Markets Steady Ahead of Inflation Data | Gold Slumps, Bonds Gain
Markets Steady Ahead of Inflation Data | Gold Slumps, Bonds Gain
Also 10-year T-Note, Gold, Crude Oil, and Japanese Yen Futures
- S&P 500 E-mini futures (/ES): +0.03%
- 10-year T-Note futures (/ZN): +0.06%
- Gold futures (/GC): -2.54%
- Crude Oil futures (/CL): -0.28%
- Japanese Yen futures (/6J): -0.27%
The market edged slightly higher at the start of the week, with prices on major indexes hovering near all-time highs. All eyes are on tomorrow’s inflation data due out Tuesday, which should provide the next puzzle piece to investors as the macroeconomic situation remains cloudy. Rate traders are pricing in a 90% chance for a rate cut at next month’s Federal Reserve meeting. Bitcoin futures (/BTC) and the dollar moved higher to start the week. The VIX rose about 4% to trade near 15.7 in early trading.
| Symbol: Equities | Daily Change |
| /ESU5 | +0.03% |
| /NQU5 | +0.15% |
| /RTYU5 | -0.01% |
| /YMU5 | -0.24% |
S&P 500 futures (/ESU5) were slightly higher Monday morning, rising about 0.03% in the first 30 minutes of trading. Earnings season is wrapping up and traders are refocusing on the economic backdrop. Tuesday’s inflation data and retail sales data due later this week may inject some uncertainty or confidence into the market. Barrick Mining Corp (B) fell 3% despite reporting positive quarterly results. Oklo Inc (OKLO) is slated to report second quarter earnings after the bell today.
| Strategy: (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 6375 p Short 6400 p Short 6550 c Long 6575 c | 18% | +900 | -350 |
| Short Strangle | Short 6400 p Short 6550 c | 45% | +8612.50 | x |
| Short Put Vertical | Long 6375 p Short 6400 p | 60% | +345 | -905 |
| Symbol: Bonds | Daily Change |
| /ZTU5 | -0.01% |
| /ZFU5 | +0.01% |
| /ZNU5 | +0.06% |
| /ZBU5 | +0.27% |
| /UBU5 | +0.37% |
10-year T-Note futures (/ZNU5) rose 0.06% Monday. This comes after prices fell last week from the highest level traded since April. Tomorrow's inflation report poses considerable risk to bond markets, as the print will likely be highly impactful on rate cut bets for the Fed’s September meeting. Last week’s price action came amid a series of week Treasury auctions. This week’s auction schedule doesn’t hold any notable events, leaving price action more focused on economic prints and Fed rate cut bets.
| Strategy (46DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 111 p Short 111.5 p Short 112.5 c Long 113 c | 27% | +359.38 | -140.63 |
| Short Strangle | Short 111.5 p Short 112.5 c | 52% | +1234.38 | x |
| Short Put Vertical | Long 111 p Short 111.5 p | 70% | +203.13 | -296.88 |
| Symbol: Metals | Daily Change |
| /GCZ5 | -2.54% |
| /SIU5 | -1.91% |
| /HGU5 | -0.18% |
Gold prices (/GCZ5) fell 2.5% in early trading as uncertainty around tariffs on U.S. imports increases. The White House said it would provide more clarity on last week’s news that suggested certain gold products would face tariffs. Gold reached record high levels last week on the news and pushed U.S. prices away from other markets like the London Metal Exchange. Today’s move brings prices below the 9- and 21-day exponential moving averages.
| Strategy (45DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 3330 p Short 3335 p Short 3425 c Long 3430 c | 19% | +400 | -100 |
| Short Strangle | Short 3335 p Short 3425 c | 55% | +10610 | x |
| Short Put Vertical | Long 3330 p Short 3335 p | 61% | +230 | -270 |
| Symbol: Energy | Daily Change |
| /CLU5 | -0.28% |
| /HOU5 | -0.99% |
| /NGU5 | -1.27% |
| /RBU5 | -0.99% |
Crude oil prices (/CLU5) trimmed overnight gains to trade slightly negative in early U.S. trading hours. U.S. President Donald Trump is set to meet with Russian President Vladimir Putin later this week in Alaska to negotiate a possible ceasefire in Ukraine. The U.S. is threatening Moscow with increased tariffs, specifically targeting countries that buy large amounts of Russian crude. For now, prices are trading above the late June swing lows, as concerns over demand continue to weigh on sentiment.
| Strategy (37DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 61 p Short 61.5 p Short 65 c Long 65.5 c | 22% | +360 | -130 |
| Short Strangle | Short 61.5 p Short 65 c | 53% | +3660 | x |
| Short Put Vertical | Long 61 p Short 61.5 p | 58% | +190 | -310 |
| Symbol: FX | Daily Change |
| /6AU5 | -0.41% |
| /6BU5 | -0.36% |
| /6CU5 | -0.32% |
| /6EU5 | -0.57% |
| /6JU5 | -0.27% |
Market conditions are supportive for the dollar at the start of this week, which is pressuring non-U.S. dollars ahead of tomorrow’s inflation data risk event. Japanese Yen futures (/6JU5) fell 0.26% in early trading. Traders see the Bank of Japan (BoJ) raising rates later this year, which is supporting the Yen as other major currencies suffer stepper losses versus the dollar today. Still, the market isn’t offering risk-off flows for the Yen. Data released on Friday showed that Japanese investors reduced their holdings of foreign equities in July.
| Strategy (53DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 0.64 p Short 0.645 p Short 0.66 c Long 0.665 c | 34% | +310 | -190 |
| Short Strangle | Short 0.645 p Short 0.66 c | 55% | +1070 | x |
| Short Put Vertical | Long 0.64 p Short 0.645 p | 70% | +160 | -340 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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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