The Market Brief
Hey team, U.S. futures traded relatively mixed throughout the overnight session as recent headlines over trade tariff threats stoked concerns about a widening trade war.
Let’s recap the prior session and see what’s ahead for the market!
Impact Snapshot
🟥 FOMC Meeting Minutes - 2:00pm
Macro Viewpoint
U.S. stock index futures edged lower on Wednesday as investors reacted to President Donald Trump's latest comments on trade restrictions.
This week, market volatility has been driven primarily by headlines from Washington and concerns over tariffs. However, as has been the trend, any pullbacks have remained brief and relatively shallow.
Investors are also awaiting the release of the minutes from the Federal Reserve's January policy meeting, scheduled for 2 p.m. ET. During that meeting, policymakers opted to keep interest rates unchanged, with Fed Chair Jerome Powell indicating that further cuts would not be considered unless inflation and employment data justified such a move.
Currently, traders are pricing in at least one 25-basis-point rate cut by the end of the year, with a 44% probability of an additional reduction.
Prior Session Deep Dive
Many traders feel the need that just because the market is open, they must simply have a position open as well and ride the current “trend” of the price, often not realizing the amount of risk they are exposing themselves to.
Who is likely in control of low-volume sessions? Does the market show high confidence in this directional move or not? These are some questions to ask before opening a position and those very questions played a role on yesterday’s session.
Every morning, when we evaluate the overnight, we include in our report card for the Paid Substack an overnight inventory evaluation—this time, it was extreme long.
At the end of this month, we will publish a chart of the number of times we marked the overnight as extreme long or short and the probability of correction that followed right after.
Entering a trade doesn’t take time. Preparing and waiting for it should.
