Markets Mixed Ahead of Fed Decision | Nasdaq Gains, Gold Drops, Oil Jumps
Markets Mixed Ahead of Fed Decision | Nasdaq Gains, Gold Drops, Oil Jumps
Also, 10-year T-note, gold, crude oil and Japanese yen futures
- Nasdaq 100 E-mini futures (/NQ): +0.25%
- 10-year T-note futures (/ZN): -0.27%
- Gold futures (/GC): -1.1%
- Crude oil futures (/CL): +1.52%
- Japanese yen futures (/6J): -0.44%
It’s Fed day, although no rate cuts are expected. Ahead of the announcement, the 2Q ’25 US gross domestic product (GDP) report came in better than expected at +3% annualized, although the internals of the report were hollow: “core GDP,” effectively GDP less government spending and net-exports, slowed to 1%; it was 2.9% in 4Q ’24 and 1.9% in 1Q ’25. Signs of tariff inflation are prevalent as well, leading the markets into downgrading expectations for a September rate cut.
| Symbol: Equities | Daily Change |
| /ESU5 | 0% |
| /NQU5 | +0.25% |
| /RTYU5 | +0.42% |
| /YMU5 | -0.15% |
US equity markets are little-changed, with a small tilt to the upside as traders await Federal Reserve Chair Jerome Powell. But the Federal Open Market Committee (FOMC) isn’t the only item of interest for the remainder of the day: The Nasdaq 100 (/NQU5) will be contending with earnings from Meta (META) and Microsoft (MSFT). Absent a shocking development, July 2025 will have been the 11th consecutive July that produced a positive return for the index.
| Strategy: (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 21750 p Short 22000 p Short 25250 c Long 25500 c | 66% | +885 | -4115 |
| Short Strangle | Short 22000 p Short 25250 c | 71% | +4795 | x |
| Short Put Vertical | Long 21750 p Short 22000 p | 83% | +575 | -4425 |
| Symbol: Bonds | Daily Change |
| /ZTU5 | -0.05% |
| /ZFU5 | -0.16% |
| /ZNU5 | -0.27% |
| /ZBU5 | -0.52% |
| /UBU5 | -0.58% |
Fed cut odds for July are immaterial, even if it’s anticipated that two FOMC voters will dissent and call for a 25-basis-point (bps) rate cut (the first dissents since September 2020). The mix of data this morning coupled with relief over Tsunami warnings for Japan and the Western United States may be contributing to some “selling” in safe havens (like the Japanese yen). Heading into today’s FOMC meeting, rates markets are discounting a 77% chance of two 25-bps rate cuts for the remainder of the year.
| Strategy (58DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 108 p Short 109 p Short 113 c Long 114 c | 57% | +265.63 | -734.38 |
| Short Strangle | Short 109 p Short 113 c | 64% | +625 | x |
| Short Put Vertical | Long 108 p Short 109 p | 86% | +125 | -875 |
| Symbol: Metals | Daily Change |
| /GCZ5 | -1.1% |
| /SIU5 | -1.69% |
| /HGU5 | -1.16% |
A stronger US dollar and a continued easing of tariff tension (regardless of today’s news related to India) is denting the desire to hold precious metals in the short-term. Technical breakdowns in gold (/GCZ5) and silver (/SIU5) are beginning to accelerate, with the former seeing a path toward 3200 while the latter may open the floor to 36. Volatility has been contracting and is effectively non-existent, which has been a hallmark of difficult trading conditions for precious metals (i.e. people panic buy metals, so low volatility indicates panic is low).
| Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 3100 p Short 3125 p Short 3525 c Long 3550 c | 67% | +650 | -1850 |
| Short Strangle | Short 3125 p Short 3525 c | 73% | +3430 | x |
| Short Put Vertical | Long 3100 p Short 3125 p | 85% | +320 | -2180 |
| Symbol: Energy | Daily Change |
| /CLQ5 | +1.52% |
| /HOQ5 | -1.68% |
| /NGQ5 | -3.63% |
| /RBQ5 | +1.04% |
President Donald Trump threats against Russia continue to pump volatility into the energy sector, with crude oil prices (/CLU5) taking on another buck and scaling 70 for the first time since the Israel-Iran 12-Day War ended in mid-June. Despite the gains in price, volatility isn’t budging all that much: The IVR has yet to scale 30.
| Strategy (49DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 59 p Short 61 p Short 79 c Long 81 c | 64% | +440 | -1560 |
| Short Strangle | Short 61 p Short 79 c | 71% | +1770 | x |
| Short Put Vertical | Long 59 p Short 61 p | 83% | +250 | -1750 |
| Symbol: FX | Daily Change |
| /6AU5 | -0.98% |
| /6BU5 | -0.58% |
| /6CU5 | -0.34% |
| /6EU5 | -0.66% |
| /6JU5 | -0.44% |
The good fortunate of avoiding a large scale damage stemming from the Pacific earthquake overnight (8.8 on the Richter scale) has led some traders to dump the Japanese yen (/6JU5) today (see: March 2011 reaction to the Fukushima earthquake). Today, higher US Treasury yields are proving supportive of the US dollar ($DXY), which is working on its third consecutive close above its 50-day moving average for the first time since February.
| Strategy (65DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 0.0065 p Short 0.0066 p Short 0.0071 c Long 0.0072 c | 64% | +350 | -900 |
| Short Strangle | Short 0.0066 p Short 0.0071 c | 70% | +800 | x |
| Short Put Vertical | Long 0.0065 p Short 0.0066 p | 76% | +200 | -1050 |
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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