Category: Indexes

  • Nasdaq 100 Vulnerable; Crowded Shorts Won’t Save Bulls – Monday, 25 May

    Where we are: The Nasdaq 100 futures are currently trading around 19,550, holding a bid after a quiet overnight session. This is slightly below Friday’s close, but still within the recent trading range. We’re watching for a break above 19,600 to signal renewed upside momentum, while a dip below 19,500 could open the door to further declines.

    What’s driving it: The primary driver remains the US real yield environment. The 10-year real yield continues its ascent, now at 2.18%, putting pressure on tech valuations, a known headwind for the Nasdaq 100. While the broader narrative of potential Middle East peace negotiations provides a tailwind for risk assets, the real-yield story trumps that; ultimately the Fed is watching inflation, and right now the bond market is saying they’re not winning. Friday’s 6bp steepening of the 2s10s curve also bears watching — it hints at some belief that the Fed may need to cut more aggressively at some point but this is a second order effect for today’s open. We will be watching it closely.

    • The 10Y real yield is at 2.18%, a level that has historically been a headache for Nasdaq valuations.
    • CFTC data reveals a crowded short position in Nasdaq 100 futures, with net non-commercial positions at -1,420 contracts (4th percentile).
    • Hedge funds are reportedly rotating out of software and into semiconductors, per Goldman, suggesting a shift in sector preference within the tech space.

    NY session focus: With US markets closed for Memorial Day, liquidity will be thinner than usual, potentially exacerbating any moves. Keep an eye on the 19,500 level as initial support and 19,650 as resistance. While there is no major US data release today, any headlines regarding the Middle East negotiations could trigger a risk-on or risk-off move. The trade that’s working is shorting rallies into 19,600, but the risk is a short squeeze fueled by the crowded positioning. The pain trade would be a sustained breakout above 19,700, forcing shorts to cover aggressively.

  • Dow Jones Momentum Stalls as Rate Concerns Linger – Monday, 25 May

    Where we are: The Dow Jones Industrial Average (US30) futures are trading around 39,850, slightly below the overnight high of 39,900, and well within Friday’s range. The index closed last week on a strong note, but appears to be consolidating those gains as traders look to the week ahead. Friday’s close was 39,900.

    What’s driving it: Rising US real yields are creating a headwind for equities. The 10-year real yield has climbed to 2.18%, up 5bp on the day, increasing the attractiveness of fixed-income assets relative to stocks. This comes as the market prices in a potentially less dovish Fed stance in the face of persistent inflation. Optimism around potential US-Iran deal has faded, despite initially boosting sentiment and contributing to last week’s gains.

    • The 10-year Treasury yield is holding steady at 4.57%, a level that continues to provide resistance for equity bulls.
    • Net non-commercial positioning in Dow Jones futures remains moderately short at -10,765 contracts, although this has decreased by 7,203 contracts w/w, suggesting a possible shift in sentiment or short covering.
    • The broad USD index is firm at 119.2825 (as of May 15th).

    NY session focus: With US markets closed today for a public holiday, trading activity is expected to be subdued. Focus will be on positioning ahead of the upcoming PCE inflation data later this week. Watch the 39,700 level for support; a break below could signal further downside. Resistance remains at 40,000. The trade that’s working is fading rallies into resistance. The pain trade would be a renewed push above 40,000 triggering short covering and a breakout to new highs, unlikely given the holiday mood.

  • Footsie Sags on Soft Inflation, Rising Real Yields – Monday, 25 May

    Where we are: The FTSE 100 is trading around 10,430, down roughly 35 points from Friday’s close. Overnight range has been relatively contained, oscillating between 10,420 and 10,470. Friday’s close marked the highest level since April 22nd, but momentum appears to be fading this morning.

    What’s driving it: UK inflation data, released last week, continues to weigh on sentiment. While the FTSE enjoyed a strong week overall, driven partly by easing rate hike expectations from the Bank of England, the weaker-than-expected CPI print (2.8% YoY) combined with a tick up in the unemployment rate to 5% is giving investors pause. The rise in US real yields, currently at 2.18%, further contributes to the headwind by drawing capital away from risk assets like the FTSE. Despite stabilisation in global markets, investors are cautious about the likelihood of a US-Iran agreement and its potential impact on oil prices.

    • UK CPI at 2.8% YoY in April, down from 3.3% prior, suggesting easing inflationary pressures.
    • US 10Y Real Yields climbed to 2.18%, increasing the appeal of US assets.
    • The 2s10s spread has compressed to 0.43%, signalling further risk-off sentiment.

    NY session focus: With no major UK data releases scheduled today, the FTSE will likely be driven by external factors. Watch for US Durable Goods Orders at 08:30 ET. Key levels to watch on the downside are 10,400, followed by 10,350. A break below 10,350 could trigger a deeper correction. The trade that’s working is shorting FTSE rallies into resistance. The trade at risk is holding onto long positions initiated earlier in the month. The pain trade for the FTSE would be a surprise hawkish turn from the Bank of England or a sharp spike in oil prices despite global growth concerns.

  • Nikkei 225 Momentum Unwavering as Oil Eases – Monday, 25 May

    Snapshot: The Nikkei 225 surged past 65,000, driven by optimism surrounding potential US-Iran talks and a subsequent decline in oil prices. The surge reflects a positive shift in risk sentiment, with tech stocks leading the charge.

    • Breaching 65,000 signals strong upward momentum, potentially targeting the 65,500 level.
    • A sharp reversal in oil prices remains a key risk, particularly if Hormuz reopening hopes fade.

    Bias into NY: Expect continued upside for the Nikkei 225 as long as oil prices remain contained and the US-Iran dialogue progresses; a break above 65,200 would confirm the bullish trend.

  • DAX Breaks 25,000 on Inflation Relief – Monday, 25 May

    Snapshot: The DAX is pushing higher, trading around 25,000, fuelled by easing inflationary pressures within the Eurozone. German HICP decelerated to 2.0% YoY, down from 2.6% previously, bolstering sentiment. Positive developments in US-Iran talks, potentially reopening the Strait of Hormuz, are adding to the risk-on mood.

    • Watch for follow-through above 25,000, a key psychological level.
    • Rising US real yields (10Y TIPS at 2.18%) pose a headwind if the trend continues, potentially drawing capital away from European equities.

    Bias into NY: Bullish on the DAX, targeting a move towards 25,200, supported by receding Eurozone inflation and improving global risk appetite. The rally is contingent on US yields remaining contained, and the US data calendar before the NY close will be crucial.

  • NY Session Tactical Brief – Friday, 22 May

    Regime: Mixed — VIX steady at 17.44 despite higher oil and Dow futures, indicating risk appetite remains selective and rate-sensitive.

    Today’s market themes:

    • USD Strength: DXY supported by relatively hawkish Fed pricing.
    • Oil Volatility: Geopolitical tensions and inventory concerns drive swings.
    • Data Dependence: Retail sales releases in GBP and CAD in focus.

    The setup: USD strength continues, fueled by hawkish Fed bets as US yields remain elevated. Traders eye the 1.1600 level on EUR/USD; a break could trigger further downside. Focus remains on incoming data and any further escalation of geopolitical tensions in the Middle East.

    Watch list (native time per event):

    • 07:00 BST GBP: Retail Sales m/m (forecast -0.6%, prior 0.7%)
    • 08:30 ET CAD: Retail Sales m/m (forecast 0.6%, prior 0.7%)
    • 10:00 ET USD: Revised UoM Consumer Sentiment (forecast 48.2, prior 48.2)

    Bias by asset:

    STRICT SILO RULE: For every non-USD asset, the Domestic line MUST contain only domestic content (home central bank / domestic data / domestic yield / domestic political-fiscal driver). USD, DXY, Fed, US yields, and risk regime go in the Cross line — never in Domestic. If no fresh domestic catalyst exists, write “No fresh domestic catalyst — sensitive to US response” in Domestic. For commodities, Domestic = real-yields / supply / inventories / flows. For BTC, Domestic = funding / ETF flow / on-chain.

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed pricing stable / economic resilience
      • Cross: Global growth worries / safe-haven bids on tension
      • Levels: Support 99.00 / Resistance 99.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / rate divergence / risk-off flows
      • Levels: Support 1.1600 / Resistance 1.1650
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): Disappointing retail sales weigh on GBP
      • Cross: DXY strength / US-UK yield spreads / risk sentiment
      • Levels: Support 1.3380 / Resistance 1.3450
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): Intervention risk high / BoJ dovish
      • Cross: US yields / risk-on / DXY strength
      • Levels: Support 158.50 / Resistance 159.50
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / WTI volatility / US-CA spread
      • Levels: Support 1.3600 / Resistance 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Surprise unemployment rise weighs on Aussie
      • Cross: DXY strength / China growth / commodity prices
      • Levels: Support 0.6600 / Resistance 0.6650
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / risk aversion / US-NZ yield spreads
      • Levels: Support 0.5850 / Resistance 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength / safe-haven demand eases
      • Levels: Support 0.7800 / Resistance 0.7900
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP neutral, EUR/JPY bullish, GBP/JPY bearish
      • Domestic: BoE vs ECB / BoJ, relative yield spreads / economic data
      • Cross: DXY / risk aversion / cross-of-crosses dynamic
      • Levels: Monitor for breakout patterns
    • XAU (Gold):
      • Direction: Bullish
      • Domestic (asset-specific): Real yields down / safe-haven bids
      • Cross: DXY weaker / risk aversion
      • Levels: Support $4500 / Resistance $4550
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Industrial demand / Gold-Silver ratio
      • Cross: DXY / risk appetite
      • Levels: Support $29.50 / Resistance $30.00
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Refinery attack / supply concerns
      • Cross: DXY / risk appetite
      • Levels: Support $108 / Resistance $115
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China stimulus hope/ LME stocks
      • Cross: DXY / global growth
      • Levels: Support $5.00 / Resistance $5.10
    • SPX:
      • Direction: Bullish
      • Domestic (US): Better earnings / Rate cut expectations
      • Cross: Steady VIX / Global sentiment
      • Levels: Futures support 5280 / Resistance 5320
    • NDX:
      • Direction: Bullish
      • Domestic (US): Mega-cap tech / Yield sensitivities
      • Cross: rates sensitivity / VIX
      • Levels: Support 19700 / Resistance 19900
    • US30 (Dow):
      • Direction: Bullish
      • Domestic (US): Industrial activity / Positive earnings
      • Cross: Bond yield reaction
      • Levels: Support 39500 / Resistance 40000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Weak pound / commodity-heavy mix
      • Cross: global risk / US tone
      • Levels: Support 10400 / Resistance 10500
    • DAX:
      • Direction: Bullish
      • Domestic (DE): Bund yields stable / EU confidence
      • Cross: US tech/ DXY / risk-on
      • Levels: Support 24700 / Resistance 24900
    • Nikkei:
      • Direction: Bullish
      • Domestic (JP): JPY weakness / BoJ policy
      • Cross: US Tech / risk sentiment
      • Levels: Support 63000 / Resistance 63500
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF inflows / funding rates
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support $67500 / Resistance $68500

    Positioning watch: AUD and Copper are crowded long (>98th percentile), leaving them vulnerable to a squeeze lower on weaker China data or disappointing earnings. Nasdaq is crowded short (<0th percentile) and ripe for a rally if yields soften further.

    The pain trade: A sharp rally in the Nasdaq fueled by falling real yields would squeeze crowded shorts and force further buying, pushing indices higher.

  • S&P 500 Faces Inflation Test Ahead of Sentiment – Friday, 22 May

    Where we are: S&P 500 futures are up around 0.4% as we head into the New York open, holding onto gains from the previous session. The index is attempting to consolidate above 5300 after a volatile week, supported by strength in the tech sector. This level puts it comfortably above yesterday’s close, signalling a continuation of the risk-on sentiment.

    What’s driving it: Despite strong earnings from some sectors, the main headwind for the S&P 500 remains persistent inflation concerns. Yesterday’s moves in the Treasury market saw the 2-year yield fall 9bp to 4.04% and the 10-year yield drop 10bp to 4.57%, but the market still expects elevated long-term yields, signalling fears that the Fed may need to maintain its restrictive monetary policy stance for longer than anticipated. The dip in real yields is providing a tailwind for gold, but also speaks to latent stagflationary anxiety. Cross-market drivers include the ongoing uncertainty surrounding the Iran war, which has propped up oil prices (WTI at $112.25), adding further inflationary pressure.

    • The 10-year breakeven inflation rate fell 5bp to 2.39%, highlighting market sensitivity to inflation expectations.
    • Speculator positioning in S&P 500 futures remains modestly short, with net non-commercial positions at -138,905 contracts, leaving the index vulnerable to a short squeeze if positive catalysts emerge.
    • The Zweig-DiMenna model warns of rising inflation in the next 3-6 months and that bond yields have not risen enough to compensate, suggesting potential downside for equities.

    NY session focus: All eyes will be on the Revised UoM Consumer Sentiment release at 10:00 ET, where any deviation from the expected 48.2 print could trigger a significant market reaction. A stronger number could reinforce the “higher for longer” narrative, putting downward pressure on the S&P 500, while a weaker reading might offer a temporary boost. Key levels to watch are 5320 as resistance and 5280 as immediate support. The long tech trade, particularly in AI-related names like Nvidia and Lenovo, continues to work, but is vulnerable to profit-taking. The pain trade for the S&P 500 is a surprise dovish pivot from the Fed combined with a ceasefire in the Middle East, unleashing pent-up risk appetite and squeezing short positions.

  • Nasdaq 100 Remains Buoyant on AI Trade – Friday, 22 May

    Where we are: The Nasdaq 100 futures are holding steady this morning, trading around the 19,800 level, within the overnight range. While the index saw some softness yesterday, it is still tracking to open near the highs of the week. The overnight range has been relatively tight, and we’re seeing some consolidation ahead of the US open, roughly flat versus yesterday’s NY close.

    What’s driving it: The dominant theme remains the relentless bid in tech stocks, fueled by the ongoing enthusiasm for the AI sector. Despite some profit-taking in Nvidia yesterday after earnings, the underlying narrative of strong growth potential is keeping dip buyers active. Lower US yields across the curve are also supportive. The 2-year yield is down 9bp and the 10-year down 10bp yesterday, helping to alleviate some pressure on growth stocks.

    • Net non-commercial positioning in the Nasdaq 100 is crowded short at the 0th percentile, increasing the risk of a squeeze on any positive surprise.
    • The US 10-year real yield has fallen 5bp to 2.13%, potentially providing a tailwind for gold and other risk assets.
    • The Bloomberg wire notes that EM stocks are also seeing a weekly gain, adding to the overall positive risk sentiment.

    NY session focus: Focus will be on the 10:00 ET release of the Revised UoM Consumer Sentiment data; markets are already pricing in the forecast of 48.2. We’ll be watching for any move above 19,850, which could trigger a squeeze given the current positioning. Failure to hold 19,750 could lead to a test of overnight lows. The trade that’s working is still long tech on dips. The risk is a broader risk-off move driven by geopolitical concerns, given elevated crude oil prices which sit at $112.25. The pain trade is a sharp rally in yields if the consumer sentiment data surprises to the upside, reigniting inflation fears.

  • Dow Jones Firm as Treasury Yields Subside – Friday, 22 May

    Where we are: Dow futures are up 300 points at 39,800, building on yesterday’s gains and on track for a winning week. The index is pushing toward the psychological 40,000 level, having traded in a tight range overnight following yesterday’s rally, and is significantly above its prior NY close.

    What’s driving it: Easing Treasury yields are providing a tailwind to risk assets, as the 2-year yield has fallen 9bp to 4.04% and the 10-year yield is down 10bp to 4.57%. With no domestic data prints prior to the NY open, the focus remains on the bond market’s reaction to receding inflation fears and the persistent bid in the AI sector. While a US-Iran deal might limit concerns of escalation, markets are still expecting a prolonged suspension of regular energy exports through the Middle East.

    • The 10-year real yield falling 5bp to 2.13% provides a tailwind for gold, indicative of receding inflation concerns and supporting risk appetite.
    • CFTC data shows moderately short positioning in Dow futures, with net non-commercial contracts at -3,562, leaving room for a potential short squeeze if the rally continues.
    • The VIX is down 3.43% to 17.44, signaling a decrease in market volatility and further supporting the risk-on sentiment.

    NY session focus: All eyes will be on the revised UoM Consumer Sentiment release at 10:00 ET, which could provide further direction if it deviates from the forecast of 48.2. A break above 40,000 could trigger further buying, while a pullback could see support around 39,500. The current trade is long equities, short bonds. The risk trade is a surprise hawkish signal from the Fed, reigniting inflation concerns and sending Treasury yields higher. The pain trade for the Dow would be a sharp reversal driven by unexpected weakness in consumer sentiment, coupled with renewed geopolitical fears.

  • FTSE 100 Momentum Flags as Domestic Data Disappoints – Friday, 22 May

    Where we are: The FTSE 100 is currently trading around 10,475, down from its overnight high of 10,490. It’s holding above its intraday low near 10,460, but the index is under pressure as it struggles to maintain the gains seen earlier in the week. The current level is below yesterday’s New York close, suggesting a weaker tone heading into the US session.

    What’s driving it: This morning’s weaker-than-expected UK Retail Sales print is weighing on the FTSE. The -1.3% m/m figure, significantly below the -0.6% forecast, has triggered a reassessment of the UK’s economic outlook and tempered expectations for further Bank of England rate hikes. This disappointment overshadowed earlier data showing softer inflation and a slight improvement in consumer confidence, as traders scale back bets on BoE tightening amid signs of a slowing economy. While US Treasury yields have fallen, offering some support, the focus remains firmly on the domestic picture.

    • UK Retail Sales m/m printed -1.3%, nearly double the forecasted -0.6% decline.
    • The UK’s unemployment rate edged up to 5% in February, signaling a softening jobs market.
    • Despite the recent pullback, the FTSE 100 remains at relatively high levels, suggesting some resilience, though it now looks vulnerable to further downside.

    NY session focus: The US session will likely amplify or counter the current negative sentiment. Key levels to watch on the downside are 10,450 and then 10,400, while resistance sits at 10,500. Any further downside surprises from US data or hawkish commentary from Fed officials could intensify the pressure. The trade that’s working is shorting FTSE on bounces, while the trade at risk is chasing the recent rally. The pain trade for the FTSE 100 would be a strong rebound in US sentiment coupled with a surprise improvement in UK economic data, forcing shorts to cover.

  • Nikkei 225 Remains Bid on Domestic Tech Optimism – Friday, 22 May

    Snapshot: The Nikkei 225 is holding onto gains near 63,300, driven by continued optimism surrounding domestic technology and AI stocks, spurred further by SoftBank’s portfolio companies potentially pursuing US IPOs. Focus will remain on assessing the broader implications of BoJ Board Member Koeda’s speech in Fukuoka regarding economic activity, prices, and monetary policy in Japan. No key Japanese macro prints are scheduled before the New York open.

    • Watch for follow-through from SoftBank; a break above 63,500 would signal further upside.
    • Geopolitical tensions related to Iran could introduce downside risk, particularly for energy-sensitive Japanese names.

    Bias into NY: Bullish, as domestic drivers and improved risk appetite are likely to outweigh external headwinds; look for a test of 63,500. Declining US real yields provide an additional tailwind.

  • DAX Set for Weekly Gain Amid Cautious Optimism – Friday, 22 May

    Snapshot: The DAX is poised to close out the week with a 3.5% gain, currently trading around 24,800. The recent drop in Eurozone HICP to 2% is fueling hopes that the ECB may consider easing its monetary policy stance sooner than anticipated. Focus remains on geopolitical tensions and upcoming US data releases.

    • Watch for a break above 24,850 to confirm the bullish momentum.
    • Risk of profit-taking into the weekend and any escalation in US-Iran tensions could trigger a pullback.

    Bias into NY: We see a slightly bullish bias into the NY session, supported by the positive sentiment stemming from the cooling Eurozone inflation and hopes for de-escalation between the US and Iran. Continued tech strength could push the DAX towards 24,900 if risk sentiment holds.

  • NY Session Tactical Brief – Thursday, 21 May

    Regime: Risk-off, fueled by rising real yields and renewed Iran tensions, with VIX at 18.06 and DXY bid.

    Today’s market themes:

    • Oil shock revival: Geopolitical tensions around Iran exacerbate supply concerns, driving crude higher.
    • Rates repricing: Dimon’s hawkish comments reinforce the potential for higher-for-longer, lifting Treasury yields.
    • Mixed PMI signals: Eurozone and UK PMIs offer a mixed bag, with services sector weakness raising growth concerns.

    The setup: Renewed geopolitical risks are stoking inflation fears and pushing real yields higher, putting pressure on risk assets. Look for opportunities to fade rallies in equities, especially tech. Watch the 10Y real yield at 2.18% as a key level. Initial weakness in Dow futures around 39,850 offers a possible short entry.

    Watch list (native time per event):

    • 11:30 AEST AUD: Employment Change (forecast 16.7K, prior 17.9K)
    • 09:15 CET EUR: French Flash Manufacturing PMI (forecast 52.1, prior 52.8)
    • 09:30 London GBP: Flash Services PMI (forecast 51.7, prior 52.0)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Fed policy uncertainty, strong US yields
      • Cross: Risk-off sentiment, safe-haven demand
      • Levels: Resistance 119.50, support 119.00
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Weak Eurozone PMIs, ECB dovishness
      • Cross: Strong DXY, widening US-DE 10Y spread, risk-off flows
      • Levels: Resistance 1.1620, support 1.1580
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): Mixed UK PMIs, uncertainty around BoE path
      • Cross: Strong DXY, US-UK 10Y spread, risk aversion
      • Levels: Resistance 1.2660, support 1.2600
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): BoJ caution, intervention risk remains high
      • Cross: Rising US 10Y yields, DXY strength, risk sentiment
      • Levels: Resistance 159.50, support 159.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC cautious tone, WTI volatility
      • Cross: Strong DXY, US-CA 10Y spread
      • Levels: Resistance 1.3820, support 1.3750
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Mixed labour data, RBA tightening path uncertain
      • Cross: Strong DXY, US-AU 10Y spread, China growth concerns
      • Levels: Resistance 0.6680, support 0.6620
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias
      • Cross: Strong DXY, US-NZ 10Y spread, risk-off sentiment
      • Levels: Resistance 0.5900, support 0.5850
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB dovishness, Swiss yields lagging
      • Cross: Strong DXY, safe-haven demand
      • Levels: Resistance 0.7900, support 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral; EUR/JPY: Bearish; GBP/JPY: Bearish
      • Domestic: Relative ECB/BoE/BoJ stance, relative yields
      • Cross: DXY, risk regime, cross-of-crosses dynamics
      • Levels: Monitor key supports/resistances on charts
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, CB demand waning
      • Cross: Strong DXY, risk aversion not fully supportive
      • Levels: Resistance $4,510, support $4,480
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Slower industrial demand growth
      • Cross: Strong DXY, risk-off sentiment
      • Levels: Follow Gold
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Iran tensions / potential supply disruption
      • Cross: DXY offsetting factor, risk-off a moderate headwind
      • Levels: WTI Resistance $102, Support $98
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns, LME inventories stable
      • Cross: Strong DXY, global growth proxy
      • Levels: Follow market trend, trade in accordance with real yields.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields, earnings headwinds
      • Cross: Elevated VIX, global risk-off
      • Levels: Futures resistance 5300, cash support 5250
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield sensitivity, mixed earnings
      • Cross: Rates sensitivity, elevated VIX
      • Levels: Follow SPX general resistance and support level
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical headwinds, rising yields
      • Cross: Bond-yield reaction
      • Levels: Follow SPX general resistance and support level
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength, mixed PMI data, commodity exposure
      • Cross: Global risk, US tone
      • Levels: Resistance 10,400, support 10,350
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Weak German PMIs, Bund yield increase
      • Cross: US tech, DXY, risk-off
      • Levels: Resistance is high, monitor yield trend
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): Cautious BOJ commentary, JGB yield focus
      • Cross: US tech reaction, global risk
      • Levels: Follow global risk sentiment
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flows slowing, funding rates stable
      • Cross: DXY strength, risk-off, Nasdaq correlation
      • Levels: Resistance $68,000, support $67,500

    Positioning watch: AUD, Copper, and US Dollar are crowded longs (>80th percentile), creating squeeze risk on any positive surprises or a shift in sentiment. Nasdaq 100 and Japanese Yen are crowded shorts (<20th percentile), risking a sharp rally on positive catalysts.

    The pain trade: A dovish pivot from a Fed speaker today would trigger a violent short squeeze in Nasdaq and Yen, simultaneously undermining the DXY.

  • S&P 500 Faces Headwinds from Rising Yields – Thursday, 21 May

    Where we are: S&P 500 futures are currently trading lower, around 5285, trimming yesterday’s rebound. The index is struggling to break above resistance at 5300, and remains below last week’s highs. Overnight range has been relatively tight, but we are seeing some pressure as Treasury yields climb.

    What’s driving it: Rising US Treasury yields are weighing on the S&P 500, as the 2-year and 10-year yields have both climbed 6 basis points to 4.13% and 4.67% respectively. This is amplified by a slight decrease in 10-year breakeven inflation to 2.44%, pushing real yields higher to 2.18% and creating a headwind for risk assets, gold in particular. Furthermore, Walmart’s cautionary outlook on sales growth, citing potential fuel cost pressures, adds to the market’s concerns about corporate earnings.

    • The US 10Y Real Yield rose 5bp to 2.18%, diminishing the appeal of risk assets.
    • Walmart’s warning of a profit miss due to slowing sales growth contrasts with Target’s performance, raising sector-specific concerns.
    • Net non-commercial positioning remains modestly short at -138,905 contracts, suggesting limited fuel for a significant rally.

    NY session focus: Today’s economic calendar includes the Philly Fed Manufacturing Index and Unemployment Claims at 08:30 ET, followed by Flash Manufacturing and Services PMIs at 09:45 ET. A weaker-than-expected print from the Philly Fed could provide a temporary reprieve, while stronger data would likely exacerbate the yield-driven selloff. Keep an eye on the 5250 level as initial support, with a break below potentially opening the door to further downside. The pain trade here is a surprise dovish tilt from Barr speaking at EMERGE, unwinding the yield curve steepening.

  • Nasdaq 100 Faces Headwinds Despite Solid Earnings – Thursday, 21 May

    Where we are: Nasdaq 100 futures are currently trading lower, pressured by rising Treasury yields and mixed reactions to recent earnings reports. The NQ is down approximately 0.8% as of 13:00 London, sitting near the lower end of its overnight range. This contrasts with a slightly more positive tone in the S&P 500 and Dow futures, highlighting the tech sector’s relative underperformance. Failure to hold here opens up a test of yesterday’s lows.

    What’s driving it: The primary driver is the uptick in US Treasury yields, with both the 2-year and 10-year yields up 6 basis points, to 4.13% and 4.67% respectively. The increase in yields puts pressure on growth stocks, as higher rates reduce the present value of future earnings. While Nvidia beat earnings expectations and raised its dividend, guidance that didn’t exceed the upper range of expectations tempered enthusiasm, underscoring the sensitivity of the market to growth forecasts in the current rate environment. Rising real rates are also weighing, providing a headwind for gold and other alternative assets.

    • The 10-year real yield climbed 5bp to 2.18%, further tightening financial conditions.
    • Net non-commercial positioning in the Nasdaq 100 is crowded short at the 0th percentile, suggesting squeeze risk if we see a positive surprise.
    • SpaceX’s plans for a $1.75 trillion IPO, listing on Nasdaq under the ticker SPCX, introduce a potentially significant supply dynamic to the market in the coming month.

    NY session focus: The market will be closely watching the 08:30 ET release of the Philly Fed Manufacturing Index and Unemployment Claims. Flash PMI data at 09:45 ET will also be key. A weaker-than-expected Philly Fed print could provide a temporary boost to the Nasdaq 100, but the overall trend of rising yields suggests limited upside. Key levels to watch are yesterday’s low and then 19,500 as key support. The pain trade would be a sustained break above 19,700, triggering a short squeeze given the crowded short positioning.