Following futures positions of non-commercials are as of Sep 16, 2025.

10-year note: Currently net short 819.3k, down 38.7k.

As expected, the Federal Reserve lowered the fed funds rate by 25 basis points to a range of 400 basis points to 425 basis points. This was the first cut since December when the benchmark overnight lending rate was reduced by a full percentage point over three meetings, including a 50 last September.

This time around, Stephen Miren, who is on leave as the chair of the Council of Economic Advisers and only assumed office as governor on Tuesday, voted for a 50-basis-point cut and was the lone dissenter; Christopher Waller and Michelle Bowman, both governors, who had dissented in the July meeting voting for a cut, disagreed with Miren and voted for a 25.

The Fed is signaling two more 25-basis-point reductions in the remaining two meetings this year, which is what the futures market is currently predicting. These traders have their money on three more cuts next year – two for sure, three maybe – even as this week’s FOMC dot plot is forecasting only one quarter-point cut.

It is awfully hard to predict what will transpire next year. There have been dramatic changes in trade and immigration policies, and they have the potential to meaningfully impact both jobs and inflation. It is also not clear if businesses will try to pass most of the tariffs on to the consumer, or they will absorb those by cutting costs, including labor. In this environment, it is not easy to confidently give forward guidance – be it the Fed or any business. The labor market is clearly softening, and the central bank would not want it to soften more; at the same time, it would not want inflation to continue to trend higher. A real catch-22!

Then there is the issue of the FOMC makeup. Next May, Chair Jerome Powell’s term ends, but his term as governor does not end until January 2028. If he also steps down as governor, President Donald Trump will have an opportunity to appoint another governor. In addition, if the Supreme Court agrees with Trump’s attempt to oust Dr. Lisa Cook, governor, then markets are likely to begin to bet on a much looser monetary policy.

30-year bond: Currently net short 94.1k, down 4.5k.

Major US economic releases for next week are as follows.

Existing home sales (August) will be out Tuesday. July sales were up two percent month-over-month to a seasonally adjusted annual rate of 4.01 million units – a two-month high.

New home sales (August) are scheduled for Wednesday. Sales slid 0.6 percent m/m in July to 652,000 units (SAAR) – a two-month low.

Thursday brings GDP (2Q25, 3^rd and final estimate), corporate profits (2Q25, revision) and durable goods orders (August).

The second estimate showed real GDP grew at an annual rate of 3.3 percent in the June quarter. This followed a 0.5-percent contraction in the March quarter and was the best showing in seven quarters.

The first print showed 2Q25 corporate profits with inventory valuation and capital consumption adjustments grew 4.3 percent from a year ago to $3.98 trillion (SAAR). The all-time high of $4.01 trillion was posted in 4Q24.

In July, orders for non-defense capital goods ex-aircraft – proxy for business capex plans – rose 1.1 percent m/m to $76.5 billion (SAAR), which was the highest since November 2022; in August that year, a record $78.1 billion was registered.

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

In the 12 months to July, headline and core PCE (personal consumption expenditures) increased 2.6 percent and 2.9 percent respectively – both at five-month highs. They have been trending higher since bottoming in April at 2.2 percent and 2.6 percent, in that order.

September’s preliminary reading showed consumer sentiment dropped 2.8 points m/m to 55.4. This was a four-month low; the 52.2 count in April and May was the lowest since July 2022.

WTI crude oil: Currently net long 139.3k, up 28.7k.

West Texas Intermediate crude rallied toward the falling 50-day (now $64.72), but the average repelled the bulls for three consecutive sessions through Thursday, with Tuesday tagging $64.76. In the end, the crude managed to edge up 0.3 percent for the week to $62.72/barrel.

On the weekly, after last week’s spinning top, this week produced a shooting star. Tuesday’s high was also an unsuccessful test of crucial horizontal support-turned-resistance at $65-$66. With this, risks have risen of a test of $61-$62, which the bulls have defended for over a month. This support also approximates the daily lower Bollinger band at $61.68.

In the meantime, US crude production in the week to September 12^th decreased 13,000 barrels per day week-over-week to 13.482 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 dropped as well, down 579,000 b/d to 5.7 mb/d. As did stocks of crude and gasoline, which respectively declined 9.3 million barrels and 2.3 million barrels to 415.4 million barrels and 217.7 million barrels. Distillates inventory, however, was up four million barrels to 124.7 million barrels. Refinery utilization declined 1.6 percentage points to 93.3 percent.

E-mini S&P 500: Currently net short 225.1k, up 51.4k.

Going into the FOMC meeting this week, non-commercials aggressively raised their holdings of net shorts to an 18-month high. Thus far, the trade has not panned out well. The cash (6664) added 1.2 percent this week. In fact, on Wednesday, the day the benchmark interest rates were lowered, the large cap index sold off initially, but the weakness was bought at the 10-day, with a session low of 6600.

Two weeks ago, when the daily Bollinger bands were really tightening, it seemed obvious at the time that this would get resolved by putting downward pressure on the S&P 500. In the past, narrow Bollinger bands have tended to precede a sharp move – either up or down. The bands are now widening, with the index gaining more. The S&P 500 has now rallied for three weeks in a row – and in six of the last seven. On 7 April, it bottomed at 4835, translating to gains of 38 percent in a little over five months.

It has been a relentless rally since that low, with one after another hurdle giving way sooner or later. Yes, several valuation multiples are elevated, but they can hardly be used as timing tools (more on this here). Momentum is strong, with the daily RSI now in the low-70s.

In the event of downward pressure in the sessions ahead, what transpires at 6530s, followed by 6480s, will decide if selling can persist.

Euro: Currently net long 117.8k, down 7.9k.

It was a spectacular failure at the July high. Back then, on the 1^st, the euro peaked at $1.183, having earlier bottomed at $1.02s in January. Then, on Wednesday, the FOMC day, the currency rallied as high as $1.1919 intraday but only to reverse hard. When it was all said and done, it inched up 0.1 percent for the week to $1.1745, with a massive weekly shooting star.

This week’s action is likely to result in downward pressure ahead. The euro remains above horizontal support at $1.16; bears will have to reclaim the level before regaining momentum.

Gold: Currently net long 266.4k, up 4.7k.

Gold posted a new high this week, and non-commercials could not be riding this any better, with net longs at a 30-week high.

On Wednesday, the metal ticked $3,708 intraday but reversed to close at $3,660. By Friday, it closed the week at $3,683/ounce, up 1.1 percent for the week. This was the fifth up week in a row. Last December, the metal tagged $2,596.

The most recent momentum followed a symmetrical triangle breakout four weeks ago. The triangle consisted of several lower highs since reaching a then-all-time high of $3,500 on 22 April and several higher lows since mid-May when it ticked $3,121 intraday.

Gold remains overbought on several metrics. Nearest support lies at $3,620s, followed by the April high.

Nasdaq (mini): Currently net long 17.8k, down 7.7k.

As was the case with the S&P 500, the tech-heavy Nasdaq 100 too found support at the 10-day on Wednesday, with a session low of 24000. By the end of the week, the index closed at 24626, up 2.2 percent for the week. On 7 April, it bottomed at 16542.

Two weeks ago, after having gone sideways for six weeks, the Nasdaq 100 was able to push through 23600s. This is a level to watch the next time the index comes under pressure. Just underneath that at 23494 lies the 50-day, which has not been breached on a closing basis since May.

Russell 2000 mini-index: Currently net short 85.8k, up 13.6k.

Finally, small-caps were able to emulate their large-cap peers in reaching new all-time highs. This week, the Russell 2000 rallied 2.2 percent to 2449, with Friday ticking 2472 intraday, which surpassed the prior high of 2466 posted last November and 2459 before that in November 2021.

Small-cap bulls have spent a lot of buying power the past five months when the Russell 2000 bottomed at 1733 on 9 April. Kudos to the bulls for rallying the index thus far. Their real test comes in the sessions/weeks ahead. If they can meaningfully build on this week’s action, this will be viewed as a significant milestone. Failure to do so, however, will the raise the odds of a triple top.

US Dollar Index: Currently net short 12.9k, up 7.3k.

On 1 July, the US dollar index ticked 96.38 and bottomed, even as a long-legged doji formed on the weekly. Earlier in January, it peaked at 110.18 and reversed lower. This week, the July low was revisited; as a matter of fact, it was undercut on Wednesday with an intraday low of 96.22, but that weakness was bought. For the week, the index added 0.1 percent to 97.66, and a dragonfly doji developed on the weekly. Thus far, this very much looks like a textbook successful test of the July low. If so, higher prints should follow in the sessions/weeks to come.

Besides the July low, there also was important trendline support around 97 which goes back to the lows of April and May of 2011. Once dollar bulls are able to reclaim 97.60s, they could in due course be eyeing 100-101, which was breached in April.

VIX: Currently net short 101.7k, down 6.1k.

For the second time in four weeks, a green spinning top showed up on the weekly. This follows a sustained drop since April when VIX spiked to 60.13 on the 7^th and reversed lower. This week, the volatility index added 0.69 points to 15.45. It is not often both VIX and the S&P 500 rally; this happened this week. This also comes amidst VIX’s refusal to lose 14.

In January and February this year, VIX found support at 14.50s-14.70s for several sessions before turning up. This was again the case on 29 and 31 July, with a few sub-15 readings before that; August was no exception. This month, too, this occurred several times, including a 14.33 intraday print on Thursday.

Concurrently, the 50-day is flattening. Should VIX begin to rally, non-commercials, who are sitting on net shorts that are near four-and-a-half-year highs, will come under pressure to lock in profit/cover.

Thanks for reading!

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