Looking to the Futures
Equities Set New Highs
Equity markets reached all-time highs to start the week with stocks pricing in a 25-basis point rate cut following the FOMC meeting ending on Wednesday. Global economic news came in weaker on Monday limiting the upside move. The market will be focused on this week's U.S. economic news as well as the FOMC announcement in order to gauge momentum moving forward. Global bond yields were lower on Monday.
Traders were optimistic to start the week as they anticipate the 25-basis point rate reduction following Wednesday's FOMC meeting. The CME fed watch tool shows a 96% chance of a - 25 basis point rate cut. Expectations indicate a 75-basis point rate cut by the end of 2025.
In global economic news China’s Aug industrial production increased +5.2% y/y, missing the expected +5.6% y/y increase. China's Aug retail sales jumped +3.4% y/y, but still missed the +3.8% y/y expectation. China Aug jobless rate increased +0.1 to 5.3%, missing the unchanged expectation and showing weakness in the Chinese labor market. The Chinese Aug new home prices dropped -0.3% m/m, indicating price declines on new homes for the last 27 consecutive months. In U.S. economic news Sep Empire manufacturing survey general business conditions dropped 20.6 to -8.7, missing the expectation of 5.0.
Upcoming U.S. economic news could help shed a light on market direction moving forward. On Tuesday, Aug retail sales are expected to increase +0.3% m/m, retail sales ex autos are expected to rise +0.4% m/m. Aug manufacturing production is expected to decrease-0.3% m/m. The Sep NAHB housing market index is expected to increase by +1 to 33. As we discussed earlier markets are expecting a - 25 BP rate reduction, but traders will be reviewing Fed Chairman Jerome Powell's comments after Wednesday's meeting for an outline of upcoming of monetary policy.
Global bond yields were lower to start the week with the US 10-year Treasury yield dropping -3.3 bp to 4.032%. European bond yields are lower with the 10-year German bund yield dropping -2.1 bp to 2.694%. The 10-year UK gilt yield fell -3.8 bp to 4.633%.
Technicals
Looking at the daily chart for the E Mini S&P 500 index December 2025 (/ESZ25) futures contract we can see the new highs were set as we roll inti the next quarterly active contract. The contract has previously used the 20-day Simple Moving Average as a support level and hasn't tested the 50-day SMA price point since early September. We can see volume starting to increase on this uptrend potentially indicating more bullish sentiment.
The Daily Technical Summary from Hightower research shows support levels at 6629.00 and 6614.38 with resistance levels at 6660.50 and 6677.37. Both resistance levels were tested during yesterday's trading session.
According to the CFTC Commitment of Traders report released September 9th shows asset managers have increased their long position by +25,699 contracts and have decreased their short position by -895 contracts. Asset managers are still net long 887, 422 contracts as September 9th.
The 14-day relative strength index at 67.94% indicates the contract is moving into overbought territory.
This week represents the soft roll of the E mini S&P 500 contract, traders should be cognizant of the volume and trading activity of the contract as we move closer to the last trading day on Friday.
20-Day SMA 6,548.33
50-Day SMA 6,471.70
200-Day SMA 6,128.20
14-Day RSI 67.94%
Implied Volatility 13.20%
Contract Specifications
Economic Calendar
Building Permits 8:30 AM ET
EIA Crude Oil Inventories 10:30 AM ET
FOMC Rate Decision 2:00 PM ET
Housing Starts 8:30 AM ET
MBA Mortgage Applications Index 7:00 AM ET
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