E-mini S&P 500 (June): Settled at 3958.25, up 25.50
E-mini Nasdaq-100 (June): Settled at 13,069.25, up 145.00
Yesterday, the S&P front-month rallied to its first record high since February 16th and the stage is set for a melt-up into Friday’s quadruple witching. The Dow achieved its 6th straight session with a fresh record and the Russell 2000 its 3rd. Although the Nasdaq closed 6% from the record it set 1 month ago, the rebound has brought a broad tailwind to risk-assets.
Within the space, Apple started the week off on strong footing, gaining 2.45% and semiconductors gained 2%. This type of leadership could have legs, but they’ve failed to string together consecutive sessions of such results. This brings us to the Treasury complex and the Federal Reserve’s 2-day policy meeting that kicks off today.
The Bond market cratered late Thursday night on the heels of President Biden’s uplifting reopening speech and in preparation for the $1.9 trillion-worth of debt being printed. We at Blue Line Futures believed a low had already been formed in the 30-year Bond futures given the February 25th capitulation, the roll from March to June, a failed retest on March 5th, a downtrend break from when the February 11th selling kicked in, and the constant noise on rates across media— but we’re not always right.
Still, the low set Friday has so far been successfully defended, has held a trend line, and price action is building to consolidate higher at minimum ahead of tomorrow’s Federal Reserve policy decision.
We’ve discussed the impact of rates and reopening on investors in high-flying tech names and how they must decide between risk-free return and overpriced Tech. If the Bond market can continue to improve ahead of the Fed, it would bring a tailwind to tech, which would bring added strength to the 3 aforementioned U.S. benchmarks in breakout-mode.
The Federal Reserve has no reason not to be dovish: they have been and will continue to be. However, is their emphasis on “remaining accommodative” merely enough now? As seen on March 5th, markets want to hear something on the steeping yield curve. Markets have become accustomed to continued assistance and yield curve control is now what they’re asking for.
Today, Retail Sales came due at 7:30 a.m. CT and Industrial Production followed at 8:15 a.m. CT. Large deviations from expectations would certainly have an impact on the Treasury complex.
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