European open and is now trading back to levels on Sunday night. Treasury futures have also come off session lows; the 10-year yield hit a high of 3.495% and has pulled back to 3.286%. These moves also come after a deluge of economic data from the U.S. all missed expectations; Jobless Claims, Philly Fed Manufacturing, Building Permits, and Housing Starts.

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Silver (July)

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