Russell 2000 Rebounds Despite Weakness in Bonds
Also, 30-year T-bond, copper, natural gas and Japanese yen futures
- Russell 2000 E-mini futures (/RTY): +0.69%
- 30-year T-bond futures (/ZB): -0.35%
- Copper futures (/HG): +0.25%
- Natural gas futures (/NG): -0.71%
- British pound futures (/6B): -0.07%
A relatively quiet week from the earnings and macro calendar perspective continues to roll on. Federal Reserve Chair Jerome Powell will be taking the podium once more again today at 2 p.m. Eastern Standard Time (1 p.m. Central Standard Time). In remarks he made yesterday, he mentioned nothing about monetary policy and thus deprived markets of a meaningful catalyst. Weekly U.S. jobless claims figures this morning showed continued strength in the labor market. Elsewhere, U.S. equity index futures continue their robust streak, and the Russell 2000 (/RTYZ3) is finally joining the party.
Symbol: Equities | Daily Change |
/ESZ3 | +0.28% |
/NQZ3 | +0.13% |
/RTYZ3 | +0.69% |
/YMZ3 | +0.29% |
The streak continues: The S&P 500 (/ESZ3) is working on its ninth consecutive day of gains, while the Nasdaq 100 (/NQZ3) is working on 10 in a row. Conspicuously missing from the continued rally in recent days has been the Russell 2000 (/RTYZ3), which had decoupled from gains at the long-end of the bond curve. That said, today is off to a better start, as /RTYZ3 is the leader to the upside thus far.
Strategy: (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1650 p Short 1675 p Short 1825 c Short 1850 c | 45% | +530 | -720 |
Long Strangle | Long 1650 p Short 1850 c | 36% | x | -1520 |
Short Put Vertical | Long 1650 p Short 1675 p | 74% | +255 | -995 |
Symbol: Bonds | Daily Change |
/ZTZ3 | -0.03% |
/ZFZ3 | -0.08% |
/ZNZ3 | -0.14% |
/ZBZ3 | -0.35% |
/UBZ3 | -0.52% |
No comments yesterday on rate hikes or cuts from Fed Chair Powell and yesterday’s tepid 10-year note auction did little to stand in the way of further gains for bond markets. But signs that the U.S. labor market remains firm, following the latest round of weekly jobless claims, have U.S. Treasuries trading lower across the curve this morning. All eyes remain on the long-end (30s (/ZBZ3) and ultras (/UBZ3).
Strategy (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 110 p Short 111 p Short 117 c Long 118 c | 43% | +531.25 | -486.75 |
Long Strangle | Long 110 p Long 118 c | 35% | x | -1734.38 |
Short Put Vertical | Long 110 p Short 111 p | 75% | +250 | -750 |
Symbol: Metals | Daily Change |
/GCZ3 | -0.17% |
/SIZ3 | -0.17% |
/HGZ3 | +0.25% |
Copper (/HGZ3) inched higher as the metal looks to recover from several days of selling pressure from permeating fears of economic weakness after Chinese data earlier this week pointed to slowing activity from Asia’s industrial engine. Copper inventories have increased recently in the London Metal Exchange (LME).
Strategy (47DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 3.64 p Short 3.65 p Short 3.73 c Long 3.74 c | 15% | +212.50 | -37.50 |
Long Strangle | Long 3.64 p Long 3.74 c | 48% | x | -3187.50 |
Short Put Vertical | Long 3.64 p Short 3.65 p | 59% | +112.50 | -137.50 |
Symbol: Energy | Daily Change |
/CLZ3 | +1.58% |
/HOZ3 | -1.06% |
/NGZ3 | -0.71% |
/RBZ3 | +1.47% |
Natural gas (/NGZ3) continues to decline as traders see mild November weather across the United States and Europe, which is buffering stockpiles ahead of the withdrawal-heavy winter months. With Europe’s gas storage nearly full, the risk of an energy crisis looks small. The Energy Information Administration (EIA) will not report stockpiles today amid system upgrades. Technical traders may look for some support around the 3 level as November’s decline nears 10%.
Strategy (47DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2.8 p Short 2.9 p Short 3.3 c Long 3.4 c | 26% | +720 | -280 |
Long Strangle | Long 2.8 p Long 3.4 c | 39% | x | -4060 |
Short Put Vertical | Long 2.8 p Short 2.9 p | 69% | +300 | -700 |
Symbol: FX | Daily Change |
/6AZ3 | +0.22% |
/6BZ3 | -0.07% |
/6CZ3 | +0.18% |
/6EZ3 | +0.06% |
/6JZ3 | +0.05% |
Outside of isolated bouts of event risk, FX markets have been relatively quiet recently, and that’s continued thus far this week through this morning. But technical breakouts in favor of U.S. dollar weakness remain in place, with the British pound (/6BZ3) having perhaps the most appealing setup among the majors at the present time.
Strategy (29DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.215 p Short 1.2175 p Short 1.2375 c Long 1.24 c | 35% | +100 | -56.25 |
Long Strangle | Long 1.215 p Long 1.24 c | 39% | x | -618.75 |
Short Put Vertical | Long 1.215 p Short 1.2175 p | 73% | +56.25 | -100 |
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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