Looking to the Futures
Australian Dollar Follows Interest Rates Up
Treasuries traded flat yesterday following a significant sell-off last Friday after the jobs report came in bearish for debt obligations. Stock indexes recovered to start the week which reduced safe-haven demand for T-notes. Global economic data came in mixed to start the week and treasuries saw some relief from crude oil prices coming of their highs seen Sunday night.
10-year US Treasury notes closed significantly lower on Friday after the Nonfarm payroll data came in stronger than expected. The Nonfarm Employment Change report for May showed an increase of +172,000 jobs well above the expected +85,000 figure. The Unemployment Rate was in line with expectations at 4.3%. We also saw a significant upside revision to April nonfarm payrolls, which reduced the likelihood that the Fed will increase interest rates. The CME FedWatch tool has a 98.2% chance of rates going unchanged during the June meeting.
A rally in equity markets yesterday curbed the safe haven demand for treasuries. Chipmakers and AI-infrastructure stocks saw moderate recoveries which reduced the flight to safety from equities into Treasuries. Supply pressures are mounting with the Treasury auction of $119 billion of notes and bonds this week, starting with today's $58 billion auction of 3-year Treasury notes.
Global economic data came in mixed over the past few trading days, starting with last week’s US Nonfarm payroll data. The European Jun Sentix investor confidence index rose +3.0 to -3.4, beating the expected -14.0. German Apr factory orders dropped -3.8% m/m, missing the expected decrease of -2.0% m/m.
A pullback from crude oil gains provided some support for Treasuries yesterday. President Trump stated on Monday that Iran and Israel are looking for an immediate ceasefire. Despite this rhetoric hostilities between the two countries continue with Israel targeting multiple Iranian military targets yesterday as a retaliation from missile attacks by Iran over the weekend. These exchanges have complicated negotiations to end the war.
Technicals
Looking at the daily chart for the 10-Year US Treasury Note September 2026 (/ZNU26) contract we can see the significant selloff on moderate volume last week. The contract attempted to break above the 20-Day Simple Moving Average but repeatedly failed over 5 trading sessions.
The Daily Technical Summary from Hightower Research has support levels at 108-230 and 108-145 with resistance levels at 109-155 and 110-000. Yesterday’s trading tested the upper support levels but was able to trade higher and close flat.
According to the CFTC Commitment of Traders report released June 2nd, asset managers increased their long position by +313,334 contracts and increased their short position by +29,385 contracts. Asset managers were net long 2,354,292 contracts as of the time this report was published.
The 14-Day Relative Strength Index at 39.96% has trended recently but the contract has not moved into oversold territory.
What else to watch today
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