Following futures positions of non-commercials are as of May 20, 2025.

10-year note: Currently net short 851.4k, down 38.9k.

FOMC minutes for the May 6-7 meeting are due out next Wednesday. As expected, the fed funds rate was left steady at a range of 425 basis points to 450 basis points during that meeting, even as the policy-setting body vowed a wait-and-see approach to future cuts. Importantly, they said that risks of higher inflation and higher unemployment have increased since the March (18-19) meeting, partly due to the trade policy.

If anything, uncertainty around President Donald Trump’s tariff policy has only increased. Most recently, he has threatened a 50-percent tariff on all European Union imports and 25 percent on Apple products unless iPhones are made in the US. How Apple CEO Tim Cook resolves the issue remains to be seen. Trump will occupy the White House for four years. Even if Apple were to decide to bring iPhone manufacturing back home, it will take not months but years to properly set one up. Besides, it is nearly impossible to make all the hundreds of items that go into an iPhone domestically; in the current setup, any imports are subject to tariffs.

This nothing but creates uncertainty for businesses to plan capex and hiring. Several companies have withdrawn 2025 guidance blaming tariff uncertainty. Amidst this, the consumer – not surprisingly – is beginning to expect higher inflation, with the University of Michigan’s inflation outlook for next year coming in at 7.3 for May (preliminary), up from 2.6 last November.

In the futures market, the probabilities of rate cuts continue to vacillate. As of Friday, traders expected two 25-basis-point cuts this year – one each in September and December. Going into April’s jobs report, they were pricing in four cuts beginning in June. If there is any certainty in the weeks and months to come, it is that such roller-coaster rides are here to stay.

30-year bond: Currently net short 72k, down 5.6k.

Major US economic releases for next week are as follows. Markets are closed Monday for observance of Memorial Day.

Durable goods orders (April) and the S&P Case-Shiller home price index (March) are scheduled for Tuesday.

March orders for non-defense capital goods ex-aircraft – proxy for business capex plans – edged up 0.1 percent month-over-month to a seasonally adjusted annual rate of $75.1 billion. A record $75.3 billion was reached this January.

Nationally, US home prices in February appreciated 3.9 percent m/m. This was the fifth month in six that prices rose sub-four percent, with January rising 4.1 percent.

Thursday brings GDP (1Q25, 1^st revision) and corporate profits (1Q25).

The first print showed real GDP shrank 0.3 percent in the March quarter. This was the first contraction in 12 quarters.

In the December quarter, corporate profits with inventory valuation and capital consumption adjustments grew 6.9 percent from a year ago to $4.01 trillion (SAAR) – a record.

Personal income/spending (April) and University of Michigan’s consumer sentiment index (May, final) will be reported Friday.

In the 12 months to March, headline and core PCE (personal consumption expenditures) increased 2.3 percent and 2.7 percent respectively. These were six- and nine-month lows, in that order.

May’s preliminary reading showed consumer sentiment declined 1.4 points m/m to 50.8, which is not too far away from the record low 50 registered in June 2022. As recently as last December, the count was 74, and 79.4 in March last year.

WTI crude oil: Currently net long 198.4k, up 2k.

West Texas Intermediate crude was down 1.2 percent this week to $61.76/barrel but remains locked in a sideways pattern. Horizontal support at $65-$66 was decisively breached seven weeks ago with a daily gap-down. The crude then proceeded to drop to an intraday low of $56.06 by 9 April before reversing sharply higher by close. Since that low, this was the seventh straight week of action under $65-$66, with a weekly long-legged doji this week.

Unless the early-April low gets violated, the weeks-long consolidation in due course is likely to resolve into a takeout of $65-$66. Before that happens, oil bulls will also have to clear another hurdle at the 50-day moving average at $63.57.

Horizontal support at $55 goes back a couple of decades. If this gets breached, the next layer of support is not until the low-$50s, and then the low-$40s.

In the meantime, US crude production in the week to May 16^th increased 5,000 barrels per day week-over-week to 13.392 million b/d; output has come under slight pressure since registering a record 13.631 mb/d in the week to December 6^th last year. Crude imports increased as well, up 248,000 b/d to 6.1 mb/d. As did stocks of crude, gasoline, and distillates, which respectively grew 1.3 million barrels, 816,000 barrels and 579,000 barrels to 443.2 million barrels, 225.5 million barrels and 104.1 million barrels. Refinery utilization edged up five-tenths of a percentage point to 90.7 percent.

E-mini S&P 500: Currently net short 96.6k, down 25.6k.

Hindsight is 20/20, but equities simply ran too far, too fast! From the April 7^th low of 4835 through Monday’s high of 5969, the S&P 500 rallied 23.4 percent. All this in 30 trading sessions! And, considering the positive momentum until last week, it did look like the bulls would keep charging forward until the all-time high of 6147 posted on 19 February was tested.

In the end, the large cap index fell in four of the five sessions this week, down 2.6 percent to 5803. If there is any consolation for the bulls, it is that the 200-day (5773) was successfully tested on Friday, but it is probable the average gets violated in the sessions ahead.

Nearest support lies at 5700, and, should the index trade there, this would have also filled a May 12^th gap-up. After this lies the 50-day at 5585.

Euro: Currently net long 74.5k, down 10.3k.

After four weekly drops in a row, the euro snapped back with gains of 1.8 percent this week to $1.1365. This follows defense of the 50-day early last week when it tagged $1.1066 on the 12^th.

Earlier, the currency came under pressure since tagging $1.1573 on 21 April, having begun to stabilize around $1.02s early this year.

As things stand, the path of least resistance is a rally toward last month’s high.

Gold: Currently net long 164k, up 2.8k.

On 22 April, gold posted a fresh all-time high of $3,500. This was followed by a lower high of $3,439 on the 6^th this month. Rallying 4.8 percent this week to $3,358/ounce, the metal closed right at this falling trendline. So, next week is crucial.

After reaching last month’s record, gold came under pressure to tag $3,121 by the 15^th this month, which breached the rising 50-day (now $3,200) intraday but was saved by close. This also represented a successful test of horizontal support at $3,160s.

Momentum will have once again swung gold bugs’ way should they are able to take out the trendline resistance in question.

Nasdaq (mini): Currently net long 14.5k, down 5k.

As was the case with the S&P 500, tech bulls ran out of steam this week. From the February 19^th all-time high of 22223 through the April 7^th trough of 16542, the Nasdaq 100 quickly tumbled 25.6 percent. Then, in the next six weeks, it shot back up 29.5 percent; as a matter of fact, through this Tuesday’s intraday high of 21483, the index was up 29.9 percent. But the bulls were unable to hang on to the gains. By Friday, the tech-heavy index was down 2.4 percent to 20916.

As mentioned earlier, the 200-day on the S&P 500 was tested on Friday, with rising risks of a breach ahead. On the Nasdaq 100, the average is still 2.9 percent away. In the event the average gets breached, the 50-day (19607) can provide support.

Russell 2000 mini-index: Currently net short 5.7k, down 22.6k.

In the last 10 sessions, the Russell 2000 crossed 2100 five times intraday, with a close above in four. Yet, when it was all said and done, the hurdle proved tough to jump over. This week, the small cap index dropped 3.5 percent to 2040.

The significance of 2100 goes back to January 2021. Most recently, the horizontal support was breached two and a half months ago, in early March. This time around, just above 2100 also lies trendline resistance from 25 November last year when a new all-time high of 2466 edged past the prior high of 2459 from November 2021. This week’s high of 2111 was posted on Tuesday.

Inability to decisively clear 2100 significantly raises the odds the index is headed lower. Immediately ahead, the 50-day lies at 1991.

US Dollar Index: Currently net short 546, down 69.

The recent positive momentum during which the US dollar index went from 97.92 on 21 April to 101.98 on 12 May ended this week, as it gave back two percent to 99.11.

Sellers showed up on the 12^th at the falling 50-day (now 101.30) – well before testing 103-104, which goes back to December 2016; the support was lost early April. The 200-day at 104.16 lies around there as well.

April’s low is now worth a watch. A breach opens the door to a test of trendline support at 96 from May 2011.

VIX: Currently net long 4.4k, down 1.7k.

The 21-day moving average of the CBOE equity-only put-to-call ratio opened the week at Monday’s 0.512 – a three-month low. These represent elevated readings of optimism, and, lo and behold, unwinding began right on cue. The average ended the week at 0.524 and has a long way to go before it is completely unwound.

VIX, in the meantime, rallied back above the 200-day (19.65), having remained under the average for seven sessions. Volatility bulls had an opportunity to also reclaim the 50-day (25.27) on Friday, with the session rallying as high as 25.53, but closing at 22.29, leaving behind a long upper wick on the daily. Odds favor VIX goes after the 50-day again in the sessions to come.

Thanks for reading!

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