Where we are: S&P 500 futures are trading at 7198.75, up 0.65% and testing the overnight high of 7211.25. This move puts futures well above yesterday’s cash close of 7136.00 and suggests a strong open for the New York session. The market is attempting to consolidate gains above the psychological 7200 level.
What’s driving it: Optimism ahead of this morning’s 08:30 ET US GDP print (forecast 2.2%) is providing a lift to risk assets. The slightly steeper 2s10s curve (0.5%) also reflects that the market is positioning for stronger growth. Strong earnings from mega-cap tech (Alphabet and Amazon) after yesterday’s close appear to be spilling over, particularly in futures, though there’s some conflicting information as META missed and is showing weakness in pre-market. A modestly short speculator positioning in S&P 500 futures, reflected in the net non-commercial positioning of -109,957 contracts (69th %ile) could amplify upward moves if data beats expectations.
- The 10Y breakeven rate is creeping higher to 2.46%, suggesting inflation expectations are modestly elevated.
- The recent FOMC statement remains a factor, though no specific language has emerged since the release to further guide markets.
- Europe is showing broad strength, with the DAX up nearly 2.0%, which may be creating a risk-on spillover effect in US futures.
NY session focus: All eyes are on the 08:30 ET data dump: GDP, Core PCE, Employment Cost Index, and Unemployment Claims. A beat on GDP and a miss on Core PCE could fuel a risk rally, while the opposite scenario could trigger a sharp reversal. Key levels to watch are 7211.25 on the upside and 7133.75 on the downside. The trade that’s working right now is buying the dip in mega-cap tech, but that’s at risk if the GDP data disappoints. The pain trade is a strong GDP print combined with higher inflation, forcing the market to reprice Fed tightening expectations.