Where we are: Dow futures currently trade at 49258, down 99 points or 0.20% on the day, having traded in a 49205-49417 range so far today. This is modestly below yesterday’s cash close of 49142. The index remains sensitive to shifts in risk sentiment given Big Tech earnings looming after the bell.
What’s driving it: All eyes are on today’s FOMC meeting, where the Federal Funds Rate is expected to remain unchanged at 3.75%. However, the market will scrutinize the FOMC statement and Chair Powell’s press conference for any hints about future policy direction, especially concerning inflation and growth. Rising real yields, currently at 1.91%, are putting downward pressure on risk assets and offsetting the positive effects of stable breakeven inflation at 2.44%.
- The 2s10s curve is at 0.52%, reflecting a modestly steepening bias.
- VIX is lower on the day, decreasing -0.69 to 18.02.
- Speculator positioning in Dow Jones futures is modestly short, with net non-commercial positions at -1,731 contracts, which is at the 52nd percentile over the past 52 weeks and unlikely to trigger any major position squeeze.
NY session focus: The market’s direction hinges on the 14:00 ET FOMC rate decision and statement, followed by the 14:30 ET press conference. A hawkish tone could send the Dow lower, potentially testing support around 49000. Conversely, dovish signals could propel the index toward 49500. Focus will also shift to earnings releases from major tech companies after the close. The working trade is short volatility into the event; the at-risk trade is a long Dow position premised on a dovish surprise. The pain trade is a hawkish Fed that also signals openness to future easing.