Week ahead for futures traders: Fed minutes Wednesday, ISM services Monday, 10-year at 5.28%
A light data week follows Friday's 29,000-job payroll miss. The Dow lost 1.3% last week while the Nasdaq 100 gained 0.65%, and the 10-year Treasury yield has risen 11 basis points in five sessions.
Futures reopen Sunday evening into a quiet calendar. The big releases are behind us: Friday's September jobs report showed 29,000 new jobs and unemployment at 4.2%, and the next CPI report is not until Oct. 14. What remains this week is the ISM services survey on Monday, the minutes of the Fed's September meeting on Wednesday, jobless claims on Thursday and a handful of earnings reports. With little scheduled, the market is left with the two forces CNBC described on Friday: yields and oil.
Where the contracts settled
| Contract | Friday settle | Cash index close | Cash, week |
|---|---|---|---|
| E-mini S&P 500 (Dec) | 7,777.25 | 7,722.72 | -0.27% |
| E-mini Nasdaq 100 (Dec) | 31,061.75 | 30,807.93 | +0.65% |
| E-mini Russell 2000 (Dec) | 2,850.90 | 2,832.90 | -0.16% |
| Dow Jones Industrial Average | 51,176.96 | -1.26% | |
| WTI crude (Nov) | $91.11 | per barrel, -1.4% on the week | |
| Gold (Dec) | $4,162.30 | per ounce, -3.7% on the week | |
| 10-year T-note (Dec) | 104-11 | 10-year yield 5.28% | |
Week changes compare Friday, Oct. 2 with Friday, Sept. 25 (cash indexes) or the Sept. 25 settle (crude, gold). Futures data via Yahoo Finance.
The headline S&P number hides a wide spread. The Dow fell 1.26% while the Nasdaq 100 rose 0.65%, a gap of about 1.9 points. Friday did the heavy lifting: the S&P 500 rose 0.73% that day, from 7,666.45 to 7,722.72, and the Nasdaq Composite closed at a fresh high, according to CNBC, which credited a record in Nvidia and Micron's results. CNBC also cited Bespoke Investment Group's finding that September was one of the three worst months for the equal-weight S&P 500 against the cap-weighted index since 2003, lagging by 4.6 percentage points.
The number behind the yield move
The jobs report sent yields lower in the morning, but they did not stay there. Treasury's closing curve shows the move over the week was up, and at the long end:
| Maturity | Sept. 25 | Oct. 2 | Change |
|---|---|---|---|
| 2-year | 4.81% | 4.83% | +2 bp |
| 10-year | 5.17% | 5.28% | +11 bp |
| 30-year | 5.49% | 5.63% | +14 bp |
The gap between the 2-year and the 10-year widened from 36 to 45 basis points. That is a market reading a weak labor report and a Fed funds rate of 3.88% and still demanding more to hold long bonds. The Fed raised its target range to 3.75%-4.00% on Sept. 16, by a 12-0 vote, so the funds rate sits about 95 basis points below the 2-year yield. Futures traders pricing the Oct. 28 meeting are weighing a payroll miss against that backdrop, and Wednesday's minutes are the first detailed account of how the Committee argued the September hike.
What a 10-year move does to real money: Freddie Mac's 30-year mortgage average rose to 7.28% in the week to Oct. 1 from 7.03% a week earlier. On a $400,000 loan that is a payment of about $2,737 a month against $2,669, or roughly $68 more (our arithmetic, principal and interest only). See our 10-year chart for the path.
The calendar (all times ET)
| Day | Release or event | Previous | Consensus |
|---|---|---|---|
| Mon, Oct 5 | S&P Global services PMI, final (Sept), 9:45; ISM services PMI (Sept), 10:00 | 55.4 | 55 |
| Tue, Oct 6 | ADP weekly employment change; Constellation Brands earnings | ||
| Wed, Oct 7 | FOMC minutes (Sept. 15-16 meeting), 2:00 PM; consumer credit (Aug), 3:00 PM | ||
| Thu, Oct 8 | Initial jobless claims, 8:30; wholesale inventories (Aug), 10:00; PepsiCo earnings | 197K | 200K |
| Fri, Oct 9 | University of Michigan sentiment, preliminary (Oct), 10:00; Delta Air Lines earnings |
Calendar per CNBC; previous and consensus figures where shown are from the Chronicle economic calendar. Blank cells mean no figure in our feed.
Next week brings the inflation read the market is really waiting for: CPI on Oct. 14, with a previous reading of 3.4% a year and core at 2.4%, and retail sales the next day, per our economic calendar. The Fed meets Oct. 28.
What could move each market
- Treasury futures: the December 10-year note settled at 104-11. Monday's ISM services number is the first chance to test whether Friday's labor weakness shows up in the larger part of the economy. A reading far from 55 in either direction would reprice the long end first.
- Equity index futures: the question CNBC raised is breadth. Only 12% of 153 sub-industries in the S&P 1500 were above both their 50- and 200-day averages, according to CFRA's Sam Stovall as quoted by CNBC. A Nasdaq-led rally and a Dow-led slide can both coexist in the same index, as last week showed.
- Crude: November WTI settled at $91.11 on Friday after reports the European Union is considering releasing strategic fuel reserves, per CNBC. Middle East shipping headlines remain the swing factor; see our crude chart.
- Gold: December gold fell about $159 over the week to $4,162.30 as yields rose. See the gold chart.
Bitcoin traded near $85,870 on Coinbase on Sunday afternoon, up about 1.4% on the day. For the weekend's crypto detail, see our October 4 crypto report; for the previous week's setup, see last Sunday's preview and the live futures page.
Sources: U.S. Department of the Treasury; Federal Reserve; Yahoo Finance settlement and index data; CNBC; Freddie Mac; Coinbase; Chronicle economic calendar. Mortgage arithmetic is illustrative, principal and interest only on a 30-year fixed loan. This is market information, not trading advice.
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