Monday's Close

E-mini S&P 500 Futures (June): Settled at 3959, down 5.75

E-mini Nasdaq-100 Futures (June): Settled at 12,944.50, down 22.25

U.S. benchmarks were under pressure ahead of the bell as rates and the U.S. Dollar grinded higher. The yield on the 10-Year Treasury Note hit an overnight high of 1.77%, matching that from January 23, 2020, and the Dollar Index is at a 5-month high. 

With Europeans in lockdown and the U.S. seeing a successful vaccine rollout, there’s a tailwind to both the U.S. Dollar and Treasury rates. The latter adds strength to the former. Alone, either would weigh on the risk landscape, but given the combination, equity markets were holding in arguably well ahead of the bell. The true test comes within the 1st hour of trade. 

Let’s not forget, the Dow set a fresh record high yesterday and is less than half a percent from that level. Although the S&P didn’t achieve such a mark yesterday, it’s still within 1% of its record high. On the other side of the coin, the Russell 2000 lost 2.8% yesterday. The new head of the CDC instilled fear, warning of a 4th wave of the pandemic and her feeling of “impending doom.” 

This certainly weighed on the reopening trade, but the rate environment turned a blind eye and continued higher in what exudes expectations of a strong March jobs report Friday. Even so, Financials didn’t participate in the otherwise-favorable environment due to uncertainties tied to the Archegos blowup. 

Furthermore, some small caps were likely indiscriminately sold yesterday as hedge funds delivered, also tied to the Archegos blow up. Still, the Dow was able to capitalize on healthcare, defensive stocks, and Boeing.

This week’s jam-packed economic calendar kicks into gear today. The Case Shiller Home Price Index came due at 8:00 a.m. CT and was followed by the closely-watched CB Consumer Confidence read at 9:00 a.m. CT.

We also look to Fed Governor Randall Quarles at 8:00 a.m. CT, Atlanta Fed President Raphael Bostic at 11:00 a.m. CT, and NY Fed President John Williams at 1:00 p.m. CT; all 3 are 2020 voters. Tonight, China Manufacturing PMI will be released at 9:00 p.m. CT.