S&P 500 Sideways Ahead of CPI as Yields Subside
S&P 500 Sideways Ahead of CPI as Yields Subside
Also 10-year T-note, copper, crude oil and British pound futures
- S&P 500 E-mini futures (/ES): -0.02%
- 10-year T-note futures (/ZN): +0.18%
- Copper futures (/HG): +0.81%
- Crude oil futures (/CL): +1.29%
- British pound futures (/6B): +0.25%
U.S. equity markets opened lower for the second day in a row to add to a lackluster start of the 2024 trading year. Bond yields and the dollar rose ahead of key data points on the U.S. labor market that will likely sway interest rate bets. Today will bring the Federal Open Market Committee’s (FOMC) most recent minutes across the wires.
Symbol: Equities | Daily Change |
/ESH4 | -0.02% |
/NQH4 | -0.01% |
/RTYH4 | -0.11% |
/YMH4 | -0.02% |
U.S. equity futures are mostly unchanged this morning, with S&P 500 contracts (/ESH4) down 0.02%. It appears traders are waiting for tomorrow’s inflation report before making any big moves. Rate cut bets on the Federal Reserve’s path may change on the numbers, which are already in doubt and may be too dovish.
Strategy: (47DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 4730 p Short 4740 p Short 4840 c Long 4850 c | 20% | +370 | -130 |
Long Strangle | Long 4730 p Long 4850 c | 49% | x | -4912.50 |
Short Put Vertical | Long 4730 p Short 4740 p | 64% | +162.50 | -337.50 |
Symbol: Bonds | Daily Change |
/ZTH4 | +0.07% |
/ZFH4 | +0.13% |
/ZNH4 | +0.18% |
/ZBH4 | +0.20% |
/UBH4 | +0.24% |
U.S. Treasury yields are lower this morning as bond traders assess the economic headwinds ahead of key U.S. data. The 10-year T-note futures contract (/ZNH4) is about 0.18% higher this morning, with the underlying yield trading below the 4% mark. Today’s 10-year Treasury note auction could impact the bond market.
Strategy (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 109.5 p Short 110 p Short 114.5 c Long 115 c | 58% | +171.88 | -328.13 |
Long Strangle | Long 109.5 p Long 115 c | 28% | x | -500 |
Short Put Vertical | Long 109.5 p Short 110 p | 85% | +93.75 | -406.25 |
Symbol: Metals | Daily Change |
/GCG4 | +0.16% |
/SIH4 | +0.04% |
/HGH4 | +0.81% |
Copper futures (/HGH4) are bouncing back this morning but remain lower on the week as a stronger dollar weighs on demand, especially out of China—the world’s top consumer. The economic calendar for today is rather light, which makes tomorrow’s inflation data the focal point, followed by Chinese inflation and trade data over the next 24 hours.
Strategy (47DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 3.72 p Short 3.74 p Short 3.84 c Long 3.86 c | 21% | +387.50 | -112.50 |
Long Strangle | Long 3.72 p Long 3.86 c | 46% | x | -2862.50 |
Short Put Vertical | Long 3.72 p Short 3.74 p | 61% | +212.50 | -287.50 |
Symbol: Energy | Daily Change |
/CLG4 | +1.29% |
/HOG4 | +1.50% |
/NGG4 | -6.27% |
/RBG4 | +2.26% |
Crude oil futures (/CLG4) rose over 1% this morning as supply concerns move back into the fold ahead of several data points that will inform the demand side. For now, oil prices are up on a supply disruption in Libya’s oil fields, which might impact up to a quarter of a million barrels per day of oil out of the Sharara field. Elsewhere, natural gas futures (/NGH4) have reversed sharply.
Strategy (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 71 p Short 71.5 p Short 75.5 c Long 76 c | 22% | +380 | -120 |
Long Strangle | Long 71 p Long 76 c | 45% | x | -4040 |
Short Put Vertical | Long 71 p Short 71.5 p | 59% | +200 | -300 |
Symbol: FX | Daily Change |
/6AH4 | +0.23% |
/6BH4 | +0.25% |
/6CH4 | +0.06% |
/6EH4 | +0.19% |
/6JH4 | -0.46% |
The British pound (/6BH4) is higher after traders pushed the currency lower despite ongoing expectations that the Bank of England (BOE) will start cutting rates after the Federal Reserve. The currency’s direction for the rest of the week will likely be decided tomorrow, when U.S. inflation data crosses the wires. BOE Governor Andrew Bailey will speak later today.
Strategy (58DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.25 p Short 1.255 p Short 1.295 c Long 1.3 c | 43% | +162.50 | -150 |
Long Strangle | Long 1.25 p Long 1.3 c | 36% | x | -681.25 |
Short Put Vertical | Long 1.25 p Short 1.255 p | 78% | +87.50 | -225 |
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
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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