S&P 500 Slips Towards Yearly Lows, Gold Nears New All-Time Highs

Also, 30-year T-bond, gold, natural gas and Australian dollar futures

1. S&P 500 E-mini futures (/ES): -0.2% 
2. 30-year T-bond futures (/ZB): -0.38% 
3. Gold futures (/GC): +0.51% 
4. Natural gas futures (/NG): -1.76% 
5. Australian dollar futures (/6A): -0.56% 

No rest for the weary as U.S. equity markets continue to struggle to find a bottom. More tariff headlines from the White House are leaving traders in an uneasy position as the weekend looms around the corner; there has been significant de-risking on Fridays in 2025. With relaxed readings from the consumer price index (CPI) yesterday and producer price index (PPI) today, the recession/stagflation trade is easing off and instead clearing the path for metals to run to fresh monthly highs. Minor gains by the U.S. dollar have done little to recoup recent losses.

U.S. equity markets continue to struggle to maintain any gains from the overnight sessions once the New York session begins. Today’s trading has produced fresh attempts at dropping to the weekly, monthly and yearly lows in each of the four equity index futures. Despite a meaningful drop in volatility (spot VIX is down from 29.56 on Monday to 23.9 at the time of writing), stocks have yet to bounce back: This may be the canary in the coal mine that the sell-off isn’t done yet. 

Treasuries are weaker across the curve today, a sign traders are relaxing their more aggressive “recession” bets in the wake of the CPI and PPI reports. Federal Reserve interest rate cut odds have likewise receded, with June eyed as the next opportunity for the Federal Open Market Committee (FOMC) to lower rates. After a string of bad auctions, yesterday’s 10-year note auction stopped through and saw a bid-to-cover ratio above its six-month average. There will be a 30-year bond auction later today. 

The shift in market mindset from ‘“imminent recession and potential stagflation!’” to ‘“a slowdown is coming, but stagflation isn’t!’” has been beneficial for the metals. Gold prices (/GCJ5) are at fresh monthly highs and less than 0.4% away from new all-time highs. Likewise, silver prices (/SIK5) have advanced to a fresh high for March. Likewise, a close at these levels would represent the high close watermark of 2025 for copper (/HGK5). 

Natural gas futures (/NGJ5) were lower in early trading, but traders trimmed those losses after the Energy Information Administration (EIA) reported a larger-than-expected inventory draw on Thursday morning. U.S. inventories decreased 62 billion cubic feet (bcf) compared to an expected 42 bcf decrease. The morning’s bounce saw prices hold above the 4 handle following two days of losses that followed a price spike to just below the 5 handle on Monday. Meanwhile, the weather outlook for the U.S. shows above-average temperatures, which should keep gas-weighted heating degree days below the average for this time of the year. Next week’s inventory report should be on the more bearish side, given the current weather landscape across the United States. 

Australian Dollar futures (/6AH5) fell 0.4% Thursday morning, as the currency ceded strength to the dollar following this morning’s report on producer prices. Australia’s consumer inflation expectations for the 12 months ahead fell to 3.6% in March, dropping from 4.6% in the prior month. Combined with a modest risk-off tone in equity markets, and the Aussie dollar looks like it will hold the weakness through today’s U.S. trading session.  

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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