Where we are: Nasdaq futures are currently trading at 28755.25, up 0.33% on the day and near the session high of 28813.75. The overnight range has been relatively contained, but the move higher extends yesterday’s gains. Cash NDX closed last night at 25838.94, so futures are implying a significantly higher open today.
What’s driving it: Risk sentiment remains broadly positive, fueled by expectations of a resolution to the Iran-US conflict and a potential boost to energy supplies, easing inflationary pressures. The US 10-year yield is down 2.8bps to 4.316%, while the 2-year yield is down a more substantial 4bps to 3.834%, suggesting a flattening of the curve, which is typically supportive for risk assets. However, rising real yields, now at 1.96%, present a potential headwind to gold and, by extension, a subtle caution flag for the broader risk rally.
- Unemployment Claims data at 08:30 ET is the key domestic event today. The forecast of 205K vs. the previous 189K could temper the rally if it comes in higher than expected.
- Speculator positioning in the Nasdaq 100 is heavily short, with net non-commercial positions at -2,322 contracts, putting it in the 0th percentile over the last 52 weeks. This creates a considerable short-squeeze risk if the rally persists.
- The DAX is flat in European trading, while the FTSE is up 0.61%, pointing to a somewhat mixed picture outside of the US, suggesting this rally is quite domestic-centric.
NY session focus: All eyes are on the 08:30 ET Unemployment Claims data – a weaker print could trigger a substantial short squeeze in Nasdaq futures, potentially pushing through resistance at 28850 and targeting 29000. Conversely, a strong print could lead to a retest of the 28600 level. Keep an eye on the DXY, currently at 97.69, for further weakness as it can act as an accelerant. The trade to watch remains dip-buying in tech, but a hawkish surprise from Claims data could quickly unwind this, especially given the crowded short positioning. The pain trade would be a surprisingly strong jobs number that forces the market to reprice Fed rate hike expectations.