Where we are: The Nasdaq 100 futures are currently trading around 19,550, holding a bid after a quiet overnight session. This is slightly below Friday’s close, but still within the recent trading range. We’re watching for a break above 19,600 to signal renewed upside momentum, while a dip below 19,500 could open the door to further declines.
What’s driving it: The primary driver remains the US real yield environment. The 10-year real yield continues its ascent, now at 2.18%, putting pressure on tech valuations, a known headwind for the Nasdaq 100. While the broader narrative of potential Middle East peace negotiations provides a tailwind for risk assets, the real-yield story trumps that; ultimately the Fed is watching inflation, and right now the bond market is saying they’re not winning. Friday’s 6bp steepening of the 2s10s curve also bears watching — it hints at some belief that the Fed may need to cut more aggressively at some point but this is a second order effect for today’s open. We will be watching it closely.
- The 10Y real yield is at 2.18%, a level that has historically been a headache for Nasdaq valuations.
- CFTC data reveals a crowded short position in Nasdaq 100 futures, with net non-commercial positions at -1,420 contracts (4th percentile).
- Hedge funds are reportedly rotating out of software and into semiconductors, per Goldman, suggesting a shift in sector preference within the tech space.
NY session focus: With US markets closed for Memorial Day, liquidity will be thinner than usual, potentially exacerbating any moves. Keep an eye on the 19,500 level as initial support and 19,650 as resistance. While there is no major US data release today, any headlines regarding the Middle East negotiations could trigger a risk-on or risk-off move. The trade that’s working is shorting rallies into 19,600, but the risk is a short squeeze fueled by the crowded positioning. The pain trade would be a sustained breakout above 19,700, forcing shorts to cover aggressively.