Overnight Recap

Previous Session Context

Context from Thursday's July 10 session, caught by the freshness guard (content from the prior session's tape, published inside the overnight window):

• S&P 500 closed +0.42% to 7,575, Nasdaq +0.29% to 26,282, Dow +0.29% to 52,637 — a seventh positive session in eight, but the Russell 2000 fell 0.49% to 2,978. The advance was concentrated: Meta surged 5% on AI training cost breakthrough, Nvidia rose 3.7% on SK Hynix halo, while small-caps and energy faded (market_snapshot.json, July 10 close).
• VIX collapsed 5.1% to 15.03 — the calm that the weekend's Iran escalation has now shattered (market_snapshot.json, July 10 close).
• SK Hynix Nasdaq debut opened 14% above $149 offering price, raising $26.5B — the marquee event of the week (Reuters, CNBC, July 10).
• Fed Monetary Policy Report warned inflation "stepped up" — the 2-year yield climbed 4.6bp to 4.21%, Kalshi priced 54% odds of a 2026 rate hike (ForexLive, July 10).
• Delta Q2 earnings: record revenue absorbed by record fuel costs — shares flat; higher airfare "here to stay," CEO said (CNBC, July 10).

Global Equity Movers

Asia (overnight session, July 13):

• Nikkei 225: +0.3% — modest gains, yen strength capping exporter upside
• KOSPI: -1.5% — SK Hynix local shares plummeted, dragging the index
• Shanghai Composite: -0.8% — tech regulation concerns and Iran risk weighing
• Hang Seng: -0.5%
• ASX 200: -0.2%
• Nifty 50: -0.4% — rupee weakness on higher oil prices

Europe (early session, 06:10 ET):

• FTSE 100: -0.4% — energy names bid but broader risk-off
• DAX: -0.6% — German manufacturing and Iran supply fears
• CAC 40: -0.5%
• Euro STOXX 50: -0.6%
• TTF Natural Gas: +3.0% — Hormuz LNG transit concerns

U.S. pre-market single-stock movers:

• Energy complex higher: XLE +0.5% — oil surge lifting the sector after Thursday's decline
• SK Hynix (ADR): indicated lower after Seoul shares tumbled post-IPO
• TSMC (TSM): indicated modestly higher after record June revenue
• Delta Air Lines (DAL): -0.8% — fuel cost anxiety from crude spike
• Defense sector (ITA): +1.2% — Iran escalation driving rotation into defense names

Rates, FX, and Commodities

Treasuries are steady-to-slightly-firmer overnight with no clear directional conviction: TU1 (2Y) is essentially flat at 102.93 (-0.01%), TY1 (10Y) at 109.02 (-0.01%), and US1 (Long Bond) at 111.09 (-0.06%). The curve is holding its steepening bias from Thursday — the 2s10s spread around 36 bp — as the front end digests Williams' hawkish tripwire language. The 10-year yield sits near 4.55%, down about 2 bp from Thursday's close. Bunds and gilts are bid on the flight-to-safety flow: DE 10Y at ~3.02% (-3 bp), UK 10Y at ~4.86% (-3 bp). JGBs are modestly firmer on the GPIF domestic pivot narrative.

The dollar is broadly stronger on safe-haven flows: DXY ~101.05 (+0.2%). USD/JPY is rangebound above 160.50, capped by yen repatriation expectations and supported by the risk-off bid for dollars. EUR/USD is slightly lower at 1.140. The Indian rupee is under pressure from the oil spike — India imports ~85% of its crude. Sterling is holding near 1.34. Goldman Sachs research notes the FX carry trade looks poised to continue shining in H2, with major currency vol subdued outside of yen (ForexLive, 05:54 ET).

Commodities are dominated by the Iran escalation: WTI $73.14 (+2.4% from prior settle, overnight high $75.08), Brent ~$77.50 (+2.0%). Natural gas is mixed — Henry Hub down 1.3% to $2.90 on mild weather, but European TTF up 3% on LNG transit risk. Gold is down 0.9% to $4,077 — failing to attract haven flows as the dollar and rate channel dominate, extending the metal's worst quarter since 2013. Quiet elsewhere in metals and agriculture.

Today's Setup and Risk Map

Economic calendar (all times ET):

• Monday, July 13: Quiet day — no major economic data. Fed's Bowman speaks at Bank Policy Institute Roundtable on Modernizing Financial Regulation.
• Week ahead highlights:
• Tuesday, July 14: Bank earnings begin — JPMorgan Chase, Wells Fargo, Citigroup pre-market. PPI June (08:30, consensus: +0.2% m/m).
• Wednesday, July 15: Bank of America, Goldman Sachs, Morgan Stanley earnings. Empire State Manufacturing (08:30). Fed Beige Book (14:00).
• Thursday, July 16: CPI June (08:30, consensus: +0.2% m/m, core +0.2% m/m) — the week's marquee data point. Jobless claims (08:30). TSMC, Netflix, UnitedHealth earnings.
• Friday, July 17: Housing starts (08:30). Options expiration.

Key futures levels (from market_snapshot.json, 05:58 ET):

• ES1 (S&P 500): 7,601 — overnight range 7,566–7,615; prior settle 7,620
• NQ1 (Nasdaq 100): 29,767 — overnight range 29,543–30,041; prior settle 30,032
• CL1 (WTI Crude): $73.14 — overnight range $72.61–$75.08; prior settle $71.41

Bull case: Diplomacy gains traction — Qatar/Oman mediation produces a Hormuz de-escalation, oil fades back below $72, and equities recover the overnight gap. Bank earnings previews on Tuesday provide a rotation catalyst. ES1 reclaims 7,620 prior settle.

Base case: Consolidation with a geopolitical risk premium. Oil holds $72–74, equities trim 20–50 bp but hold overnight lows. The Iran story dominates headlines but doesn't escalate further. Quiet Monday as markets wait for bank earnings Tuesday and CPI Thursday. ES1 range: 7,560–7,610.

Bear case: Escalation deepens — confirmed Hormuz shipping incident, another round of strikes, or crude breaking above $75 and holding. A second risk-off wave triggers: ES1 breaks 7,560 overnight low toward 7,500, VIX surges above 18, and the AI/reflation trade unwinds. Bank earnings optimism evaporates.

Biggest risk to base case: The Strait of Hormuz situation. At ~21 million barrels per day of oil transit, any confirmed prolonged closure turns a risk premium into a supply shock. The oil options market is underpricing this tail — the weekend's events caught the tape flat-footed after Thursday's VIX closed at 15.03.