Rates and the dollar: ZN, the 10 year, and why the NQ is the most sensitive

Of the four US indices, the NQ is the one that reacts most to interest rates. Not by superstition: by construction. And the rates market has its own hours, which land right in the NQ session.

Why the NQ is the rates index

The Nasdaq's large names are growth stocks: their price rests on earnings expected far in the future. The present value of those earnings depends on the rate at which they are discounted. When the US 10 year yield rises, distant earnings are worth less, and the NQ falls more than the ES, whose banks and energy names benefit instead from higher rates. That is the duration of growth stocks, and it explains why a 10 basis point rise in the 10 year can cost the NQ 1% on a nervous day.