S&P 500 Losses Mount Ahead of FOMC
S&P 500 Losses Mount Ahead of FOMC
Also, 30-year T-note, copper, crude oil and Australian dollar futures
- S&P 500 e-cote futures (/ZB): -0.35%
- Copper futures (/HG): -0.58%
- Crude oil futures (/CL): +2.84%
- Australian dollar futures (/6A): -0.35%
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 could interest rate bets. Today will bring the Federal Open Market Committee’s (FOMC) most recent minutes across the wires.
Symbol: Equities | Daily Change |
/ESH4 | -0.51% |
/NQH4 | -0.53% |
/RTYH4 | -1.58% |
/YMH4 | -0.44% |
The S&P 500 (/ESH4) opened about 0.5% lower following weak performances overnight in European and Asian equity markets. Traders are reassessing Federal Reserve interest rate bets and today’s FOMC minutes due this afternoon may nudge those bets ahead of Friday’s non-farm payrolls report, which may prove even more influential to markets. However, with the market already expecting a more dovish outcome than the Fed’s forecast, there isn’t much room for improvement, and that may see bearish sentiment continue.
Strategy: (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 4,710 p Short 4,720 p Short 4,810 c Long 4,820 c | 18% | +387.50 | -112.50 |
Long Strangle | Long 4,710 p Long 4,820 c | 47% | x | -5,500 |
Short Put Vertical | Long 4,710 p Short 4,720 p | 62%% | +162.50 | -337.50 |
Symbol: Bonds | Daily Change |
/ZTH4 | -0.07% |
/ZFH4 | -0.19% |
/ZNH4 | -0.29% |
/ZBH4 | -0.35% |
/UBH4 | -0.80% |
Treasury yields rise
Treasuries are falling and yields are rising for a second day, pressuring other asset classes. Today will see the first Treasury auction of the year, with 17-week bills leading the schedule. However, the long end of the curve is under the most pressure, with 30-year Treasury futures (/ZBH4) down about 0.5% this morning, putting its yield at 4.123%. The FOMC minutes may move the needle but it's likely to have a greater effect on the policy-sensitive short end of the curve.
Strategy (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 120 p Short 121 p Short 125 c Long 126 c | 30% | +671.88 | -328.13 |
Long Strangle | Long 120 p Long 126 c | 41% | x | -2,687 |
Short Put Vertical | Long 120 p Short 121 p | 69% | +328.13 | -671.88 |
Symbol: Metals | Daily Change |
/GCG4 | -1.31% |
/SIH4 | -2.98% |
/HGH4 | -0.58% |
Copper futures fall
Copper futures (/HGH4) are down nearly 1% in the metal’s fourth consecutive down day. That has nearly wiped out December’s gains. Mounting economic concerns out of metal-hungry China are weighing on the industrial metal, which experts often see as a barometer of global economic health. U.S. and Chinese purchasing managers’ indexes are due today and tonight and may change the metal’s direction if the data impresses.
Strategy (54DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 3.78 p Short 3.79 p Short 3.92 c Long 3.93 c | 19% | +200 | -50 |
Long Strangle | Long 3.78 p Long 3.93 c | 47% | x | -3,750 |
Short Put Vertical | Long 3.78 p Short 3.79 p | 60% | +112.50 | -137.50 |
Symbol: Energy | Daily Change |
/CLG4 | +2.84% |
/HOG4 | +2.19% |
/NGG4 | +4.83% |
/RBG4 | +1.61% |
Crude oil rises
Crude oil future (/CLG4) rose more than 2% Wednesday morning as supply concerns moved 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 El Sharara field. Elsewhere, energy prices are climbing, with natural gas futures (/NGH4) up about 5%.
Strategy (48DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 70 p Short 70.5 p Short 75 c Long 75.5 c | 23% | +390 | -110 |
Long Strangle | Long 70 p Long 75.5 c | 41% | x | -4,640 |
Short Put Vertical | Long 70 p Short 70.5 p | 59% | +190 | -290 |
Symbol: FX | Daily Change |
/6AH4 | -0.35% |
/6BH4 | +0.26% |
/6CH4 | -0.11% |
/6EH4 | -0.10% |
/6JH4 | -0.67% |
Australian dollar falls
The risk-sensitive Australian dollar (/6AH4) fell overnight with the losses continuing into the Wall Street trading session.
Economic concerns for Chinese growth are diminishing the currency’s appeal and with several more data points expected this week, those concerns may deepen if data points to further slowdowns.
Strategy (65DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.66 p Short 0.665 p Short 0.685 c Long 0.69 c | 31% | +320 | -180 |
Long Strangle | Long 0.66 p Long 0.69 c | 44% | x | -1,080 |
Short Put Vertical | Long 0.66 p Short 0.665 p | 71% | +160 | -340 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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