Rising Yields Burden the Nasdaq 100’s Push to New Highs
Rising Yields Burden the Nasdaq 100’s Push to New Highs
Also five-year T-note, silver, crude oil and Australian dollar futures
Nasdaq 100 E-mini futures (/NQ): +0.44%
5-year T-note futures (/ZF): -0.01%
Silver futures (/SI): +0.16%
Crude oil futures (/CL): +0.13%
Australian dollar futures (/6A): +0.14%
Stronger than expected February U.S. durable goods orders are weighing on the odds of a June interest rate cut, leading to a reversal of overnight price action on this morning. U.S. equity markets were fading gains following the data release, while bonds swung from gains to losses on the day amid signs that consumption trends remain strong. Elsewhere, precious metals continued to show signs of resiliency, with gold prices at what would be a new all-time closing high. Energy markets are mixed, while the U.S. dollar is broadly weaker.
Symbol: Equities | Daily Change |
/ESM4 | +0.33% |
/NQM4 | +0.44% |
/RTYM4 | +0.67% |
/YMM4 | +0.19% |
All four U.S. equity indexes are in positive territory this morning, but gains are being trimmed in the wake of the daily data dump. The Russell 2000 (/RTYM4) is the top performer, making what may be considered its fifth attempt since December 2023 at scaling 2100. The Nasdaq 100 (/NQM4) has erased the past two days of losses, setting it up for a potential breakout to fresh all-time highs. Technically, U.S. equity markets remain bullish.
Strategy: (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 17300 p Short 17500 p Short 19600 c Long 19800 c | 61% | +1185 | -2815 |
Short Strangle | Short 17500 p Short 19600 c | 68% | +5070 | x |
Short Put Vertical | Long 17300 p Short 17500 p | 83% | +570 | -3430 |
Symbol: Bonds | Daily Change |
/ZTM4 | -0.03% |
/ZFM4 | -0.01% |
/ZNM4 | +0.01% |
/ZBM4 | +0.10% |
/UBM4 | +0.25% |
Bonds are pulling back across the board as the stronger durable goods orders point to a U.S. economy that retains meaningfully positive economic momentum. Federal Reserve rate cut odds for June dropped this morning from 68% to 63%, with knock-on weakness emanating from the short-end of the curve. With bonds quickly losing overnight gains and sliding into the red, attention will turn to the U.S. five-year note auction (/ZFM4) later today.
Strategy (59DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 105 p Short 105.5 p Short 108.5 c Long 109 c | 55% | +164.06 | -335.94 |
Short Strangle | Short 105.5 p Short 108.5 c | 63% | +460.94 | x |
Short Put Vertical | Long 105 p Short 105.5 p | 89% | +93.75 | -406.25 |
Symbol: Metals | Daily Change |
/GCM4 | +0.78% |
/SIK4 | +0.16% |
/HGK4 | +0.05% |
Higher yields aren’t bothering precious metals, and the round of U.S. dollar weakness today is helping to propel the metals complex back toward its yearly highs. Gold prices (/GCM4) are at a level consistent with what would be a fresh all-time closing high. Meanwhile, silver prices (/SIK4) appear to be forming a base of support around 24.75; the bullish falling wedge in play since the start of March has yet to be completed, leaving a bullish technical impulse intact.
Strategy (30DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 23.5 p Short 23.75 p Short 26 c Long 26.25 c | 51% | +480 | -770 |
Short Strangle | Short 23.75 p Short 26 c | 63% | +2265 | x |
Short Put Vertical | Long 23.5 p Short 23.75 p | 76% | +255 | -995 |
Symbol: Energy | Daily Change |
/CLK4 | +0.13% |
/HOK4 | -0.46% |
/NGK4 | -0.17% |
/RBK4 | -0.22% |
Near-term supply constraints may be the driving force behind the recent push higher by crude oil prices (/CLK4). Shipping volume through the Suez Canal has dropped by 69% from its peak in November 2023. Ukrainian attacks on Russian refineries coupled with calls for output cuts by Moscow are creating additional strain.
Strategy (51DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 74 p Short 75 p Short 88 c Long 89 c | 58% | +320 | -680 |
Short Strangle | Short 75 p Short 88 c | 68% | +1840 | x |
Short Put Vertical | Long 74 p Short 75 p | 78% | +170 | -830 |
Symbol: FX | Daily Change |
/6AM4 | +0.14% |
/6BM4 | +0.08% |
/6CM4 | +0.16% |
/6EM4 | +0.17% |
/6JM4 | +0.01% |
The ongoing rise in commodity prices is proving to be a supportive tailwind for currencies like the Australian dollar (/6AM4) and Canadian dollar (/6CM4). For the former, green shoots of economic activity in China may also be helping to drive flows into the currency, not to mention the Aussie’s role as a ‘risk-on’ proxy in FX, which tends to benefit when global equity markets rally.
Strategy (38DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.635 p Short 0.64 p Short 0.67 c Long 0.675 c | 64% | +150 | -350 |
Short Strangle | Short 0.64 p Short 0.67 c | 69% | +350 | x |
Short Put Vertical | Long 0.635 p Short 0.64 p | 88% | +70 | -430 |
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
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