Category: SPX

  • NY Session Tactical Brief – Wednesday, 20 May

    Regime: Mixed — the VIX at 17.82 suggests a moderately risk-on environment, but rising US 10Y real yields near 2.13% offset the positive sentiment.

    Today’s market themes:

    • FOMC Minutes: focus on the Fed’s inflation outlook and rate-cut timeline.
    • Iran tensions: geopolitical risks weigh on oil and broader sentiment.
    • Nvidia earnings: potential market catalyst, could affirm rally or spur correction.

    The setup: All eyes on the FOMC Minutes at 2 PM ET. The market is pricing in minimal rate cuts this year. Hawkish surprises in the minutes could strengthen the dollar and pressure risk assets. A dovish surprise could weaken the dollar and boost stocks and bonds. Watch the 2Y yield for reaction.

    Watch list (native time per event):

    • 07:00 London [High] GBP: CPI y/y (forecast 3.0%, prior 3.3%)
    • 11:30 AEST [High] AUD: Employment Change (forecast 16.7K, prior 17.9K)
    • 14:00 ET [High] USD: FOMC Meeting Minutes

    Bias by asset:

    • DXY:
      • Direction: Neutral.
      • Domestic (US): FOMC minutes could provide hawkish catalysts.
      • Cross: Risk sentiment shifts amid Nvidia earnings anticipation.
      • Levels: Support at 119.00; resistance at 119.50.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: DXY strength and rising US yields pressure the pair.
      • Levels: Resistance at 1.0830; support at 1.0780.
    • GBP/USD (Cable):
      • Direction: Neutral.
      • Domestic (UK): CPI miss fueled gilt buying – focus on MPC hearings.
      • Cross: DXY strength and risk appetite weigh on cable.
      • Levels: Resistance at 1.2700; support at 1.2650.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ dovish stance and weak wage data.
      • Cross: US 10Y yield strength and DXY provide tailwinds.
      • Levels: Support at 158.50; resistance at 160.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): BoC cautious outlook and weak CPI.
      • Cross: DXY strength and weaker oil prices pressure CAD.
      • Levels: Support at 1.3750; resistance at 1.3800.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): RBA cautious stance on inflation. Employment data in focus.
      • Cross: DXY strength and China growth concerns weigh.
      • Levels: Resistance at 0.6700; support at 0.6630.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ dovish stance after recent meetings.
      • Cross: DXY strength and risk-off sentiment impact the Kiwi.
      • Levels: Resistance at 0.5860; support at 0.5800.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): SNB easing bias supports USD/CHF upside.
      • Cross: DXY strength and risk-off flows support pair.
      • Levels: Support at 0.7850; resistance at 0.7950.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Bearish, EUR/JPY Bullish, GBP/JPY Bullish.
      • Domestic: Relative CB policy (BoE more hawkish than ECB; BoJ more dovish).
      • Cross: DXY strength weighing on EUR/GBP; risk-on supporting JPY crosses.
      • Levels: EUR/GBP: 0.8480/0.8530; EUR/JPY: 170.00/171.00; GBP/JPY: 193.50/194.50.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields increase the opportunity cost.
      • Cross: DXY strength weighs on Gold.
      • Levels: Resistance at $4,480/oz; support at $4,450/oz.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): Weaker industrial demand prospects.
      • Cross: DXY strength and risk-off environment are headwinds.
      • Levels: Resistance at $32.00/oz; support at $31.50/oz.
    • WTI / Brent:
      • Direction: Neutral.
      • Domestic (asset-specific): Iran talks and Ukraine refinery attack priced in.
      • Cross: DXY strength and mixed risk sentiment.
      • Levels: WTI: $100/$103; Brent: $108/$111.
    • Copper:
      • Direction: Neutral.
      • Domestic (asset-specific): Wait for new China catalyst to lift LME stocks.
      • Cross: DXY and global growth prospects.
      • Levels: Resistance at $5.15; support at $5.00.
    • SPX:
      • Direction: Neutral.
      • Domestic (US): Earnings season nearing end; Fed policy key.
      • Cross: VIX stable, global sentiment depends on Nvidia.
      • Levels: Futures 5300/5340; cash support 5280/5320.
    • NDX:
      • Direction: Neutral.
      • Domestic (US): Nvidia earnings key; real yield reaction impacts valuation.
      • Cross: Rates sensitivity and VIX.
      • Levels: 19250/19450.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Awaiting for more industrials to show positive earnings.
      • Cross: Bond-yield reaction to FOMC minutes.
      • Levels: 39700/39900.
    • UK100 (FTSE):
      • Direction: Neutral.
      • Domestic (UK): Sterling swings impacting export-heavy index.
      • Cross: Global risk and US tone.
      • Levels: 10200/10300.
    • DAX:
      • Direction: Neutral.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech and DXY.
      • Levels: 24300/24500.
    • Nikkei:
      • Direction: Neutral.
      • Domestic (JP): JPY weakness continues, JGB yields drive sentiment.
      • Cross: US tech and risk regime.
      • Levels: 59500/60000.
    • BTC:
      • Direction: Neutral.
      • Domestic (asset-specific): ETF flows holding steady, no major funding stress.
      • Cross: DXY and risk sentiment influencing Bitcoin’s price action.
      • Levels: 65000/68000.

    Positioning watch: Crowded longs in AUD and Copper (98th percentile) and crowded shorts in Nasdaq (0th percentile) and JPY (8th percentile) suggest squeeze risks if data improves or Fed turns dovish. Dollar long also extended (85th %ile) exposes downside on risk-on turn.

    The pain trade: A dovish surprise in the FOMC minutes would trigger a short squeeze in Nasdaq, fuel a rally in beaten-down gold, and weaken the dollar, hurting those positioned for higher rates.

  • S&P 500 Braces for Nvidia and Fed Minutes – Wednesday, 20 May

    Where we are: S&P 500 futures are trading around 5320, modestly higher on the session, in line with premarket gains. This puts the index above yesterday’s close but still within the recent trading range. The overnight session saw limited volatility, consolidating after yesterday’s cautious retreat driven by rising bond yields.

    What’s driving it: The market’s primary focus is squarely on Nvidia’s earnings after the close, which will either validate or undermine the AI-driven rally that has been a major support for the S&P 500 this year. Rising real yields are creating a headwind for risk assets, with the US 10Y real yield now at 2.13%. Additionally, the market is awaiting the release of the FOMC meeting minutes at 14:00 ET, which could provide further insights into the Fed’s thinking on inflation and interest rate policy.

    • Nvidia’s performance is seen as a bellwether for the tech sector and broader market sentiment.
    • Rising 10Y real yields are increasing the opportunity cost of holding equities.
    • The modestly short positioning among non-commercial accounts suggests potential for a squeeze if Nvidia delivers a strong earnings report.

    NY session focus: The main event is the release of the FOMC meeting minutes at 14:00 ET. Traders will be scrutinizing the minutes for any clues about the Fed’s tolerance for inflation and potential shifts in the policy outlook. Key levels to watch are 5300 as support and 5350 as resistance. The trade that’s working is a long-Nvidia gamma squeeze, but the trade that’s at risk is a broad equity long if the minutes signal a hawkish Fed. The pain trade is a hawkish surprise in the Fed minutes combined with disappointing guidance from Nvidia, triggering a sharp sell-off in equities.

  • NY Session Tactical Brief – Tuesday, 19 May

    Regime: Mixed — VIX at 18.43 signals ongoing unease, but rising US yields underpin USD strength, offsetting risk aversion.

    Today’s market themes:

    • USD dominance: Rising US yields and safe-haven demand continue to buoy the Dollar across the board.
    • Inflation watch: Canadian CPI data offers key test for BoC rate-cut expectations.
    • Positioning unwind: Crowded longs in AUD and Copper face disappointment risk from China slowdown fears.

    The setup: The market is pricing in a hawkish Fed, driving the USD higher, with USD/JPY approaching multi-decade highs near 159.15. The trade is to fade crowded shorts in Nasdaq and Yen while selling AUD on weak data. The risk is a surprise dovish signal from the Fed, triggering a rapid unwinding of USD longs.

    Watch list (native time per event):

    • 11:30 AEST AUD: Monetary Policy Meeting Minutes
    • 08:30 ET CAD: CPI m/m (forecast 0.7%, prior 0.9%)
    • 10:00 ET USD: Pending Home Sales m/m (forecast 1.0%, prior 1.5%)

    Bias by asset:

    • DXY:
      • Direction: Higher
      • Domestic (US): US yields climbing; hawkish Fed repricing.
      • Cross: Safe-haven demand, global uncertainty boosting USD.
      • Levels: Support 119.00, Resistance 119.50.
    • EUR/USD:
      • Direction: Lower
      • Domestic (EU): Dovish ECB outlook weighing on the Euro.
      • Cross: DXY strength, US-DE 10Y widening.
      • Levels: Support 1.1600, Resistance 1.1700.
    • GBP/USD (Cable):
      • Direction: Lower
      • Domestic (UK): BoE reluctance, claimant count.
      • Cross: DXY strength, risk off sentiment, US-UK 10Y.
      • Levels: Support 1.2450, Resistance 1.2550.
    • USD/JPY:
      • Direction: Higher
      • Domestic (JP): BoJ remains dovish; intervention risk grows.
      • Cross: US 10Y surging, DXY strength amplifying the move.
      • Levels: Support 158.50, Resistance 160.00.
    • USD/CAD (Loonie):
      • Direction: Higher
      • Domestic (CA): CPI miss will trigger BOC dovish repricing.
      • Cross: DXY strength, watching US-CA 10Y spread.
      • Levels: Support 1.3700, Resistance 1.3750.
    • AUD/USD (Aussie):
      • Direction: Lower
      • Domestic (AU): RBA cautious, meeting minutes confirm dovish stance.
      • Cross: DXY strength, China growth concerns.
      • Levels: Support 0.6600, Resistance 0.6650.
    • NZD/USD (Kiwi):
      • Direction: Lower
      • Domestic (NZ): RBNZ easing bias entrenched.
      • Cross: DXY strength, risk aversion.
      • Levels: Support 0.5800, Resistance 0.5850.
    • USD/CHF (Swissy):
      • Direction: Higher
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response
      • Cross: DXY strength, safe-haven flows supporting.
      • Levels: Support 0.7850, Resistance 0.7900.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: sideways, EUR/JPY: higher, GBP/JPY: higher
      • Domestic: Relative hawkish BoE to ECB; JPY still dovish.
      • Cross: DXY strength, risk aversion affecting the crosses.
      • Levels: EUR/GBP: 0.8500-0.8550, EUR/JPY: 170.00-171.00, GBP/JPY: 193.50-194.50.
    • XAU (Gold):
      • Direction: Lower
      • Domestic (asset-specific): Rising real yields weighing on gold.
      • Cross: DXY strength.
      • Levels: Support $4,520, Resistance $4,560.
    • XAG (Silver):
      • Direction: Lower
      • Domestic (asset-specific): Industrial demand mixed, gold ratio flat.
      • Cross: DXY strength, risk aversion.
      • Levels: Support $31.00, Resistance $32.00.
    • WTI / Brent:
      • Direction: Sideways
      • Domestic (asset-specific): US-Iran talks weighing.
      • Cross: DXY strength, risk aversion muted.
      • Levels: WTI: $100-103, Brent: $108-112.
    • Copper:
      • Direction: Lower
      • Domestic (asset-specific): China growth worries, LME stock build.
      • Cross: DXY strength, global growth proxy weak.
      • Levels: Support $4.80, Resistance $4.90.
    • SPX:
      • Direction: Lower
      • Domestic (US): Rising yields, earnings season fades.
      • Cross: Elevated VIX, global risk concerns.
      • Levels: Futures support 5280, resistance 5300.
    • NDX:
      • Direction: Lower
      • Domestic (US): Rising real yields pressuring valuations.
      • Cross: Rate sensitivity elevated, VIX concerns.
      • Levels: Support 19,300, Resistance 19,400.
    • US30 (Dow):
      • Direction: Lower
      • Domestic (US): Earnings less supportive, cyclicals under pressure.
      • Cross: Bond yield reaction negative.
      • Levels: Support 39,800, Resistance 40,000.
    • UK100 (FTSE):
      • Direction: Sideways
      • Domestic (UK): Sterling strength offsetting global weakness.
      • Cross: Global risk tone, US weakness.
      • Levels: Support 8,350, Resistance 8,400.
    • DAX:
      • Direction: Sideways
      • Domestic (DE): German HICP eases, no bullish trigger.
      • Cross: US tech weakness, DXY strength.
      • Levels: Support 24,500, Resistance 24,600.
    • Nikkei:
      • Direction: Lower
      • Domestic (JP): JPY weakness hurting profitability.
      • Cross: US tech weak; no clear up catalyst.
      • Levels: Support 60,000, Resistance 61,000.
    • BTC:
      • Direction: Sideways
      • Domestic (asset-specific): ETF flow slowing, mixed on-chain data.
      • Cross: DXY strength, Nasdaq correlation weighing.
      • Levels: Support $66,000, Resistance $67,000.

    Positioning watch: Crowded longs in AUD (98th percentile) and Copper (98th percentile) expose these assets to significant downside risk if China economic data disappoints or trade tensions escalate. Crowded shorts in Nasdaq (0th percentile) face a squeeze risk if yields drop.

    The pain trade: A surprise dovish turn by the Fed, sparked by weak US data, would trigger a rapid unwinding of USD longs and a rally in equities, catching crowded shorts offside.

  • S&P 500 Braces for Home Sales Data – Tuesday, 19 May

    Where we are: S&P 500 futures are trading slightly lower, around 5295, as the European session progresses. The index is consolidating after last week’s rally to record highs, trading within a tight overnight range of 5288-5302. Resistance sits at the all-time high of 5325, with initial support around 5270, a level that held well during the early European session.

    What’s driving it: The near-term direction for the S&P 500 hinges on the US interest rate outlook, particularly as inflation concerns linger despite a strong equity market. Rising US real yields, currently at 2.1%, are putting pressure on risk assets and providing a headwind for gold. Affirming the full-year outlook from Home Depot is welcome news stateside, though this hasn’t translated into broader risk-on sentiment as Wall Street frets over a potential correction. The move in yields is the key thing to watch.

    • US 10-year yields rose 12bp yesterday to 4.59%, reflecting persistent inflation worries and hawkish Fed expectations.
    • Pending Home Sales data at 10:00 ET today could offer clues about the strength of the US housing market and overall economic activity. A weaker-than-expected print (forecast 1.0% m/m vs previous 1.5%) could prompt a dovish repricing.
    • Net non-commercial positioning in S&P 500 futures is modestly short (-138,905 contracts), suggesting limited immediate squeeze risk, although a strong upside surprise could see this positioning reverse quickly.

    NY session focus: Today’s US Pending Home Sales data at 10:00 ET will be a key focus for gauging the near-term economic outlook. Watch for a break above 5305 to trigger a test of the all-time high at 5325, while a break below 5270 could open the way to 5250. The market will also be closely watching Nvidia’s earnings report tomorrow. The trade that’s working is fading rallies in AI infrastructure names. The trade that’s at risk is chasing momentum in large-cap tech. The pain trade for the S&P 500 is a strong home sales number combined with hawkish Fed rhetoric, triggering a sharp bond sell-off and equity reversal.

  • NY Session Tactical Brief – Monday, 18 May

    Regime: Risk-off, driven by rising real yields as 10Y TIPS push above 2% and oil climbs to $105, pressuring equities.

    Today’s market themes:

    • Real-yield repricing and inflation fears weighing on risk assets.
    • Geopolitical tensions in Middle East adding to oil supply concerns.
    • Watch for signs of USD/JPY intervention as pair tests 159.

    The setup: Rising real yields are the dominant driver, pressuring risk assets. Focus on the US 10Y TIPS yield, currently at 2%, as it sets the tone. A break above 2.1% could trigger further equity sell-off and dollar strength. Trade: short SPX futures, stop above 5300. Risk: surprising dovish Fed commentary.

    Watch list (native time per event):

    • 08:30 ET US Retail Sales (m/m) Forecast: 0.4%, Prior: 0.7%
    • 10:00 ET US NAHB Housing Market Index Prior: 51
    • 11:00 CET ECB President Lagarde Speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Hawkish Fed rhetoric, rising US yields
      • Cross: Risk-off sentiment, safe-haven demand
      • Levels: Support 117.80 / Resistance 118.30
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Weak German data, dovish ECB comments
      • Cross: Stronger DXY, widening US-DE 10Y yield spread
      • Levels: Support 1.0800 / Resistance 1.0850
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): Cautious BoE stance, weak data prints
      • Cross: Stronger DXY, risk-off flows
      • Levels: Support 1.2550 / Resistance 1.2620
    • USD/JPY:
      • Direction: Bullish
      • Domestic (JP): BoJ dovish, rising JGB yields, intervention watch
      • Cross: Rising US 10Y, DXY strength, risk-off
      • Levels: Support 158.50 / Resistance 159.00
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC holds, CPI is soft, rangebound
      • Cross: Stronger DXY, US-CA 10Y spread widening
      • Levels: Support 1.3650 / Resistance 1.3700
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): Hawkish RBA stance but crowded long positioning
      • Cross: Stronger DXY, weaker China growth, US-AU spread
      • Levels: Support 0.7050 / Resistance 0.7120
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias, weakening economic momentum
      • Cross: Stronger DXY, risk aversion, US-NZ yield divergence
      • Levels: Support 0.5800 / Resistance 0.5850
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB neutral, CPI contained
      • Cross: DXY strength, safe-haven unwinding
      • Levels: Support 0.7800 / Resistance 0.7850
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP Neutral, EUR/JPY Bearish, GBP/JPY Neutral
      • Domestic: Diverging central bank policies, relative yield spreads
      • Cross: DXY strength, risk regime dynamics
      • Levels: EUR/GBP 0.8500-0.8550, EUR/JPY 169.50-170.50, GBP/JPY 192.00-193.00
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, soft CB demand
      • Cross: Stronger DXY, risk-off environment
      • Levels: Support $4,500 / Resistance $4,550
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Weaker industrial demand, high Gold-Silver ratio
      • Cross: Stronger DXY, risk aversion
      • Levels: Support $30.00 / Resistance $31.00
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Tight supply, geopolitics, rising demand
      • Cross: Risk-off, inflation hedge
      • Levels: WTI Support $100 / Resistance $105
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): Weak China, rising LME stocks
      • Cross: DXY strength, global growth concerns
      • Levels: Support $5.00 / Resistance $5.10
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising yields, Fed outlook
      • Cross: VIX elevated, global risk-off
      • Levels: Futures 5285, support 5250, resistance 5300 cash
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yields pressure valuations
      • Cross: Rates sensitivity, VIX
      • Levels: Support 18,100 / Resistance 18,300
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Earnings cyclical concerns, yields
      • Cross: Bond-yield reaction
      • Levels: Support 39,700 / Resistance 40,000
    • UK100 (FTSE):
      • Direction: Neutral
      • Domestic (UK): Mixed data, Gilt yields
      • Cross: Global risk, US tone
      • Levels: Support 8,400 / Resistance 8,450
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Weak German data, rising Bund yields
      • Cross: US tech, DXY, risk regime
      • Levels: Support 23,600 / Resistance 23,800
    • Nikkei:
      • Direction: Bearish
      • Domestic (JP): Strong JPY, rising JGB yields, BoJ stance
      • Cross: US tech, risk regime
      • Levels: Support 60,500 / Resistance 61,000
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): ETF outflows
      • Cross: DXY, risk regime, Nasdaq correlation
      • Levels: Support $60,000 / Resistance $62,000

    Positioning watch: AUD and Copper are crowded long at >98th percentile, creating significant squeeze risk if US data surprises to the upside or China stimulus disappoints. Nasdaq is crowded short at the 0th percentile, vulnerable to a rally.

    The pain trade: A dovish surprise from a Fed speaker would ignite a risk rally, squeezing crowded short positions in Nasdaq and causing dollar weakness.

  • S&P 500 Under Pressure as Yields and Oil Climb – Monday, 18 May

    Where we are: S&P 500 futures are currently trading around 5285, down roughly 0.5% from Friday’s close. The overnight range has been relatively tight, but the downside bias is evident, reflecting concerns about rising yields and energy prices. We’re seeing some profit-taking after last week’s gains, particularly after the late pullback as the week ended.

    What’s driving it: Rising US Treasury yields are the primary headwind for equities this morning, fueled by persistent inflation concerns and elevated oil prices. The 10-year Treasury yield is sitting at 4.47%, up 1bp on the day, and the 10Y real yield is a notable headwind, climbing to 2.0%. The market’s pricing in a prolonged period of restrictive monetary policy, and the “higher for longer” narrative is gaining traction, even as traders have discounted near-term Fed cuts. This yield dynamic, coupled with concerns about Middle East tensions and their impact on energy supply, is dampening risk appetite. The market impact of Nvidia earnings on Wednesday is also creating some wariness.

    • US 10Y Real Yield at 2.0%, putting pressure on gold and risk assets.
    • WTI Crude trading above $101, adding to inflationary pressures.
    • The net non-commercial positioning in S&P 500 futures remains modestly short, suggesting limited room for a significant short squeeze, but is off recent lows, so the window is closing.

    NY session focus: The main focus today will be on how the market absorbs the higher yield environment. Watch the 2s10s spread, currently at +0.5%, for signs of further steepening, which could provide some relief for risk assets. Keep an eye on the 08:30 ET data dump. Key levels to watch are 5275 (support) and 5300 (resistance). The trade that’s at risk is chasing AI infrastructure names higher ahead of Nvidia earnings on Wednesday. The pain trade would be a sharp reversal in yields if incoming data weakens significantly, sparking a renewed rally in growth stocks, although this looks unlikely given the current macro backdrop.

  • NY Session Tactical Brief – Friday, 15 May

    Regime: Risk-off, driven by rising oil prices and inflation worries spooking bond markets, pushing US 2Y yields to 3.98%.

    Today’s market themes:

    • Oil supply scare: Strait of Hormuz tensions driving WTI above $104, fueling inflation concerns.
    • Global bond selloff: Rising oil and inflation fears triggering broad-based bond yield increases.
    • USD strength: Dollar continues to rally on Fed hike expectations, nearing best week since March.

    The setup: Oil supply disruptions are the dominant driver, pushing inflation expectations higher and triggering a global bond selloff. The trade is to fade equity rallies, especially in growth names, as real yields rise. Risk is a de-escalation in Middle East tensions, sending oil and yields lower.

    Watch list (native time per event):

    • 08:30 ET US PPI (Prior: +0.2%)
    • 10:00 ET US University of Michigan Consumer Sentiment (Prior: 77.2)
    • 15:00 CET ECB’s Lagarde speaks

    Bias by asset:

    • DXY:
      • Direction: Bullish
      • Domestic (US): Hawkish Fed bets, resilient US data, rising US yields.
      • Cross: Global risk aversion, flight to safety, EUR/USD weakness.
      • Levels: Support 98.50, Resistance 99.50
    • EUR/USD:
      • Direction: Bearish
      • Domestic (EU): Dovish ECB, persistent inflation challenges, peripheral stress.
      • Cross: Strong DXY, widening US-DE 10Y yield spread, risk-off sentiment.
      • Levels: Support 1.1600, Resistance 1.1700
    • GBP/USD (Cable):
      • Direction: Bearish
      • Domestic (UK): BoE hawkishness priced in, potential for dovish repricing, Gilt underperformance.
      • Cross: Strong DXY, widening US-UK 10Y yield spread, risk aversion.
      • Levels: Support 1.3350, Resistance 1.3450
    • USD/JPY:
      • Direction: Neutral
      • Domestic (JP): BoJ remains dovish, intervention threat looms, JGBs constrained.
      • Cross: Rising US 10Y yield, strong DXY, risk aversion.
      • Levels: Support 157.50, Resistance 158.50
    • USD/CAD (Loonie):
      • Direction: Bullish
      • Domestic (CA): BoC’s cautious stance, CPI remains elevated, sensitive to oil price swings.
      • Cross: Strong DXY, widening US-CA 10Y yield spread.
      • Levels: Support 1.3650, Resistance 1.3750
    • AUD/USD (Aussie):
      • Direction: Bearish
      • Domestic (AU): RBA reluctance to tighten aggressively, iron ore price concerns.
      • Cross: Strong DXY, China slowdown fears, risk-off sentiment.
      • Levels: Support 0.7150, Resistance 0.7250
    • NZD/USD (Kiwi):
      • Direction: Bearish
      • Domestic (NZ): RBNZ easing bias firmly entrenched, Dairy prices remain weak.
      • Cross: Strong DXY, risk aversion.
      • Levels: Support 0.5800, Resistance 0.5900
    • USD/CHF (Swissy):
      • Direction: Bullish
      • Domestic (CH): SNB likely to maintain dovish stance, moderate Swiss yields.
      • Cross: Strong DXY, risk aversion driving safe-haven flows out of CHF.
      • Levels: Support 0.7800, Resistance 0.7900
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Bearish, EUR/JPY: Bearish, GBP/JPY: Neutral
      • Domestic: BoE remains relatively more hawkish than ECB/BoJ, yield divergence supports GBP.
      • Cross: DXY strength, risk aversion, cross-of-crosses flows impacting correlations.
      • Levels: EUR/GBP: R: 0.8550 S: 0.8500; EUR/JPY: R: 171.00 S: 170.50; GBP/JPY: R: 193.00 S: 192.50
    • XAU (Gold):
      • Direction: Bearish
      • Domestic (asset-specific): Rising real yields, lower breakevens weighing on gold.
      • Cross: Strong DXY, risk-off sentiment limited support.
      • Levels: Support $4,575, Resistance $4,600
    • XAG (Silver):
      • Direction: Bearish
      • Domestic (asset-specific): Weak industrial demand, Gold-Silver ratio trending higher.
      • Cross: Strong DXY, risk aversion exacerbating downside.
      • Levels: Support $4,450, Resistance $4,500
    • WTI / Brent:
      • Direction: Bullish
      • Domestic (asset-specific): Strait of Hormuz tensions, potential supply disruptions, inventories tight.
      • Cross: Weaker DXY providing some offset to risk-off flows.
      • Levels: WTI: S: $102, R: $105; Brent: S: $106, R: $109
    • Copper:
      • Direction: Bearish
      • Domestic (asset-specific): China growth concerns, LME stocks elevated, supply outlook improving.
      • Cross: Strong DXY, risk-off sentiment weighing on industrial metals.
      • Levels: Support $9,800, Resistance $10,000
    • SPX:
      • Direction: Bearish
      • Domestic (US): Rising real yields, concerns about future earnings growth.
      • Cross: Elevated VIX, global risk-off sentiment weighing on equities.
      • Levels: Futures: Support 5220, Resistance 5280
    • NDX:
      • Direction: Bearish
      • Domestic (US): Real yield sensitivity, mega-cap valuations stretched, AI hype fading.
      • Cross: Rates sensitivity, elevated VIX indicating heightened volatility.
      • Levels: Support 19500, Resistance 19700
    • US30 (Dow):
      • Direction: Bearish
      • Domestic (US): Concerns about future earnings growth, pressure on cyclical sectors.
      • Cross: Rising bond yields impacting valuations.
      • Levels: Support 39500, Resistance 40000
    • UK100 (FTSE):
      • Direction: Bearish
      • Domestic (UK): Stronger Sterling weighing, Gilt yields rising, commodity sector under pressure.
      • Cross: Global risk aversion, US tone dragging on sentiment.
      • Levels: Support 8350, Resistance 8400
    • DAX:
      • Direction: Bearish
      • Domestic (DE): Rising Bund yields, weak IFO/ZEW survey data, EU growth concerns.
      • Cross: US tech weakness, DXY strength, risk-off sentiment.
      • Levels: Support 24100, Resistance 24300
    • Nikkei:
      • Direction: Bearish
      • Domestic (JP): Stronger JPY weighing, BoJ under pressure to act, JGB yield curve flattening.
      • Cross: US tech weakness, risk aversion.
      • Levels: Support 38500, Resistance 39000
    • BTC:
      • Direction: Bearish
      • Domestic (asset-specific): Elevated funding rates, ETF flows slowing, on-chain metrics mixed.
      • Cross: Strong DXY, risk aversion, Nasdaq correlation weighing on sentiment.
      • Levels: Support $61,000, Resistance $63,000

    Positioning watch: AUD and Bitcoin are crowded longs (>95th percentile) vulnerable to disappointment if risk aversion intensifies or data disappoints, creating squeeze risk. JPY is a crowded short (<15th percentile) and could rally hard if the BoJ surprises or intervention occurs.

    The pain trade: A de-escalation in Middle East tensions, leading to a sharp drop in oil prices and a rally in risk assets, would hurt crowded short positions in bonds and crowded long positions in the dollar.

  • S&P 500 Futures Tumble as Tech Trade Cools – Friday, 15 May

    Where we are: S&P 500 futures are trading around 5250, down roughly 1% pre-market, retreating from record highs seen in the prior session. The overnight range has been choppy, mirroring the pullback in tech. This level is significantly below yesterday’s New York close, signaling a potentially weak open.

    What’s driving it: The primary driver is a cooling off in the AI-led rally, triggering a broad risk-off move. While Fed speakers Barr and Bowman offered remarks on central banking, they haven’t provided any immediate catalyst for today’s move, leaving the focus on broader market sentiment. The recent surge in energy prices is also contributing to concerns about inflation, prompting traders to anticipate a more hawkish stance from the Fed down the line despite the two-year yield sitting at 3.98%.

    • Nvidia, Tesla, Amazon, Oracle, and Alphabet are all showing premarket weakness, down around 2%.
    • The recent strength in US economic data, particularly low jobless claims and a rise in the retail sales control group, bolsters the argument for hawkish dissenters at the Fed.
    • Speculator positioning in S&P 500 futures remains modestly short, with net non-commercial positions at -98,581 contracts, offering limited squeeze potential as this is only the 77th percentile on a 52 week basis.

    NY session focus: The market will be closely watching for further developments in the energy sector, and assessing how rising energy prices may impact broader inflation expectations. Keep an eye on the 08:30 ET data print. Key levels to watch are 5230 as initial support and 5280 as resistance. The trade that’s working is shorting overvalued tech names. The trade at risk is holding onto long positions in AI hyperscalers. The pain trade is a sharp reversal and continuation of the AI-led rally, squeezing shorts and punishing those who missed the initial move.

  • 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.

  • 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.

  • NY Session Tactical Brief – Tuesday, 12 May

    Regime: Risk-off, driven by stronger-than-expected US CPI data and escalating Middle East tensions, pushing the VIX higher and US 10Y yields up 5bp to 4.43%.

    Today’s market themes:

    • Real-rate repricing: Hotter CPI print fuels hawkish Fed bets, pressuring risk assets.
    • Geopolitical risk: Iran war uncertainty keeps oil elevated, supporting inflation concerns.
    • Crowded shorts: Potential for squeeze in JPY, GBP, and NZD if risk sentiment improves.

    The setup: The stronger-than-expected US CPI print has triggered a hawkish repricing of Fed expectations, sending US yields higher and the dollar stronger. This is pressuring risk assets, particularly tech and emerging markets. The trade is to fade rallies in risk assets, but watch for potential short squeezes in crowded short currencies if geopolitical risks abate or US data disappoints. US 10Y at 4.43%, DXY at 98.25.

    Watch list (native time per event):

    • 08:30 ET USD: Core CPI m/m (forecast 0.3%, prior 0.2%)
    • 11:59 ET USD: Fed Chair Nomination Vote (forecast Pass, prior —)
    • 11:30 AEST AUD: Wage Price Index q/q (forecast 0.8%, prior 0.8%)

    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: Bullish.
      • Domestic (US): Hawkish Fed repricing on CPI beat. Rising US yields support.
      • Cross: Risk-off flows, safe-haven demand, EM weakness.
      • Levels: Resistance at 98.50, support at 98.00.
    • EUR/USD:
      • Direction: Bearish.
      • Domestic (EU): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, widening US-DE 10Y yield spread, risk-off sentiment.
      • Levels: Resistance at 1.0800, support at 1.0750.
    • GBP/USD (Cable):
      • Direction: Bearish.
      • Domestic (UK): Rising UK borrowing costs pressure.
      • Cross: Stronger DXY, widening US-UK 10Y yield spread, risk aversion.
      • Levels: Resistance at 1.3550, support at 1.3500.
    • USD/JPY:
      • Direction: Bullish.
      • Domestic (JP): BoJ remains dovish. Intervention risk looming.
      • Cross: Higher US 10Y yields, strong DXY, risk-off bids into USD.
      • Levels: Resistance at 158.00, support at 157.00.
    • USD/CAD (Loonie):
      • Direction: Bullish.
      • Domestic (CA): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, US-CA 10Y yield spread widening.
      • Levels: Resistance at 1.3750, support at 1.3700.
    • AUD/USD (Aussie):
      • Direction: Bearish.
      • Domestic (AU): Awaiting Wage Price Index data.
      • Cross: Stronger DXY, US-AU 10Y yield spread widening, risk aversion.
      • Levels: Resistance at 0.7220, support at 0.7175.
    • NZD/USD (Kiwi):
      • Direction: Bearish.
      • Domestic (NZ): RBNZ easing bias remains in place.
      • Cross: Stronger DXY, US-NZ 10Y yield spread widening, risk-off flows.
      • Levels: Resistance at 0.5960, support at 0.5920.
    • USD/CHF (Swissy):
      • Direction: Bullish.
      • Domestic (CH): No fresh domestic catalyst — sensitive to US response.
      • Cross: Stronger DXY, waning safe-haven appeal of CHF.
      • Levels: Resistance at 0.7820, support at 0.7780.
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Neutral, EUR/JPY: Bearish, GBP/JPY: Bearish.
      • Domestic: Relative central bank policy divergence remains key driver.
      • Cross: DXY strength supports JPY and GBP.
      • Levels: Monitor individual cross support/resistance.
    • XAU (Gold):
      • Direction: Bearish.
      • Domestic (asset-specific): Rising real yields pressure gold.
      • Cross: Stronger DXY, risk-off flows less supportive with rates rising.
      • Levels: Resistance at $4,720, support at $4,680.
    • XAG (Silver):
      • Direction: Bearish.
      • Domestic (asset-specific): No fresh catalyst — sensitive to overall risk tone.
      • Cross: Stronger DXY, risk-off sentiment, industrial demand concerns.
      • Levels: Monitor gold for direction, lower volatility.
    • WTI / Brent:
      • Direction: Bullish.
      • Domestic (asset-specific): Supply disruption fears, escalating geopolitical tensions.
      • Cross: Weaker DXY provides some support, but risk-off a headwind.
      • Levels: Watch for Iran ceasefire news.
    • Copper:
      • Direction: Bearish.
      • Domestic (asset-specific): China growth concerns weigh.
      • Cross: Stronger DXY, global growth proxy suffers from risk-off sentiment.
      • Levels: Monitor China data.
    • SPX:
      • Direction: Bearish.
      • Domestic (US): Higher yields, earnings rotation away from growth.
      • Cross: Elevated VIX, global risk-off sentiment.
      • Levels: Futures at 5185. Support at 5170, resistance at 5200.
    • NDX:
      • Direction: Bearish.
      • Domestic (US): Sensitive to real yields, mega-cap earnings under pressure.
      • Cross: Rates sensitivity, VIX elevation.
      • Levels: Monitor tech stocks for price action.
    • US30 (Dow):
      • Direction: Neutral.
      • Domestic (US): Financials and industrials facing mixed earnings.
      • Cross: Bond-yield reaction muted.
      • Levels: Trading near flatline, awaiting catalyst.
    • UK100 (FTSE):
      • Direction: Bearish.
      • Domestic (UK): Weaker Sterling, higher Gilt yields.
      • Cross: Global risk, US tone negative.
      • Levels: Trading lower in Europe.
    • DAX:
      • Direction: Bearish.
      • Domestic (DE): No fresh domestic catalyst — sensitive to US response.
      • Cross: US tech weakness, stronger DXY, risk aversion.
      • Levels: Trading lower on lack of drivers.
    • Nikkei:
      • Direction: Bearish.
      • Domestic (JP): JPY weakness capped by intervention risk.
      • Cross: US tech selling pressure, risk off.
      • Levels: High close, vulnerable to correction.
    • BTC:
      • Direction: Bearish.
      • Domestic (asset-specific): Funding rates easing, ETF flows slowing.
      • Cross: Stronger DXY, risk aversion, Nasdaq correlation.
      • Levels: Finding soft support after overnight retreat.

    Positioning watch: CFTC data shows crowded longs in AUD, USD, Copper, and Bitcoin, creating potential downside risk if data disappoints or risk sentiment shifts. Crowded shorts in JPY, GBP, and NZD present squeeze potential if risk appetite recovers.

    The pain trade: A surprise dovish signal from the Fed Chair Nomination Vote, coupled with weaker-than-expected US data later in the week, would trigger a sharp short squeeze in JPY, GBP, and NZD, while simultaneously hammering the USD.

  • S&P 500 Braces for CPI After Yield Curve Bear Steepen – Tuesday, 12 May

    Where we are: S&P 500 futures are trading around 5185, coming off overnight lows near 5170. The index saw a mild pullback in early EU cash trading, mirroring pre-market weakness after the hot CPI print. The futures contract remains below Friday’s close, suggesting a continuation of last week’s choppy consolidation around the 5200 level.

    What’s driving it: The immediate driver is the hotter-than-expected CPI data, with the headline figure printing at 3.7% y/y versus the 3.3% expected and Core CPI at 0.3% m/m versus the 0.2% expected. This has solidified concerns about persistent inflation and the potential for the Fed to delay any rate cuts, evidenced by the 2s10s steepening to 0.47%. Although the 10Y yield has fallen 3bp since Friday, the market is focused on breakeven inflation rising 2bp, contributing to equity unease. This reinforces the expectation that the Fed will maintain its hawkish stance, further weighing on risk sentiment.

    • CPI y/y printed 3.7% vs 3.3% expected, triggering an initial risk-off reaction.
    • The 10Y Breakeven Inflation rate rose 2bp, suggesting inflation expectations are becoming unanchored.
    • Despite modestly short positioning in S&P 500 futures, there’s limited squeeze risk given the prevailing macro headwinds.

    NY session focus: All eyes will be on the market’s reaction to the 08:30 ET CPI report. Traders should watch for potential rotation into value names, particularly if energy prices continue to climb. A break below 5170 could open the door for a test of the 5150 level. The 11:59 ET Fed Chair Nomination Vote is a known positive, but unlikely to offset inflation concerns. The working trade is shorting rallies into the 5200 resistance; at risk is the long-duration tech trade given the repricing of rates. The pain trade here is a sudden dovish pivot from the Fed, which seems increasingly unlikely in the near term.

  • NY Session Tactical Brief – Monday, 11 May

    Regime: Risk-off, with oil spiking on escalating Middle East tensions and Trump rejecting Iran’s peace offer, VIX at 17.08 and 10Y yields slightly higher.

    Today’s market themes:

    • Geopolitical Risk: Middle East tensions driving oil and safe-haven flows.
    • Rate Divergence: CB policy driving FX crosses, particularly EUR/GBP and EUR/JPY.
    • Commodity Strength: Silver and Copper continue to show strong performance.

    The setup: Geopolitical tensions are escalating quickly, pushing oil higher and boosting safe-haven demand. The market is pricing in a higher risk of supply disruptions from the Middle East. Watch for further headlines as the situation develops; a break above $105 in Brent could trigger a larger risk-off move. US 10Y yield is at 4.393%.

    Watch list (native time per event):

    • 09:30 CST CNY: CPI y/y (forecast 0.9%, prior 1.0%)
    • 09:30 CST CNY: PPI y/y (forecast 1.7%, prior 0.5%)

    Bias by asset:

    • DXY:
      • Direction: Neutral
      • Domestic (US): Fed watching data; US yields steady
      • Cross: Geopolitical risk-off; Euro weakness capping upside
      • Levels: Support: 97.80, Resistance: 98.03
    • EUR/USD:
      • Direction: Down
      • Domestic (EU): ECB divergence widening vs BoE and Fed
      • Cross: DXY strength / US-DE 10Y spread widening / Risk-off
      • Levels: Support: 1.1749, Resistance: 1.1782
    • GBP/USD (Cable):
      • Direction: Neutral
      • Domestic (UK): BoE hawkish hold / higher Gilt yields supporting
      • Cross: DXY / US-UK 10Y spread / Risk-off offsets domestic strength
      • Levels: Support: 1.3570, Resistance: 1.3616
    • USD/JPY:
      • Direction: Up
      • Domestic (JP): BoJ dovish / JGB yields capped / Intervention watch
      • Cross: Higher US 10Y yield / DXY / risk regime
      • Levels: Support: 156.76, Resistance: 157.18
    • USD/CAD (Loonie):
      • Direction: Up
      • Domestic (CA): BoC dovish / WTI strength offset by CAD weakness
      • Cross: DXY / US-CA 10Y spread
      • Levels: Support: 1.3661, Resistance: 1.3695
    • AUD/USD (Aussie):
      • Direction: Down
      • Domestic (AU): RBA neutral / China data sensitivity
      • Cross: DXY strength / US-AU 10Y / China growth uncertainty
      • Levels: Support: 0.7220, Resistance: 0.7249
    • NZD/USD (Kiwi):
      • Direction: Down
      • Domestic (NZ): RBNZ dovish / dairy prices lackluster
      • Cross: DXY strength / US-NZ 10Y / risk-off sentiment
      • Levels: Support: 0.5939, Resistance: 0.5957
    • USD/CHF (Swissy):
      • Direction: Up
      • Domestic (CH): SNB dovish / Swiss yields low
      • Cross: DXY strength / safe-haven unwinding
      • Levels: Support: 0.7774, Resistance: 0.7795
    • EUR/GBP, EUR/JPY, GBP/JPY:
      • Direction (per cross): EUR/GBP: Down; EUR/JPY: Up; GBP/JPY: Up
      • Domestic: EUR/GBP: BoE vs ECB; EUR/JPY & GBP/JPY: rate divergence
      • Cross: DXY / risk regime / cross-of-crosses dynamics
      • Levels: EUR/GBP: 0.8647/0.8668; EUR/JPY: 184.39/185.02; GBP/JPY: 212.73/213.87
    • XAU (Gold):
      • Direction: Down
      • Domestic (asset-specific): Rising real yields / ETF outflows
      • Cross: DXY strength / risk-off demand limited
      • Levels: Support: 4655.6, Resistance: 4714.2
    • XAG (Silver):
      • Direction: Up
      • Domestic (asset-specific): Industrial demand / Gold strength
      • Cross: DXY / risk regime
      • Levels: Support: 7953.000, Resistance: 8418.000
    • WTI / Brent:
      • Direction: Up
      • Domestic (asset-specific): Geopolitical risk / potential supply disruption
      • Cross: DXY / risk regime
      • Levels: WTI: Support: 96.64, Resistance: 100.35; Brent: Support: 102.90, Resistance: 105.97
    • Copper:
      • Direction: Up
      • Domestic (asset-specific): China stimulus / LME stock levels
      • Cross: DXY / global growth proxy
      • Levels: Support: 625.4000, Resistance: 641.4300
    • SPX:
      • Direction: Down
      • Domestic (US): higher yields / earnings plateau
      • Cross: VIX rising / global risk aversion
      • Levels: Futures support: 7391.00, Resistance: 7420.25, Cash support: 7398.90
    • NDX:
      • Direction: Down
      • Domestic (US): Real yields / AI bubble potential
      • Cross: Rates sensitive / Rising VIX
      • Levels: Futures support: 29227.50, Resistance: 29399.25
    • US30 (Dow):
      • Direction: Down
      • Domestic (US): Cyclical rotation out / yields impact
      • Cross: bond-yield reaction
      • Levels: Futures support: 49471, Resistance: 49706
    • UK100 (FTSE):
      • Direction: Down
      • Domestic (UK): Sterling strength / Gilt yields rising
      • Cross: global risk aversion / US tone
      • Levels: Support: 22742, Resistance: 22850
    • DAX:
      • Direction: Down
      • Domestic (DE): Lower Bund yields / weaker outlook
      • Cross: US tech weakness / DXY / risk regime
      • Levels: Support: 24204, Resistance: 24362
    • Nikkei:
      • Direction: Down
      • Domestic (JP): Strong JPY / JGB yields rising slightly
      • Cross: US tech weakness / risk regime
      • Levels: Support: 62393, Resistance: 63385
    • BTC:
      • Direction: Down
      • Domestic (asset-specific): Crowded longs / Funding rates high
      • Cross: DXY / risk regime / Nasdaq correlation
      • Levels: Support: 62393, Resistance: 63385

    Positioning watch: AUD/USD and Bitcoin are crowded longs (96th and 83rd percentile, respectively), making them vulnerable to a squeeze lower on any disappointment or USD strength. GBP and JPY are crowded shorts, a positive surprise could trigger a squeeze higher.

    The pain trade: A surprise de-escalation in Middle East tensions combined with a dovish signal from the Fed would trigger a massive short squeeze in USD/JPY and GBP/USD, while simultaneously crushing oil prices and unwinding crowded long positions in AUD and BTC.