Silver trades near key support and the Russell outperforms the S&P. The possibility of a March interest rate cut is ruled out, with a 42% odds. The U.S. leading index exceeded expectations but has shown weakening conditions over the last 21 months.
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Good afternoon, traders. It’s Chris Chavez with Blue Line Futures and it’s your daily midday market minute the Russell 2000 outperforms as Treasury yields fall. But before we get to it, if you’re watching this video like it subscribe if you’re a website, there’s also a link to direct you to YouTube. You could subscribe that way. We would love for you to follow us.
We would love for you to help us build our following. Now the Russell is outperforming here today. Treasury yields are falling just a bit. The ten year yield down about six basis points or so as of the time that I’m shooting this video now followed by the Russell is the Dow Jones and then the S&P and the Nasdaq.
Nasdaq’s the leader here today, but has been the outperformer so far this year. Now, we had those bullish comments, you know, from Taiwan’s semi that I want to highlight some of those tailwinds that have really propelled the market forward. And today you’re seeing lower Treasury yields, which are still providing even more of a bid for equity markets as a whole now despite lower yields.
Gold, silver, the precious metals really struggling, specifically silver. Crude oil is in positive territory trying to break out. So we’re going to highlight some of those levels to pay attention to. This morning. We did get some economic data. The U.S. leading index came in much better than expected. It showed a negative one tenths decrease versus a negative three tenths expected.
Now, this is still the 21st consecutive month of declines that you’ve seen in the U.S. leading index, although we’re almost back to that flat or unchanged for that index, which does show a lot of resilience or at least a maybe maybe a repricing. Looking at the markets here as of late and those bullish comments, you know, about the macroeconomic environment from Taiwan semi and demand, those have really set the stage I think for a reprice of economic growth.
So when you’re looking at the CME Fed watch tool here today, the march cut has been taking taken off of the table. There’s now a 42% chance of a cut in March. So not really looking like we’re going to see a cut that soon. But there are still 525 basis point cuts priced into the market for this year.
So 125 bips worth of cuts and that compares to the Fed’s latest summary of economic projections, which showed about a 75 to some. You know, the median was 75 basis points worth of cuts. Some participants, some committee members saw 100 basis points worth of cuts. So the important thing is that the markets are still pricing in more cuts than the Fed’s latest summary of economic projections.
Those interest rate expectations, if you continue to see growth and you continue to see a resilient consumer or resilient labor market, we could start to see a few more 25 basis point cuts get taken off the table and the markets may continue to trade higher. As you know, the economy is still resilient. So I think the major risk, the major headwind is if you do start to actually see cracks emerge.
You know, there’s talks of big tech layoffs, Google layoffs and other companies planning job cuts. So that could potentially be the start of some of those headwinds, but those would be some of the risks moving forward as the markets seem to have shifted sentiment here a little bit as of late. Now, we will get more data tomorrow. Richmond Manufacturing not a significant and also a two year note auction that will be very important to pay attention to some of these support resistance levels.
You know highlighting these from earlier three star support level for the S&P 48, 69 and a half now highlighting support for the equity indices because we are off of those intraday highs today except for the Russell the Russell’s most resilient, which makes sense because yields are lower and more than 30% of the constituents in the Russell have floating interest rates.
So it’s going to remain the biggest indices that will trade based on interest rates. Now, when looking at the Nasdaq, three star support level 17 for 16 to 17 for 38. Crude oil is trying to break out here today. I would love to see us break in close above 75, 30 to 75, 71 and silver it really weak here today relative to gold underperforming of course silver as a lot of the industrial applications.
Copper is also negative here today. China is going to be the big headwind there. But 20 205i want to hold this level. We want to see the markets hold here. We traded down to this level today and then had a little bit of a V-shaped recovery, even though we’re still in negative territory. So a break in close below.
There would definitely be a bit more bearish for the silver market if you have any questions, reach out to our trade desk. We’re here for you. Remember, futures trading involves substantial risk of loss. It is not suitable for all investors.
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