Where we are: S&P 500 futures are currently trading at 7545.50, down 18.25 points or 0.24% on the day. The overnight range has been relatively contained between 7525.75 and 7565.00. This compares to the cash S&P 500 which closed at 7473.50 in the prior NY session, suggesting a slight catch-up bid this morning after yesterday’s rally.
What’s driving it: Concerns about consumer sentiment ahead of the 10:00 ET CB Consumer Confidence release are weighing on risk appetite. The market is pricing in a slight dip to 91.9 from the previous 92.8, and a weaker-than-expected print could exacerbate downside pressure. Firmer real yields, with the 10Y TIPS yield at 2.18%, continue to act as a headwind for equities. The DXY is holding steady around 99.05, offering limited support to risk assets.
- US 10Y yield is holding around 4.486%, down 2bp on the session, suggesting a slight risk-off tone ahead of the data.
- Net non-commercial positioning in S&P 500 futures remains modestly short, at -134,906 contracts, leaving room for a potential squeeze if data surprises to the upside.
- WTI crude oil prices remain elevated around $112.25/bbl, contributing to inflationary concerns and potentially capping equity gains.
NY session focus: All eyes will be on the 10:00 ET CB Consumer Confidence release. A miss could trigger a move towards the 7500 level in S&P 500 futures, potentially opening up a test of the overnight low at 7525.75. A strong print, however, could see a retest of the overnight high near 7565. The market has been rewarding defensive names and punishing growth so far this week. The pain trade would be a strong consumer confidence print, coupled with continued dovish rhetoric, triggering a rapid unwind of short positions and a move above 7600.