Looking to the Futures

US Treasury notes settled into a lower trading range with equity markets providing some support during yesterday's session. Earnings season kicked off with mixed earnings against fairly aggressive expectations. Global economic news was supportive for stocks putting downside pressure on treasuries. Comments from Fed Presidents indicated a high likelihood for rates remaining at current levels despite some contrarian views from Chicago Fed President Austan Goolsbee.

Equities traded moderately lower throughout the day after the start of earnings season and significant selling pressure in South Korean markets pushed stocks lower. Samsung Electronics and SK Hynix both sold off yesterday as concerns over increased competition from China made investors weary. 

Earnings season has started with major banks releasing their reports this week. JPMorgan Chase missed on top and bottom lines resulting in an early sell off, but the stock was able to rebound on increased net interest income guidance for 2026. Wells Fargo & Company came in at expectations on earnings per share and beat on revenue but sold off into the close. Goldman Sachs beat on top and bottom lines and traded slightly higher yesterday. According to Rebecca Walser, chief investment officer at Walser Wealth Management, " These banks still reported strong numbers, it's just that expectations were high, and higher expectations is a risk for companies across the board during this current earnings season."

US economic news was bullish for stocks yesterday with Sep existing home sales unexpectedly rising +1.5% m/m to 3.99 million, beating the expected decline to 3.95 million. The International Monetary Fund raised its 2026 global GDP forecast from 3.0% in July to 3.1% and kept the consumer price forecast from July at 4.7%.

Fed Governor Christopher Waller stated that the recent surge in long-term bond yields is helping reduce demand in certain sectors including housing and automobiles, helping tighten monetary policy. The CME FedWatch Tool shows a 76.2% chance of rates staying at current levels during the October FOMC meeting. Chicago Fed President Austan Goolsbee commented that inflation tied to the AI boom has started to push prices in unrelated corners of the economy which indicate he has a more hawkish approach. 

The 10-year US Treasury Note December 2026 (/ZNZ26) contract struggled to hold onto early gains yesterday. The contract sold off after hitting the 20-Day Simple Moving Average during yesterday's session. We can see the declining trend of the 20-Day, 50-Day, and 200-Day SMA price points as the Fed moves to tighten money supply. 

The Daily Technical Summary from Hightower Research shows support levels at 104-155 and 104-105 with resistance levels at 104-240 and 104-280. Both resistance levels were tested on Tuesday’s, but the contract was unable to hold onto early gains. 

According to the CFTC Commitment of Traders Report released October 6^th, asset managers have increased their long position by +95,636 contracts and increased their short position by +44,028 contracts. Asset managers are net long 2,828,139 contracts as of the time this report was published. 

The 14-Day Relative Strength Index at 37.91% indicates the contract is moving closer to oversold levels. 

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