Where we are: Nasdaq futures currently trade at 27236.75, up 0.11% on the day, holding within today’s 27193.50-27317.00 range. Cash NDX is at 24663.80, a touch firmer. We’re seeing some consolidation after yesterday’s choppiness and as participants prepare for the Fed’s decision today. The index is finding support around recent levels but faces headwinds from rising real yields.
What’s driving it: Today’s primary driver is the FOMC meeting and press conference, with markets universally expecting rates to remain unchanged at 3.75%. The focus will be on forward guidance, particularly given the recent uptick in US 10Y real yields, now at 1.91%, which poses a headwind for growth stocks. Also weighing is the mixed picture from tech earnings; some hyperscalers are showing robust numbers while AI infrastructure companies are facing questions, as underscored by reports of OpenAI’s growth challenges.
- The US 10Y yield is edging higher, currently at 4.371%, reflecting a slight hawkish tilt in market expectations ahead of the Fed.
- The VIX remains relatively subdued at 18.02, suggesting a degree of complacency despite the uncertainties around earnings and Fed policy.
- Net non-commercial Nasdaq 100 positioning is modestly long, but at the 4th percentile over the last 52 weeks, limiting the scope for a major short squeeze.
NY session focus: All eyes will be on the 14:00 ET FOMC announcement and the subsequent 14:30 ET press conference. Traders will be scrutinising Powell’s comments for any hints about the future pace of tightening and the Fed’s reaction function to inflation. Key levels to watch are resistance around 27300 and support near 27200 on the futures. The working trade is to fade any knee-jerk reaction higher in Nasdaq futures on a dovish tilt, as the underlying yield backdrop will ultimately reassert itself. The risk is a hawkish surprise that sends yields sharply higher, triggering a tech selloff. The pain trade? Powell delivers an unambiguously dovish message and tech names rip higher, negating the real yield squeeze thesis.