The Market Brief
U.S. futures are trading lower Friday morning, as geopolitical tensions and renewed AI chip export restrictions continue to weigh on sentiment.
Impact Snapshot
🟥 U.S. Jobs report - 8:30am
🟥 U.S. Retail Sales - 8:30am
Prime Intelligence - NFP
After a week of sharp swings in which investors repeatedly recalibrated their outlook on the duration and impact of the US-Israeli war against Iran.
Non-Farm Payrolls are due today. The distribution of SPX outcomes is skewed to the downside, reflecting elevated uncertainty from the US/Iran conflict.
Importantly, this geopolitical stress has not materially fed through into NFP expectations, with the print likely subdued given softening retail sales forecasts. In this context, a stronger read would be the more constructive outcome, as energy-driven inflation expectations are already moving higher.
Oil has moved sharply higher and the chart below shows why this can be a problem for inflation. Historically, energy prices are a leading input to headline inflation, and this gap tends to close.
A weak print would reinforce rate cut expectations, but the more pressing risk is stagflation. Slowing growth alongside energy-driven cost-push inflation is a difficult regime for both equities and fixed income.
The Market Brief
CTAs are systematic, trend-following strategies whose positioning can have an outsized impact on market direction and volatility.
In today’s brief, we break down current CTA positioning across key equity indices, what a continued unwind could mean for markets, and where the critical signal-flip levels sit.
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