Traders: Your New Essential Way to Start the Day
Traders: Your New Essential Way to Start the Day
Each weekday morning: Five futures in focus
- E-mini S&P 500 index futures (/ES): +0.23%
- 10-year U.S. Treasury notes (/ZN): -0.09%
- Gold futures (/GC): +0.03%
- Crude Oil (/CL): +1.26%
- Japanese yen futures (/6J): +0.31%
Mounting concerns over global growth, this time around concerns over the Chinese property market, continue to plague markets, with major Asian equity indexes falling to their lowest levels since March.
Data releases from the Eurozone and the U.K. point to an increased likelihood of elevated inflation amid slowing growth, stirring stagflation concerns. A weak Japanese government bond auction overnight has started to boost speculation that the Bank of Japan might be forced away from its yield curve control (YCC) policy, which in turn has helped pressure global bond yields to multi-year highs.
Symbol: Equities | Daily Change |
/ESU3 | +0.23% |
/NQU3 | +0.15% |
/RTYU3 | +0.22% |
/YMU3 | +0.26% |
The bulk of earnings season is behind U.S. equity traders, with the focus increasingly shifting to a deteriorating macroeconomic outlook. But the technical damage has been done. Both /ESU3 and /NQU3 have breached their uptrends from the March and May swing lows. Directionally, the path of least resistance appears to be lower in equity index futures in the near-term.
Strategy (0DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron condor | Long 4420p Short 4425p Short 4435c Long 4440c | 23% | +195 | -55 |
Long strangle | Long 4425p Long 4435c | 47% | x | -837.50 |
Short put vertical | Long 4420p Short 4425p | 60% | +87.50 | -162.50 |
Symbol: Bonds | Daily Change |
/ZTU3 | +0.08% |
/ZFU3 | -0.01% |
/ZNU3 | -0.17% |
/ZBU3 | -0.50% |
/UBU3 | -0.75% |
Global bond yields continue to push higher, with curve steepening apparent for U.S. Treasuries, German bunds, and U.K. gilts. The higher for longer mentality is setting in further in recent days, as it appears that major central banks will be dealing with elevated inflation through the end of 2023. The selloff in /ZNU3 has pushed the 10-year yield to its highest closing level since 2008.
Strategy (1DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron condor | Long 109p Short 109.25p Short 109.75c Long 110c | 50% | 125 | -125 |
Long strangle | Long 109.25p Long 109.75c | 40% | X | -218.75 |
Short put vertical | Long 109p Short 109.25p | 73% | +62.50 | -187.50 |
Symbol: Metals | Daily Change |
/GCU3 | -0.09% |
/SIU3 | +1.09% |
/HGU3 | +0.92% |
Gold futures continued lower after their weak close on Wednesday, after hawkish Fed comments sparked a bond selloff that sent Treasury yields higher, denting the appeal of gold—a non-interest-bearing asset. Gold volatility rose +4% per the Cboe’s Gold Volatility Index. /GC is testing the 1,900 psychological level, which bears attempted to break during the Wednesday trading session.
Strategy (1DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron condor | Long 1890p Short 1895p Short 1905c Long 1905c | 35% | +330 | -160 |
Long strangle | Long 1895p Long 1905c | 44% | x | -890 |
Short put vertical | Long 1890p Short 1895p | 84% | +70 | -430 |
Symbol: Energy | Daily Change |
/CLU3 | +1.42% |
/NGU3 | +2.66% |
Crude oil futures are rebounding following Wednesday’s data release show a six-million-barrel draw in U.S. crude inventories, per government data. Traders have been selling oil as worries mount over China, where a trust company exposed to real estate missed payments on its investments this week, deepening the property sector slump. /CL’s technical posture is muddied by the recent selloff; RSI crossed below its 50 mid-point level, while a golden cross between the 50- and 200-day simple Moving Averages nears.
Strategy (0DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 79.5p Short 80p Short 81c Long 81.5c | 52% | +180 | -320 |
Long Strangle | Long 80p Long 81c | 41% | x | -290 |
Short Put Vertical | Long 79.5p Short 80p | 69% | +110 | -390 |
Symbol: FX | Daily Change |
/6AU3 | +0.01% |
/6BU3 | +0.28% |
/6CU3 | +0.18% |
/6EU3 | +0.13% |
/6JU3 | +0.17% |
A weak Japanese 20-year government bond auction renewed speculation that the Bank of Japan may not be able to maintain YCC, even if it still wants to do so. After rising U.S. Treasury yields helped prop up the U.S. dollar in recent session, a push higher globally has helped diminish the greenback’s relative advantage, at least in the short term.
Strategy (22DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron condor | Long 0.00685p Short 0.006875p Short 0.006295c Long 0.00695c | 22% | +262.50 | -50 |
Long strangle | Long 0.006875p Long 0.006925c | 44% | x | -1300 |
Short put vertical | Long 0.006825p Short 0.00685p | 66% | +125 | -187.50 |
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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