The Nasdaq-100 Futures have set a sturdy weekly base with a key point of control (POC) at 21,315, serving as a pivotal point for potential market movement. The price exhibited a temporary halt, forming minor consolidation between 21,434 and 21,947, just below the rising regression channel.

Important resistance levels are identified, with the immediate being 21,434, while further resistances are positioned at intervals like 21,497, 21,575, and 21,631. On the flip side, immediate support lies at 21,315 with secondary supports following at 21,169 and 21,077, and further below within the 21,331 to 20,502 range.

Bullish and Bearish Scenarios

In the bullish scenario, a hold and bounce at the POC can prompt a long entry, targeting a series of upward levels with stops set just below 21,300. Conversely, a break and reclaim at 21,434 allows for aggressive long entries, targeting higher resistances.

In a bearish scenario, failure at the 21,434–21,497 zone can initiate short positions, targeting several lower levels. Additionally, a drop below the POC/VWAP confirms a value shift downward, suggesting lower targets.

The Monday execution plan includes setting pre-market alerts at key levels. A focus on volumes at these pivots is advised, coupled with stringent risk management per setup, adapting to channel respect based trends.

With the Nasdaq-100 Futures establishing a firm weekly foundation at 21,315, this area now acts as a sort of launching point — a weighted average where most recent volume and price action collided, giving it added importance. The current behaviour of price around this level suggests that market participants have accepted it as fair value, at least for now. Above this zone, the market attempted to press higher but met some hesitation in a tight range between 21,434 and 21,947, indicating a hesitation to commit in either direction just under a sloping upward channel.

Understanding Key Price Levels

Given this structure, one can interpret the 21,434 marker not as mere resistance, but as a short-term decision-making zone. If the price rotates firmly through it, volume accumulation will become essential. A move up without meaningful backing from traded volume tends to unravel. But if participants continue to treat this area as reasonable for buying, we might expect cascading targets at 21,497, 21,575, and perhaps 21,631 to be tested in sequence.

On the downside, the 21,315 support should not be treated lightly. If it caves without a fight, there’s a direct pathway to 21,169, and if that too breaches with velocity, the market might swiftly revisit the 21,077 region, potentially unwinding further into a broader zone that bottoms out near 20,502. That would serve as an indicator that sentiment may have shifted more broadly, not just a short-term retracement.

From the way price has behaved above and around the point of control, we can prepare to approach upcoming sessions with a clear preference for reactivity over anticipation. If the market floats above 21,315 and shows signs of strength — such as repeated defended tests near prior resistance — long positions become viable, assuming stops are tucked beneath 21,300 or close to it. However, strength without support on the lower timeframes often leads to punishing reversals.

Should 21,434 break and reclaim, it opens the door for quicker decisions. The path upward isn’t wildly open, though. Each level beyond that is not just a mechanical target — these are zones where volumes compacted in past auctions. One might expect friction at each point unless overriding momentum steps in.

Conversely, sharp rejection or lack of follow-through at the 21,434–21,497 region would indicate buyers remain cautious or sparse. That rejection can very realistically trigger scalps to the short side with the expectation that we start to chew down through the thin volume zones below the POC. Price below both the POC and the VWAP, especially with an accelerating volume profile, tells us value is being accepted lower, often a precursor to quick-range expansions southward.

As we look ahead to early-week execution, it’s not enough to simply mark levels — alerts and triggers should be laid out beforehand during pre-market preparation. Watching closely how the futures behave as they approach or bounce from these levels, along with matching those behaviours to volume imprints or absorption signs, can help build confidence in a directional stance.

Whatever the strategy, the key is maintaining adaptability rather than loyalty to a directional bias. The regression channel’s respect—or eventual negation—will carry weight. We must continue to gauge velocity of moves with volume and keep risk settings mechanical and position-specific. With the groundwork laid, it’s execution and consistency that will separate performance from noise in the week ahead.

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In May 2025, UK house prices saw a monthly increase of 0.6%, compared to a previous rise of 1.4%. Year-on-year, prices grew by 1.2% following a 1.3% increase the year before.

The average house price reached a new record high, although it marked the slowest monthly growth for May in nine years. The market experienced the largest number of homes for sale in a decade.

Demand And Supply

Demand in April decreased by 4% compared to April 2024. This drop followed the end of a tax incentive for purchases of cheaper homes and for first-time buyers on 1 April.

The current data points to a cooling off in housing market momentum. While there was still progress—prices edging up by 0.6% during May—the pace has slowed sharply when compared with the previous month’s leap of 1.4%. On an annual basis, the increase slipped to 1.2%. That figure alone may not raise eyebrows, but it does suggest that whatever steam had been building in earlier phases of growth may now be fading.

Price-wise, we’re now looking at a new high for average homes. However, it’s worth flagging that this was the weakest May for monthly growth across nearly a decade. Buyers, it seems, are becoming more reserved. Sellers, on the other hand, have rushed in. With the number of homes available at its highest in ten years, supply has clearly ballooned—even if enthusiasm has not matched it on the demand side.

That swing in supply versus demand pushed through as early as April. Figures show a 4% drop in buyer activity compared to the same month in 2024. This isn’t mere fluctuation—it directly followed the withdrawal of government incentives. The benefit had been aimed at cheaper properties and those entering the market for the first time. With this support mechanism removed at the start of April, enthusiasm dulled almost immediately.

Market Stability And Future Expectations

For us, this suggests more stable—but less speculative—conditions ahead. We’re reading the slower price gains and the subdued demand as foundational rather than fading. Stocks of available property are still high, giving those active in the market more room to manoeuvre.

Savills’ position hints that the impact of costlier borrowing has largely filtered through, with expectations for rate cuts already shaping sentiment on upcoming deals. The head of research there noted that, although rate reductions by the Bank of England have not materialised yet, anticipation alone has created some confidence.

Halifax’s chief analyst added that stronger wage growth could allow households to absorb current mortgage costs slightly more comfortably. But any larger adjustments, according to her, would depend on actual improvement in affordability ratios rather than speculation.

Meanwhile, Office for National Statistics data from earlier this spring had already pointed to price dips in rental sectors, particularly in London. That can feed forward into the sales market as pressure on landlords adjusts their portfolio decisions.

Given what we’re seeing in liquidity and forward pricing, near-term expectations should tilt calmly. Spreads are not widening aggressively. Activity in the contracts that hinge on housing price indices appears more based in scheduled data than sentiment-driven spikes.

In practical terms, this sets us up with measurable boundaries rather than open-ended volatility. The track ahead doesn’t seem packed with shocks—but there is plenty of room for adjustment as newer surveys come in. A careful watch should remain on affordability indicators, earnings data, and the next moves on rate policy.

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The S&P 500 Futures have key levels to monitor, with the major resistance at 6,000, alongside other levels including a secondary support at 5,917. The Volume Profile’s point of control (POC) is around 5,904, essential for maintaining bullish momentum.

Despite a recent pullback, the uptrend continues, as the price remains above the VWAP mid-line. A decline below 5,969 suggests profit-taking, setting up for a Monday test of the POC/VWAP.

Scenarios For Bullish And Bearish Trends

For bullish scenarios, a reclaim of 5,960 could lead to targets of 6,000. Alternatively, a bounce from 5,904 could aim towards 5,932. For bearish situations, a retreat from the 5,969–5,977 zone could target 5,904, or a break below 5,904 could reach lower levels like 5,870.

Risk management advises keeping trade risks below 1% and using volume for entry confirmation. Attention to geopolitical influences is suggested due to the impact on the market’s open. Pricing is subject to change, and trading in foreign exchange can involve below-risk considerations, including leverage effects. Caution is advised, considering the possibility of total investment loss.

What we’ve seen over the past sessions is a steady grind upwards, even as short-term corrective movements have entered the picture. The index remains comfortably positioned above the VWAP’s mid-line, which strengthens the broader bullish argument—at least for now. The most immediate takeaway is that, though price has cooled from its recent highs, we haven’t observed a structural shift in direction. Momentum, while having flattened somewhat, hasn’t reversed.

Smaller timeframes reflect a degree of hesitation between the 5,960 and 5,977 region. This zone has become an active battleground. If current levels fail to hold and we slip beneath 5,969, we expect more mechanical players to step aside temporarily, triggering downside motion. This introduces the possibility of a move toward the POC near 5,904, which remains an area of balanced activity. In straightforward terms, buyers and sellers seem to agree most at that price, making it a likely candidate for reaction should momentum fade further.

Jackson’s earlier guidance on risk suggests limiting exposure to below 1% per position, particularly during overlapping data periods or when liquidity thins out, such as the tail end of New York hours. When set against increased volatility, as seen last week during unexpected foreign policy headlines, this advice becomes more than textbook caution—it’s actionable strategy.

Approaching Potential Market Moves

As for setups moving into next week, if price retests 5,904 and generates buy interest—ideally through a spike in volume crossing a 15-minute VWAP—there’s an opportunity to aim back toward 5,932. Should 5,960 fold back under pressure early Monday, then what had looked like bullish consolidation could switch to directional shorts. Much of this depends not on sentiment, but how aggressively price interacts with the volume-weighted levels.

Patel’s suggestion that the bounce near 5,917 formed a structural support carries merit, especially as it’s aligned with the lower volume node from last Thursday’s session. We lean towards a watch-and-wait approach here—only initiating positions when clear rejection of highs or lows is confirmed by order flow. It’s tempting to pre-empt moves, but thin-volume fills have led to slippage and unconvincing breakouts.

This environment favours decision-making based on real-time data, not static assumptions. We’re approaching zones where options positioning, especially around the psychological 6,000 mark, could lead to pinning effects. We recommend tracking the changes in open interest daily across weekly expiries, which often cues short gamma-driven moves especially on Mondays and Thursdays.

Given how geopolitical events influenced last week’s market reaction, staying informed of international developments remains essential. This includes not only headline risk but also early indications from currency markets, which often sniff out risk sentiment changes before index futures respond. If slight downticks in risk assets coincide with widening spreads or accelerated yen strength, it’s worth reconsidering any aggressive long entries near resistance areas.

For any momentum-based execution, waiting for volume confirmation—volume being above the rolling session average—is not just a safety net but a filtering tool. Without it, legitimate signals become indistinct from noise. Let participant activity validate the bias before acting.

What streams through each of these triggers is not binary—but a probability-weighted idea set. Moves toward 5,870 or above 6,000 require more than directional conviction; they require liquidity confluence and trader commitment. Let’s focus on behaving like observers first, then participants. When liquidity tightens, emotional reaction needs to be the last response.

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In the first quarter, New Zealand’s Producer Price Index (PPI) Inputs increased by 2.9% from the previous quarter, which had seen a decline of 0.9%. PPI Outputs rose by 2.1%, in contrast to a prior drop of 0.1%.

The largest contributions to output increases came from electricity, gas, water and waste services, which soared by 26.2%. Manufacturing outputs increased by 2.3%, while rental, hiring and real estate services climbed by 1.4%.

Key Input Contributions

For inputs, electricity, gas, water and waste services saw a substantial rise of 49.4%. Inputs for manufacturing went up by 1.7%, and construction inputs increased by 0.6%.

The PPI measures average prices received by producers for outputs, which include goods and services sold either to other businesses or to consumers. Rising PPI Outputs could indicate inflationary pressure, as higher prices for goods and services may not be passed on to consumers.

The PPI Inputs measure average prices paid by producers for raw materials, services, and capital goods, obtained domestically or imported. When PPI Inputs increase, it suggests higher production costs, potentially leading to increased consumer prices if producers decide to pass these costs on.

This data points to a sharp turnaround in producer pricing dynamics, with prior downward movements giving way to several areas of steep price expansion. The shift seen in both input and output metrics suggests that pressures are mounting at different stages of the production process. In particular, what’s caught our attention is the energy-related spike — both on the cost side and the selling price side — which can’t be ignored. A 49.4% increase in input costs for utilities is abnormally high and is likely to affect multiple product chains, not only the direct providers. When expenses climb like this, it means more than a sector-specific issue; it reads more like a ripple that could impact broader areas.

Manufacturing costs also progressing upward, albeit at a slower pace of 1.7%, adds pressure of a different tone. Unlike energy, where costs can fluctuate more widely, manufacturing pricing tends to be slower-moving and more stable. The fact that both inputs and outputs here ticked up signals producers finding less room to absorb those increases internally. It serves as an early marker that margins could become tighter if relief doesn’t come quickly.

Implications For Construction

Meanwhile, construction inputs only showed a slight increase, around 0.6%. Though much lower than in other sectors, it still points to cost accumulation rather than relief, and the slow climb in framing structures, labour, and raw materials often leads to delayed pressure elsewhere — particularly in housing markets and related finance products. This sector tends to react on a lag, and it’s worth watching closely.

Now, when looking at outputs, what stands out beyond the utilities jump is the 2.3% lift in manufacturing output prices. Seeing outputs rise in line with or faster than inputs suggests a pass-through of costs further down the chain. Producers may be raising end prices not only in response to costs, but also in anticipation of further inflation. The supply chain may already be pricing in a less favourable cost environment in the months ahead.

Hodgson’s earlier comments, that rising output does not always mean higher retail inflation, do warrant consideration here. But even allowing for that, the magnitude and speed of increases this time suggest something more persistent is in play.

As price movements have been driven by clearly measurable input surges — not vague demand pulls — action must be aligned accordingly. We are not dealing with forward-looking sentiment pricing alone. The output rises appear grounded in hard numbers upstream, especially from utilities.

In this context, heightened short-term volatility should be expected. Price-sensitive instruments tied to producer margins are likely to sway more than usual, owing to uncertain pass-through levels. Yield spreads that depend on stable manufacturing input-output relationships may fluctuate. We should be especially attuned to how commodity-backed contracts or energy-intensive derivatives behave over the next few data periods.

From a structural pricing view, there’s an obvious tilt. As the upstream cost pressures emerge, hedging strategies around energy inputs might shift, while we anticipate re-evaluation of break-even levels in trades tied to the manufacturing and utility sectors. These movements, while sharp now, might still be absorbed — but the question focuses less on whether adjustment occurs and more on speed and depth.

Given where the trajectory sits, layering shorter tenors with longer-dated conditional instruments might restore some balance and avoid overexposure to a single cost component. The next few releases will confirm whether this was a one-off jump or part of a longer trend — until then, keep allocations nimble and interpretation anchored in price mechanics, not just surface-level trends.

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Gold Prices and Geopolitical Tensions

The New Zealand Producer Price Index for the first quarter exceeded expectations, registering a 2.1% quarterly increase. This was a substantial rise compared to the anticipated 0.1% increase.

EUR/USD dropped to three-day lows, reaching around 1.1130, as the US Dollar gained strength despite weaker data from the U-Mich index. Concurrently, GBP/USD fell to 1.3250, influenced by an uptick in US consumer inflation expectations.

Gold prices fell below the $3,200 mark, reversing gains from a prior rally. This decline resulted from a stronger US Dollar and reduced geopolitical tensions, putting gold on track for the largest weekly loss this year.

Ethereum continued its recovery over $2,500, benefiting from the Pectra upgrade’s positive market reception. This development led to an increase in EIP-7702 authorizations, reflecting healthy adoption by wallets and decentralised applications.

Former President Trump’s Middle East visit in May 2025 resulted in several trade agreements aimed at enhancing US trade relationships. These deals were focused on correcting trade imbalances and bolstering America’s technological and defence exports.

In foreign exchange trading, the use of leverage entails a high risk due to the potential for substantial losses. Traders must assess their experience and risk tolerance carefully before engaging in such trades.

Knock On Effects of Price Index Rise

The unexpectedly high 2.1% rise in New Zealand’s Producer Price Index for the first quarter has created some immediate knock-on effects across macro trading strategies. Forecasts had pointed to a flat 0.1% increase, so the actual data release came as a jolt. Costs are clearly rising more aggressively than traders had priced in. These outcomes tend to push interest rate expectations higher, prompting market participants to consider upward revisions to local bond yields. Naturally, this also leads to recalculated interest rate differentials, something we must keep close eyes on — especially when setting up medium-term cross-rate exposures.

Over in currency markets, EUR/USD slid lower, falling to a weekly trough of around 1.1130. This came even as U.S. consumer sentiment readings were disappointing. The reaction was more about underlying dollar strength fed by increased inflation expectations in the U.S., rather than microeconomic data points that are often shrugged off unless particularly extreme. Euros took the brunt of the adjustment, but it wasn’t alone. Sterling also retreated, with GBP/USD hitting lows around 1.3250. The decline reflected a combination of repositioning and the adjustment in implied rates prompted by the same higher U.S. inflation expectations. Inflation breakevens and short-end swap curves have steepened in tandem, particularly on the U.S. side, which gives dollar bulls more runway in the shorter cycles.

Gold’s drop beneath the $3,200 mark brings metals positioning back into focus. The earlier upward trend was largely driven by hedge demand amidst geopolitical flare-ups, which have since eased. That, together with recovery in the dollar and reduced appetite for safety flows, created a situation ripe for profit-taking in gold. The fact that it’s tracking for its largest weekly drop of the year suggests that some momentum strategies may have shifted back into net short territory, or at least gone flat. When both volatility compression and dollar strength occur simultaneously, metals become less appealing both as hedges and directional bets.

Meanwhile, Ethereum’s move through the $2,500 level has been underpinned by fundamental progress in network upgrades. The recent traction gained by EIP-7702 authorisations following the Pectra update points to both growing adoption and enthusiasm from developers. Unlike short-term sentiment-driven rallies, this price strength appears grounded in real uptake metrics — reflected by the increase in integrated wallets and decentralised applications. This type of development often supports a broader base for pricing models used in smart contract platforms. We continue to monitor gas fee structures and validator metrics for early warning signs of overextension.

Trump’s May 2025 Middle East visit, which resulted in several detailed trade agreements, brought a stream of positive commentary around greater U.S. technology exports and broader bilateral trade cooperation. Defence exports appear to have formed a key part of the discussions. From a geopolitical angle, such deals may bring supply chain changes that affect defence-linked manufacturers and select tech producers. These are difficult to price immediately but often show up in sector-based equity derivatives before making their way into broader valuation models.

As always, leveraged foreign exchange trading remains inherently risky, particularly in weeks like these, where data shocks and sharp repricing events cluster together. Risk should be weighed more cautiously during periods of dollar strength, especially when it’s driven not by growth but by shifts in inflation expectations. We advocate re-evaluating exposure levels, particularly on pairs facing asymmetric shocks, and recalibrating stop-loss positioning accordingly.

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The New Zealand services PMI, known as the BusinessNZ Performance of Services Index, registered 48.5 in April 2025. This marks a decline from March’s 49.1 and is below the survey’s long-term average of 53.0.

The sector is reportedly in mild decline, despite discussions about an economic recovery. New Zealand’s PSI has underperformed compared to other key trading partners.

Manufacturing Performance

In contrast, the New Zealand Manufacturing PMI for April demonstrated growth, rising to 53.9 from the previous 53.2.

While April’s Manufacturing PMI presents a rare bright patch at 53.9, services continue to falter — slumping to 48.5, which places the index distinctly below the expansionary threshold of 50. The fall from March’s 49.1 is subtle but persistent, reinforcing a broader pattern that’s been unfolding for several months now. With the long-term average sitting at 53.0, it’s evident that this isn’t just temporary or driven by one-off distortions. Rather, we are seeing a divergence — manufacturing is finding its footing, albeit modestly, while services are facing ongoing drag.

What does this suggest when we zoom out? The dissonance between the two sectors hints at underlying imbalances in economic momentum. In isolation, manufacturing holding above water might feel reassuring. But the bulk of modern economies—especially in countries like New Zealand—lean heavily on services. So, a contraction in that part of the economy, now stretching multiple months, brings clear consequences.

For traders focused on short-term volatility, the contrast becomes more than just academic. Markets often respond with sharper movements when data surprises come amid broader uncertainty. With headline services data falling deeper into contraction territory, broader interpretations around interest rate expectations, forward-looking business confidence, and employment prospects all begin to shift. That’s where the opportunity, and the risk, start to expand.

Sector Divergence

Keller, the BusinessNZ executive, had previously suggested that recent optimism in the business sector might be premature. Looking at these numbers, we see support for that view – one that underlines why positioning based on recovery narratives might come under pressure in the near term. Confidence surveys had begun reflecting some mild positivity earlier in the quarter, but that sentiment hasn’t translated into PMI growth yet.

On the flip side, Bagrie, the economist, continues to underline that services, particularly across tourism, hospitality, and retail, are grappling with shifting demand and cost structures, which are slowing their recovery. Recent input from domestic surveys suggests that operating costs remain sticky, with real wage pressures still filtering through. This limits rebound speed and creates defensiveness across service-related equities and currency pairs tied to consumption.

From our side, we’re considering whether to scale back positioning that leans heavily into cyclical strength assumptions for now. Instead, attention may be better served in watching spreads between sectors and looking for pairs trades that capture this divergence. For instance, long exposure to industrial names hedged against domestic retail-focused listings could present a cleaner way to manage exposure. In FX terms, there’s the potential for NZD movement to reflect these splits, particularly against currencies where services are either stabilising or expanding.

It’s also worth noting the timing within the monetary cycle. Central bank commentary has recently grown more cautious, even as inflation prints inch down month-on-month. That cautiousness likely stems from this underperformance in services, which ties directly into domestic demand – a key metric central bankers monitor when finalising rate pathways. This slows the case for earlier rate cuts.

Expect this data to feature in upcoming bank commentary and broader market reactions, especially as traders start to prepare positions ahead of forward guidance releases. Short-term positioning now sits delicately between optimism tied to manufacturing signals and concern around a more lethargic consumer and service economy.

For our trading desk, the focus shifts from broader market direction to dissecting the mismatches. That’s where alpha may sit in the current environment.

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In the first quarter, New Zealand’s Producer Price Index (Input) rose by 2.9% quarter over quarter. This figure surpasses the anticipated increase of 0.2%.

The data provided aims to inform about market trends but should not be seen as financial advice. It is crucial for individuals to conduct their own research before making investment choices.

There is no guarantee of error-free or timely information, and market activities involve risks, including potential full capital loss. Responsibility for investment risks lies with the investor.

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No compensation was received for this analysis by the author, other than standard remunerations. The information is not tailored advice or a recommendation from the author.

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The unexpected jump of 2.9% in New Zealand’s Producer Price Index (Input) for Q1, well above the modest 0.2% forecast, offers deeper information about upstream pressures building in the economy. The measure tracks the cost firms face when purchasing goods and services to produce their own offerings, and such a steep quarterly change points to an intensifying squeeze on producers from rising input costs.

This isn’t just a quirk in the data. It’s a change that could ripple through pricing structures. If producers are absorbing more expensive inputs, that cost may eventually find its way through to consumer prices, depending on margin pressures and competitive dynamics. The pass-through depends on each sector’s pricing power and broader demand conditions, but the scale of the rise suggests companies may struggle to keep those extra costs off their customers’ bills indefinitely.

Implications For Rate Expectations

We need to keep a close watch on how this affects rate expectations going forward. When producer costs gain this much ground, it can alter central bank thinking, particularly if there’s a concern it could sustain elevated inflation. This becomes even more relevant when considering the Reserve Bank of New Zealand’s existing concerns about price stability. That doesn’t mean policy will be tightened immediately; however, it does suggest a reduced appetite for any near-term loosening.

Market participants will now likely reassess inflation-linked assets and short-term rate futures. If producer inflation stays hot, hedging dynamics could shift as well – possibly pushing volatility higher within options pricing related to interest rate products.

We’re seeing this number as a signal of momentum continuing to build where it’s least helpful – at the cost base of the economy. For those monitoring price structures and the repricing of risk along the curve, it’s time to rework models and assumptions tethered to a more subdued inflation environment.

Traders should be cautious of treating this as a standalone data outlier. Instead, it’s best viewed in the context of broader cost and supply trends that have been showing renewed upward pressure. Stay aware of conditions in commodity input markets and supply chain metrics, as both will offer more short-term visibility into whether this is a one-off surge or an early step in a new trend.

We’ll also be focusing on forward-looking expectations embedded in swap rates and term structures as they adjust to this new producer input reality. There is a difference between temporary price bumps and sticky increases, and this is where accurately gauging future moves becomes more complicated.

None of this negates the groundwork that must be done before any trade decisions. Risk boundaries and scenario planning help navigate market turns without being caught by sharp pivots. With producer prices raising the floor of what costs might look like in the near term, the pricing of corporate margins and cost-of-capital assumptions should be given a fresh look.

So, while headlines might point to inflation in a general sense, it’s in these upstream details that the early messages surface. We’ll be watching closely.

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US stock futures declined as Moody’s downgraded the US credit rating, causing unease in markets. Equity index futures saw the ES down by 0.7% and NQ by 0.9%. In the bond sector, 30-year Treasury futures fell by 21 ticks and 10-year by 7 ticks, reflecting investor concerns.

S&P 500 futures saw a significant drop as the weekend brought no positive news. UK Prime Minister Starmer is set to announce a “reset” Brexit deal, while Australian Prime Minister Albanese is open to a trade deal with Europe. The European Central Bank has justified EUR/USD increases due to uncertainty surrounding US policies, with board member Schnabel cautious about a potential rate cut in June.

In other developments, the Romanian centrist presidential candidate leads with 54.3% after most votes counted, boosting the euro. Meanwhile, there were threats of tariffs returning to ‘reciprocal’ levels if no trade agreement is reached. Additionally, former US President Joe Biden was diagnosed with an advanced form of prostate cancer, adding to the weekend’s news complexity.

Volatility In Financial Markets

The recent action in US stock futures, particularly the retreat following Moody’s credit rating downgrade, has pulled forward a wave of volatility across financial markets. The drop in equity index futures—ES lower by 0.7% and NQ sharper at 0.9%—isn’t simply a mechanical repositioning. It reflects a clear reaction to a perceived uptick in sovereign risk, which has begun to ripple through capital flows and sentiment alike.

This same concern is mirrored in Treasuries, where we’ve seen both 10-year and 30-year futures lose ground quickly—7 and 21 ticks off, respectively. Such a move, although not dramatic, continues a narrative of rising rate expectations entangled with questions around long-term debt sustainability. For now, the market isn’t screaming panic, but it does appear to be hedging more firmly against heightened uncertainty in fiscal policy direction.

We’ve observed that long positions in the indices were pared back rather swiftly as the weekend failed to provide any anchors to risk. There’s a rhythm to this sort of reaction—risk-on sentiment tends to freeze first during periods of ambiguity. This is where the seemingly small items, like weak flows or reduced overnight liquidity, begin to have outsized influence.

The next few sessions may be more reactive than predictive. For rates traders, the commentary from ECB’s Schnabel should not be underestimated: a cautious tone pointing away from a June cut, while not market-moving in itself, was timed alongside changes in FX pricing and provides a textual cue to hold off on premature yield compression plays in European sovereigns. We’re observing that EUR/USD gains seem tethered more to relative policy uncertainty in Washington than to clear Eurozone data strength—another sign that macro themes are overriding region-specific fundamentals.

Global Trade And Political Developments

News from Downing Street suggests policy shifts concerning trade, and Sydney appears likewise interested in reworking bilateral terms with Europe. These raise two flags: firstly, the FX space is beginning to re-centre around trade headlines, which for several quarters took a back seat; secondly, widening interest among countries to revisit Brexit outcomes indicates that marginal flows into sterling and the euro could pick up steam, particularly among systematic strategies reacting to fresh language in official speech.

As for geopolitical developments, early results from Romanian elections point to leadership continuity, which has lent the euro a modest supportive nudge. Not a large driver, but in tight liquidity conditions, small events can set directional cues. The real outlier over the weekend, however, came from the US again. News regarding Biden’s health has triggered a recalibration in some risk models reliant on political consistency. While that theme isn’t going to dictate short-term pricing, we’d argue that it’s enough to shift option premiums and implied vol toward more expensive levels, particularly around election-related strikes.

For markets with derivatives exposure, particularly those linked to rate expectations and equity vol structures, positioning may need to be revisited. We’ve been watching gamma exposure flip to the negative side on recent index pulls, creating susceptibility to further directional movement independent of fresh catalysts. This can amplify downside if negative headlines persist. Equally, shifts in forward curves suggest funding costs are being re-assessed, not just repriced.

What’s helping us remain agile is the ability to respond not to theory, but to actual tape action. Flows continue to be jittery, especially in concentric areas like high-yield credit and tech-adjacent growth names. While none of these are in distress, the lever here is sentiment, and it’s becoming more price-sensitive. If price begins to break below recent key pivots again, hedges may not simply be strategic—they could become protective by necessity. Being light on delta and backloaded on convexity could help in maintaining flexibility during unsettled periods.

Keep in mind—when data is thin and headlines are heavy, implied volatility holds more power than realised results. That pattern seems, for now, to be intact.

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New Zealand’s Business NZ Performance of Services Index (PSI) reports a figure of 48.5 for April, slightly down from the previous reading of 49.1. This index measures the level of activity in the country’s service sector, with figures below 50 indicating a contraction.

Forward-looking statements carry certain risks and uncertainties, and the markets discussed are for informational purposes only. It is essential to conduct thorough research before making any financial decisions.

Accuracy And Responsibility

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This article does not aim to provide recommendations for buying or selling assets.

The latest PSI print of 48.5 confirms that service activity in New Zealand remained under pressure in April. A reading below 50 suggests that output fell on the month. This marks the second consecutive reading under that threshold, and although the change from March’s 49.1 isn’t large, the direction reinforces a persistent downtrend in the services sector. It suggests that softer domestic demand may now be filtering more visibly into non-goods-producing industries.

Economic Indicators And Implications

When breaking down what this implies for positioning in shorter-dated interest rate derivatives or currency pairs tied to the New Zealand dollar, we must weigh the timing and scope of potential rate adjustments. The Reserve Bank has maintained a cautious stance due to sticky inflation, particularly within non-tradeables, but softening service-sector momentum tends to push in the opposite direction, feeding expectations for an earlier shift in policy.

Wheeler and his team at the RBNZ have reiterated the importance of anchoring medium-term inflation expectations without choking off growth impulses entirely. While inflation remains above target, survey-based indicators are beginning to soften, and the job market has shown tentative signs of easing. One consequence is a growing gap between the RBNZ’s stated preferences and how the market is beginning to price moves across the curve.

This weakening services print adds to the mix. It gives traders further reason to treat upcoming domestic data—particularly business confidence, wage growth, and inflation surveys—with sharpened sensitivity. Realised data surprises are beginning to matter more again, as outright conviction about the next move in rates has dropped. We should not expect the RBNZ to adjust its messaging on the back of a single data point, but a third consecutive contraction in the PSI next month would not be easily ignored, particularly if mirrored by weakness in the PMI.

The short-term rates market will likely start to reprice if enough indicators downshift in sync. There is currently a wide gap between market-implied pricing and central bank forecasts for the cash rate path. If that divergence narrows via downticks in forward expectations, cross-market spreads—especially NZD rates versus AUD or USD swaps—could re-align.

Derivatives traders should be alert to flattening in the front-end of the kiwi curve if similar contraction readings persist into mid-year. This may offer opportunities in relative value strategies, especially near key policy meetings. One might also expect increasing volatility in two-to-five-year sectors of the curve if data starts to suggest that the current peak in policy rates has been reached.

We must remain nimble—macro data this year has frequently delivered sudden moves and fading follow-through, underlining the need for quick recalibrations. Even small changes in the service sector now ripple more than they would in expansionary cycles, especially when banks are still trying to thread the needle between growth and stability. The implications go well beyond headline figures.

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A speech by Federal Reserve Bank of New York President John Williams at Hofstra University is scheduled, but no policy announcements are anticipated from this venue. The timing of this event is 2120 GMT or 1720 US Eastern time.

In Asia, attention is on Chinese economic data for April. Retail sales are expected to decline compared to March, while fixed-asset investment is projected to remain constant. Industrial production is also anticipated to decrease, as indicated by the April purchasing managers’ index and trade data.

Asian Economic Calendar

The Asian economic calendar details these forecasts with previous month/quarter results and consensus median estimates. All times for events are listed in GMT. This data snapshot comes from the ForexLive economic calendar, providing insights into recent economic trends in the region.

While the upcoming remarks by Williams are not expected to reveal any change in near-term monetary policy, market participants often parse the tone and subtleties of such speeches for clues about how thinking may be shifting behind the scenes. His position at the New York Fed often gives weight to his words even when nothing explicit is stated. When central bank officials speak, particularly during quieter periods between scheduled policy decisions, it can offer hints at whether future tightening or easing might be brought forward or pushed back. If he appears more focused on inflation risks or on labour market softness, that tilt could influence sentiment around longer-dated yields.

At the same time, developments in Asia deserve closer attention this week. The Chinese data mentioned above present a somewhat unflattering picture. Consumption, as measured by retail sales, is not bouncing back strongly following earlier seasonal patterns. In fact, softness in sales suggests household demand remains restrained. Similarly, the anticipated stagnation in fixed-asset investment hints that public and private sectors may not be willing to ramp up outlays amid uncertain returns. On top of that, weaker industrial output, inferred from recent PMI surveys and trade flows, discourages the idea that external demand will lift manufacturing in any near-term period.

Economic Momentum Reflection

We interpret these data points as a reflection of an economy still wrestling with a lack of domestic momentum. For those of us trading futures and options contracts tied to regional asset classes, these shifts suggest relative weakness in economic activity. That might affect exposure strategies involving Asian equity indexes or currency volatility, particularly with the yuan under pressure from policy divergences.

Williams’ remarks may not be market-moving in isolation, but the broader context of delayed economic progress in China gives us reason to remain mindful of upcoming inflation prints from both sides of the Pacific. It is not always the primary releases that drive sentiment – forward-looking revisions and secondary trend data can provoke positioning shifts in global rates and FX markets, especially when disinflation pushes carry trades onto uncertain ground.

None of this implies immediate reversals or dramatic rebalancing, but it offers a framework for understanding which instruments may display higher sensitivity to global sentiment. Decisive positioning now carries more weight than usual, particularly as economic surprises out of China consistently fall short of early-year optimism.

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