Category: Indexes

  • Nikkei 225 Under Pressure Despite Firm Corporate Goods Prices – Friday, 15 May

    Snapshot: The Nikkei 225 is under pressure, tracking overnight weakness, despite slightly stronger-than-expected Japanese Corporate Goods Price Index data (Apr). The index closed down nearly 2% yesterday and continues to feel pressure today from domestic forces.

    • Watch for continued weakness if the Nikkei breaks below 61,000.
    • Risk of continued pressure from stronger-than-expected PPI potentially forcing the BoJ to act sooner rather than later.

    Bias into NY: Short Nikkei 225, targeting a move towards 60,500 as continued pressure from domestic inflation data outweighs any positive sentiment from stable US 2Y yields.

  • DAX Under Pressure as Inflation Fears Resurface – Friday, 15 May

    Snapshot: The DAX is under pressure, tracking broader European weakness, currently trading around 24,250, down approximately 0.8%. Declining German and Eurozone HICP figures have failed to inspire confidence, overshadowed by rising oil prices and geopolitical anxieties.

    • Watch for a break below 24,200, which could open the door for further declines.
    • Rising US-Iran tensions pose a significant risk to the downside, potentially exacerbating inflationary pressures.

    Bias into NY: We expect continued downward pressure on the DAX, targeting a move towards 24,000, fueled by persistent inflation concerns and a risk-off sentiment following the CNBC World report on renewed inflation fears.

  • NY Session Tactical Brief – Thursday, 14 May

    Regime: Mixed; VIX at 17.99 with US yields rising slightly and the DXY consolidating gains around 118.15 indicates a tentative risk-neutral stance.

    Today’s market themes:

    • Trump-Xi meeting impact: assessing US-China trade and oil relationship, especially regarding Iran sanctions.
    • US Retail Sales: markets are awaiting direction with Retail Sales release.
    • Crowded trades: the market is set up for a potential short squeeze, with several currencies and asset classes showing heavily skewed positioning.

    The setup: Traders are positioned for USD strength and are short GBP, JPY, and NZD. US retail sales data will be key to either confirming this bias or triggering a squeeze. Watch US 10Y yields; sustained move above 4.5% could exacerbate USD strength.

    Watch list (native time per event):

    • 07:00 London GBP: GDP m/m (forecast -0.1%, prior 0.5%)
    • 08:30 ET USD: Core Retail Sales m/m (forecast 0.7%, prior 1.9%)
    • 08:30 ET USD: Retail Sales m/m (forecast 0.5%, prior 1.7%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Data dependent on Retail Sales, Fed policy on inflation.
      • Cross: Risk sentiment / global growth outlook drive flows
      • Levels: Support 117.80 / Resistance 118.30
    • EUR/USD:
      • Direction: Neutral
      • Domestic (EU): ECB rhetoric, EU data release sensitive to global narrative.
      • Cross: DXY strength, US-DE 10Y spread.
      • Levels: Support 1.1680 / Resistance 1.1740
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): GDP print spurring rate cut bets, Gilt yield declines.
      • Cross: DXY strength / US-UK 10Y widening
      • Levels: Support 1.2450 / Resistance 1.2520
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ’s hawkish tone not enough to combat carry demand.
      • Cross: US 10Y strength / risk-on / intervention watch
      • Levels: Support 157.50 / Resistance 158.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC policy path, oil price fluctuations are the driver.
      • Cross: DXY strength / US-CA 10Y differential.
      • Levels: Support 1.3680 / Resistance 1.3740
    • AUD/USD (Aussie):
      • Direction: Neutral
      • Domestic (AU): RBA policy path / key commodity prices affecting sentiment.
      • Cross: DXY correlation, China growth, US-AU 10Y
      • Levels: Support 0.7170 / Resistance 0.7230
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovish stance is the driver.
      • Cross: DXY direction, Risk / US-NZ 10Y
      • Levels: Support 0.5900 / Resistance 0.5950
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB’s easing policy stance.
      • Cross: DXY strength, safe-haven demand fluctuation.
      • Levels: Support 0.7800 / Resistance 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Neutral, EUR/JPY Neutral, GBP/JPY Bearish
      • Domestic: Rate spreads/relative central bank stance
      • Cross: Risk, cross-of-crosses
      • Levels: Watch relative breaks; range trades
    • XAU (Gold):
      • Direction: Neutral
      • Domestic (asset-specific): Real yields are the driver.
      • Cross: DXY influence, risk sentiment.
      • Levels: Support 4670 / Resistance 4700
    • XAG (Silver):
      • Direction: Neutral
      • Domestic (asset-specific): Gold-Silver ratio influences direction.
      • Cross: DXY influence, risk correlation.
      • Levels: Support 30.40 / Resistance 30.70
    • WTI / Brent:
      • Direction: Neutral
      • Domestic (asset-specific): Supply/demand influences, WTI-Brent Spread affects trend.
      • Cross: DXY influence, risk sentiment.
      • Levels: Support 100.50 / Resistance 102.50
    • Copper:
      • Direction: Neutral
      • Domestic (asset-specific): China growth outlook is the main driver.
      • Cross: Global growth sentiment.
      • Levels: Support 5.00 / Resistance 5.10
    • SPX:
      • Direction: Bullish
      • Domestic (US): Earnings, Fed policy influences market direction.
      • Cross: Risk regime, Global Tone, yields correlation.
      • Levels: Futures level Support 5330 / Resistance 5350.
    • NDX:
      • Direction: Bullish
      • Domestic (US): Mega-cap earnings are a major factor.
      • Cross: Rates / Volatility (VIX).
      • Levels: Support 18,750 / Resistance 18,850
    • US30 (Dow):
      • Direction: Bullish
      • Domestic (US): Industrial / Financial earnings support this.
      • Cross: Bond yield / overall market tone affecting direction.
      • Levels: Support 50,000 / Resistance 50,250
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Domestic-centric influences such as Sterling performance.
      • Cross: Market Sentiment / US tone impacting direction.
      • Levels: Support 8,400 / Resistance 8,450
    • DAX:
      • Direction: Bullish
      • Domestic (DE): Domestic sentiment and yields.
      • Cross: US tech impacts, DXY correlation.
      • Levels: Support 24,350 / Resistance 24,450
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY impacts, BOJ policy stance.
      • Cross: US tech influence, global risk factors.
      • Levels: Support 38,800 / Resistance 39,200
    • BTC:
      • Direction: Neutral
      • Domestic (asset-specific): ETF flow / on-chain metrics drive direction.
      • Cross: Risk sentiment & Nasdaq performance impact.
      • Levels: Support 61,500 / Resistance 62,500

    Positioning watch: AUD/USD, Copper, and Bitcoin are crowded longs, creating squeeze risk if data disappoints; GBP, JPY, and NZD are crowded shorts, vulnerable to upside surprises. CFTC shows dollar index positioning very stretched.

    The pain trade: A dovish tilt from the Fed combined with strong UK data and a resolution of Iran tensions would trigger a massive short squeeze in GBP, JPY, NZD, Gold, and rates.

  • S&P 500 Looks to Data After Record Run – Thursday, 14 May

    Where we are: S&P 500 futures are trading around 5345, inching higher after an overnight range between 5330 and 5350. This puts the contract comfortably above yesterday’s NY close and suggests the cash market is set to open at new all-time highs. The risk tone remains constructive, mirroring the late-day bid seen yesterday.

    What’s driving it: The market remains underpinned by resilient earnings and the ongoing AI narrative, with Cisco’s strong results and investment plans adding fuel to the fire. Domestically, the focus is squarely on this morning’s 08:30 ET retail sales data, which will provide further insight into the strength of the consumer and the potential implications for Fed policy. The rise in the US 10Y Real Yield to 1.99% is a potential headwind, but so far the market is shrugging it off.

    • Cisco’s 15% premarket surge after earnings, driven by AI investment plans, exemplifies the market’s continued appetite for tech growth.
    • The US 10Y real yield is pushing higher, trading up 4bp to 1.99%, potentially challenging equity valuations.
    • Speculator positioning in the S&P 500 remains modestly short, but the 77th percentile reading suggests limited room for further shorting.

    NY session focus: All eyes are on the 08:30 ET release of Core Retail Sales and Retail Sales data, alongside Unemployment Claims. A strong print would likely reinforce the hawkish Fed narrative and could pressure equities, while a miss could provide a fresh boost. Key levels to watch are 5330 as initial support and 5360 as the next upside target. The outperformance of tech and AI-related stocks remains the prevailing trade. The pain trade would be a significant hawkish surprise from the retail sales data, triggering a sharp rates selloff and equity correction.

  • Nasdaq 100 to Remain Resilient, Eyes Fresh Highs – Thursday, 14 May

    Where we are: The Nasdaq 100 futures are consolidating gains after yesterday’s record close. Intraday, the index is trading around 19,045, holding onto the momentum fueled by tech sector strength. This is notably above the prior New York close and within striking distance of fresh all-time highs, showing resilience in the face of slightly rising yields.

    What’s driving it: The primary driver remains the robust appetite for AI-related stocks and generally strong earnings from the tech sector, as highlighted by Cisco’s impressive performance. Despite slightly higher Treasury yields, with the 10-year at 4.46% and the 2-year at 4.00%, the market is prioritizing growth prospects in technology. The VIX remains subdued at 17.99, reflecting continued risk-on sentiment despite geopolitical uncertainties.

    • Cisco’s 15% premarket surge after earnings, even with planned job cuts, signals the market’s focus on efficiency and profitability in the tech sector.
    • The clearance for US firms to ship H200 chips to ten Chinese companies underscores easing trade tensions, further boosting sentiment towards tech equities.
    • Speculator positioning in Nasdaq 100 futures remains modestly long at the 2nd percentile, suggesting room for further upside if the rally continues and shorts are forced to cover.

    NY session focus: Today’s key event is the 08:30 ET release of Core Retail Sales and Retail Sales data. A weaker-than-expected print could temporarily temper the rally, but strong results could propel the Nasdaq 100 to new highs. Watch for reactions around the 19,000 level as immediate support. A break above 19,100 would target further upside. The trade that’s working is still long tech on dips. The risk is a sharp reversal if the retail sales data disappoints and triggers a broader risk-off move. The pain trade is a continued grind higher, squeezing any remaining shorts and further extending the rally.

  • Dow Jones Set for Record Open – Thursday, 14 May

    Where we are: Dow futures are pointing to a positive open, trading around 50,150, fueled by strong tech earnings. This puts the index on track to surpass its all-time high. The overnight range has been relatively tight, consolidating gains from yesterday’s session. Currently, the Dow is well above yesterday’s NY close, signaling strong upward momentum.

    What’s driving it: The surge in Dow futures is primarily driven by the ongoing tech rally, spurred by impressive earnings from companies like Cisco, whose AI orders are boosting sentiment. The prospect of a Trump-Xi summit is also supporting risk appetite, with hopes for easing trade tensions. While energy prices remain elevated, the strong performance of tech stocks is overshadowing concerns about inflation and potential Fed hawkishness.

    • Cisco is up 15% premarket following strong earnings and forecasts.
    • Trump-Xi summit is supporting risk appetite.
    • Net non-commercial positioning in Dow Jones futures is modestly short (-677 contracts), indicating potential for a squeeze if the rally continues.

    NY session focus: Traders will be closely watching the 08:30 ET release of Core Retail Sales and Retail Sales data, as well as Unemployment Claims. Strong prints could reinforce hawkish Fed expectations, potentially tempering the rally, while weak data could fuel further upside. Key levels to watch are 50,200 as initial resistance and 50,000 as immediate support. The AI-driven tech trade is working, but vulnerable to a broader risk-off move if geopolitical tensions flare. The pain trade would be a significant upside surprise in retail sales leading to renewed hawkish Fed bets.

  • Footsie Buoyed by GDP Beat; Inflation Still a Concern – Thursday, 14 May

    Where we are: The FTSE 100 is trading around 8,420, up slightly on the session. It has traded in a relatively narrow range overnight, generally tracking European sentiment, and is holding above yesterday’s New York close. Immediate resistance is around 8,450, with support around 8,380.

    What’s driving it: The UK economy grew by 0.6% in Q1, significantly exceeding the 0.1% previously recorded and consensus forecasts of 0.1%. March also surprised to the upside with growth of 0.3% versus forecasts for a 0.1% contraction. However, inflation remains a concern, as evidenced by recent CPI prints, potentially limiting the extent of any sustained rally despite the GDP upside. Firmer US Treasury yields, with the 10-year at 4.46%, are providing a mixed influence, as they attract capital but also reflect a hawkish Fed backdrop.

    • UK GDP m/m printed at 0.3% versus -0.1% forecast, signaling a stronger-than-expected economic rebound.
    • UK Unemployment Rate unexpectedly dropped to 4.9%, suggesting a resilient labor market that could maintain wage pressure.
    • Several FTSE 100 heavyweights trading ex-dividend today, partially offsetting the positive GDP news, creating a mixed technical picture.

    NY session focus: All eyes will be on how US equities react to the ongoing data flow. Watch for reaction to the 08:30 ET US PPI number. Key levels to watch on the FTSE are 8,380 as initial support and 8,450 as immediate resistance. The ongoing trade is to be long exporters with USD revenue, though a resurgence in risk aversion could threaten this. The pain trade is a sharp move lower driven by a dovish repricing in Fed expectations.

  • Nikkei 225 Faces Profit-Taking After Recent Rally – Thursday, 14 May

    Snapshot: Nikkei 225 is correcting after a strong run, closing down 0.98% in Tokyo. BoJ board member Masu’s speech offered no fresh hawkish signals, contributing to profit-taking. Attention now turns to US data due at 08:30 ET.

    • A break below 62,500 could trigger further downside.
    • Watch for reactions to US yields, particularly the 10Y real yield continuing its upward trend, which poses a headwind.

    Bias into NY: Cautious near-term. Without a fresh bullish catalyst from the BoJ or positive surprise from US macro prints, we expect continued consolidation around 62,500, with a potential test of 62,000 if risk sentiment sours.

  • DAX 40 Firm Despite Geopolitical Headwinds – Thursday, 14 May

    Snapshot: The DAX is holding gains above 24,400, boosted by sustained optimism in AI and earnings season despite political uncertainties. Declining German HICP inflation to 2% YoY (as of December 2025) is offering the ECB room to maintain its current policy. Today’s catalyst is whether the German index can hold support if US yields continue trending upward.

    • Watch 24,500; a break above confirms the bullish trend.
    • Risk: A reversal in US yields could trigger a DAX correction.

    Bias into NY: Bullish above 24,400, supported by the global chip rally, with Infineon leading the gains. Sustained strength in US real yields above 2% may curb the upside.

  • NY Session Tactical Brief – Wednesday, 13 May

    Regime: Mixed — VIX holding near 18.40 amid rising US real yields, capping risk appetite.

    Today’s market themes:

    • Real-rate repricing: Fed nomination vote and PPI data set to dictate the pace of the climb, pressuring gold and growth stocks.
    • Iran War Impact: Ongoing supply disruptions and inventory depletion boosting oil prices, triggering inventory concerns.
    • Crowded FX positions: Extreme positioning in AUD, NZD, JPY and GBP presents squeeze risks on data surprises.

    The setup: Rising real yields are the dominant force. Focus is on US PPI and the Fed nomination vote today to further define the Fed’s path. Watch for a continued bid in US yields to pressure equities and gold, with DXY bid into the European open. Key is whether 10Y TIPS break 2.00%.

    Watch list (native time per event):

    • 08:30 ET USD: Core PPI m/m (forecast 0.3%, prior 0.1%)
    • 08:30 ET USD: PPI m/m (forecast 0.5%, prior 0.5%)
    • 14:30 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Strong US data supports hawkish Fed, boosting USD.
      • Cross: Risk-off flows and rising US yields underpin the dollar.
      • Levels: Support 117.80, Resistance 118.50.
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Eurozone growth concerns and relatively dovish ECB weigh on EUR.
      • Cross: Stronger USD and widening US-DE yield spread pressure EUR/USD.
      • Levels: Support 1.0760, Resistance 1.0820.
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): BoE easing expectations, pressured by persistent inflation, weigh on the Pound.
      • Cross: Stronger USD and widening US-UK yield spread pressure Cable.
      • Levels: Support 1.2460, Resistance 1.2520.
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ still dovish relative to Fed; intervention risk lingers.
      • Cross: Higher US yields drive USD/JPY higher despite intervention risks.
      • Levels: Support 157.75, Resistance 158.50.
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): WTI price volatility offsets CAD strength from BoC rate cuts.
      • Cross: USD strength and widening US-CA yield spreads favor upside.
      • Levels: Support 1.3650, Resistance 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA easing expectations and weak CPI growth weigh on AUD.
      • Cross: Stronger USD and risk-off sentiment hurt the Aussie.
      • Levels: Support 0.7175, Resistance 0.7225.
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ dovishness and concerns about domestic demand hurt the Kiwi.
      • Cross: Stronger USD and risk-off sentiment weigh on NZD/USD.
      • Levels: Support 0.5900, Resistance 0.5950.
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB intervention unlikely; Swiss yields remain low.
      • Cross: Risk-off flows less supportive with strong USD driving gains.
      • Levels: Support 0.7800, Resistance 0.7850.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bullish, GBP/JPY: Bullish
      • Domestic: Relative CB stance — BoE slightly more hawkish than ECB. BoJ lags both.
      • Cross: DXY strength benefiting JPY crosses, risk tone dictates flows.
      • Levels: EUR/GBP: 0.8510-0.8560, EUR/JPY: 169.00-170.00, GBP/JPY: 192.80-193.80
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields are a significant headwind.
      • Cross: Stronger USD and risk-off environment further pressure Gold.
      • Levels: Support $4,675, Resistance $4,725.
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Industrial demand is soft, Gold/Silver ratio rising.
      • Cross: Stronger USD and risk-off environment weigh on Silver.
      • Levels: Support $29.00, Resistance $29.50.
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): IEA reports record draw in global oil inventories due to Iran War.
      • Cross: Risk sentiment generally supportive, but DXY strength a cap.
      • Levels: WTI Support $101.00, Resistance $103.00.
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns resurface, LME stocks remain high.
      • Cross: Global growth worries and DXY strength pressure Copper.
      • Levels: Support $5.00, Resistance $5.10.
    • SPX:
      • Direction: Bearish
      • Domestic (US): Higher yields weigh on valuations, focus on earnings.
      • Cross: VIX spikes indicate potential for further downside risk.
      • Levels: Futures support 5200, resistance 5250 (cash: key levels to use).
    • NDX:
      • Direction: Bearish
      • Domestic (US): Mega-cap tech vulnerable to higher real yields.
      • Cross: High rate sensitivity amplifies downside in risk-off environment.
      • Levels: Support 19,500, Resistance 19,700.
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Cyclical sector earnings sensitive to rising yields.
      • Cross: Bond yield reaction to data key driver of Dow performance.
      • Levels: Support 39,000, Resistance 39,500.
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Sterling strength offsetting positive global risk sentiment.
      • Cross: Global risk appetite supports, but US tone a key determinant.
      • Levels: Support 8350, Resistance 8400.
    • DAX:
      • Direction: Neutral
      • Domestic (DE): Bund yields stable; focus on EU sentiment indicators.
      • Cross: US tech performance influences DAX, DXY strength is a cap.
      • Levels: Support 24,000, Resistance 24,100.
    • Nikkei:
      • Direction: Neutral
      • Domestic (JP): JPY weakness supports, BoJ policy stance is key.
      • Cross: US tech performance and risk-on sentiment drive Nikkei.
      • Levels: Support 63,000, Resistance 63,500.
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Funding rates remain elevated, ETF flows slowing.
      • Cross: DXY strength and risk-off sentiment hurt Bitcoin. Nasdaq correlation matters.
      • Levels: Support $62,000, Resistance $63,000.

    Positioning watch: CFTC data shows crowded longs in AUD, Copper, and Bitcoin (above 80th percentile), vulnerable to a squeeze on any downside surprises. Crowded shorts in GBP, JPY and NZD present an upside risk.

    The pain trade: A surprise dovish tilt from the Fed on the nomination vote or a much weaker-than-expected PPI print would trigger a short squeeze in crowded USD shorts and boost risk assets, especially the crowded AUD/USD longs.

  • S&P 500 Eyes PPI Data Amidst Fed Uncertainty – Wednesday, 13 May

    Where we are: S&P 500 futures are trading near flat this morning, hovering around 5230, as we await key US data. The overnight range has been relatively contained, with limited volatility seen in early European trading. This level sits just below the prior NY close, suggesting a cautious tone ahead of the data releases and the Fed Chair nomination vote.

    What’s driving it: The market is currently torn between inflationary pressures and the continued allure of the AI rally. The rise in both 2Y and 10Y Treasury yields, up 5bp and 4bp respectively, signals building concerns about inflation, reinforced by a 2bp rise in the 10Y real yield, creating a headwind for gold. All eyes will be on the 08:30 ET Core PPI and PPI prints, which are expected to show continued inflationary pressures. Adding to the uncertainty is the impending Fed Chair Nomination vote later today at 14:30 ET.

    • The 2s10s spread sits at 0.46%, indicating a modestly steepening yield curve.
    • VIX has crept up to 18.38, a 6.92% increase, reflecting some apprehension.
    • Speculators remain modestly short S&P 500 futures, yet the net short position is only at the 77th percentile, meaning a major squeeze is not the likeliest outcome.

    NY session focus: All eyes are on the 08:30 ET PPI releases, where a higher-than-expected print will likely trigger a risk-off move, pushing yields higher and potentially testing the 5200 support level on the S&P 500. A weaker print, however, could reignite the AI-led rally, targeting 5250 and potentially new all-time highs. Watch for any headlines surrounding the 14:30 ET Fed Chair nomination vote. The trade that’s working continues to be buying dips in AI-related stocks, but it’s a high-conviction, low-delta regime. The biggest risk is a hawkish surprise stemming from the PPI data, leading to a broader market correction and unwinding of leveraged long positions. The pain trade is a decisive break above 5250, leaving shorts scrambling to cover.

  • Nasdaq 100 Faces Inflation Headwinds Despite AI Optimism – Wednesday, 13 May

    Where we are: Nasdaq 100 futures are trading near flat this morning, hovering around 19,650 after a mixed overnight session. The index remains close to record highs, fueled by continued enthusiasm for AI-related stocks, but is finding resistance as inflationary pressures resurface. This level puts it just above yesterday’s NY close, with the overnight range relatively contained ahead of key US data.

    What’s driving it: The primary driver is renewed inflation concerns in the US, as evidenced by the uptick in producer prices. Rising US real yields are also acting as a headwind. While the AI rally, particularly related to Nvidia and its engagement in China, is providing support, the market is struggling to fully embrace risk given the broader macro picture. The 2s10s spread remains positive, although compressed slightly at 46bp, suggesting a degree of caution persists regarding the growth outlook despite the inflation signal.

    • US 10Y Real Yields are up 2bp d/d to 1.95%, increasing the opportunity cost of holding equities.
    • Net non-commercial positioning in Nasdaq 100 futures is modestly long, at the 2nd percentile, suggesting limited room for further speculative inflows and possible squeeze risk to the downside if sentiment shifts.
    • China AI stocks surged overnight following Nvidia CEO Huang’s visit, boosting Nvidia supply bets, but this tailwind may be limited given domestic inflation concerns.

    NY session focus: All eyes are on the 08:30 ET release of Core PPI and PPI data, which will likely dictate the near-term direction. A hotter-than-expected print could accelerate the sell-off. Support lies around 19,500, while resistance sits near the all-time highs around 19,700. Traders should monitor the reaction in US Treasury yields. We also have the Fed Chair Nomination Vote at 14:30 ET, but that’s widely expected to pass and shouldn’t be a major market mover. The trade that’s working is shorting the NDX on rallies above 19,700, while the trade at risk is chasing the AI narrative without acknowledging valuation risks. The pain trade here is PPI misses substantially to the downside, unleashing another big wave of AI-led euphoria.

  • Dow Faces Inflation Headwind on Warsh Nomination – Wednesday, 13 May

    Where we are: Dow futures are currently down roughly 250 points, trading near 39,250. Overnight, the index has largely traded sideways after yesterday’s late rally, but now trades closer to session lows following the CNBC wholesale inflation print. The DJIA closed yesterday near 39,500, and a breach of 39,200 would open the door to further downside.

    What’s driving it: Rising inflationary pressures, evidenced by the higher-than-expected PPI figures, are weighing on the Dow. The US 2Y yield continues to climb, now at 3.95%, reflecting a hawkish repricing in the front end of the curve. This comes as the market anticipates the Fed Chair nomination vote later today, with Kevin Warsh expected to pass, which could signal a shift towards a more hawkish monetary policy stance and further pressure risk assets.

    • Wholesale inflation jumped 6% in April on an annual basis.
    • The 2s10s spread remains inverted at -0.46%, signaling ongoing recession concerns.
    • Net non-commercial positioning is modestly short at -677 contracts, leaving room for further downside pressure as inflation fears grip the market.

    NY session focus: The key event today is the 08:30 ET PPI release and how the market interprets it. A strong print will likely exacerbate inflation fears and push the Dow lower, while a surprise to the downside may offer a brief respite. All eyes will then be on the Fed Chair Nomination Vote at 14:30 ET. A Warsh nomination will steepen the bear flattener and likely lead to further weakness in the Dow. The trade that’s working is shorting rallies, while the trade at risk is dip buying. The pain trade is a weaker-than-expected PPI print, which could trigger a short squeeze and send the Dow higher.

  • FTSE 100 Outperforms as Takeover Bid Buoys Sentiment – Wednesday, 13 May

    Where we are: The FTSE 100 currently trades around 8395, building on yesterday’s gains and extending its outperformance relative to European peers. The index is attempting to break above the 8400 level, which has acted as resistance recently. The overnight range has been relatively tight, but the bias is clearly to the upside following the Intertek takeover news. Yesterday’s NY close was near 8350.

    What’s driving it: Positive sentiment surrounds the FTSE 100, primarily driven by the Intertek takeover bid, which suggests underlying value is being unlocked in the UK market. Although CPI figures were released in March (3.3% YoY), they are stale and are unlikely to be front of mind today. The better-than-expected unemployment rate data from January continues to support a positive, if backward-looking, view of the UK economy.

    • Intertek’s £10.6bn takeover bid by Swedish firm EQT is injecting fresh capital into the index.
    • The banking sector’s rebound from earlier tax-change fears is adding to the positive momentum, with HSBC, Lloyds, Barclays, NatWest and Standard Chartered all posting gains.
    • Commodity strength is underpinning the resource-heavy FTSE, as copper, aluminium, nickel, and iron ore prices climb, benefiting miners like Rio Tinto and Anglo American.

    NY session focus: US traders will be assessing whether the FTSE’s strength is sustainable or merely a short squeeze driven by takeover activity. Watch for any spillover from US yields (currently the 10Y at 4.42% and rising). The takeover premium for Intertek should keep a floor under the index. Key levels to watch are 8400 as immediate resistance, and 8350 as initial support. The trade that’s working is long the FTSE on dips, while the trade at risk is shorting UK equities against stronger global macro. The pain trade would be a sharp reversal driven by risk-off sentiment triggered by a surprisingly hawkish Fed minutes release later today.

  • Nikkei Remains Buoyant Despite Wall Street Tech Selloff – Wednesday, 13 May

    Snapshot: The Nikkei 225 closed up 0.84% at 63,272, shrugging off Wall Street weakness overnight. Sustained demand for AI-linked stocks and strong corporate earnings continue to support the index. Nidec’s sharp fall is notable amid a generally positive corporate outlook.

    • Watch for follow-through from Olympus’s strong earnings and buyback announcement; a break above 63,500 would signal further upside.
    • Risk lies in a deeper tech correction in the US, potentially dragging down Japanese tech names despite the positive domestic backdrop.

    Bias into NY: Bullish. The Nikkei’s resilience in the face of US inflation data and tech weakness suggests underlying strength, and the improving corporate outlook should support further gains. A retest of recent highs near 63,800 looks likely.