Russell 2000 Continues Leadership as October CPI Fails to Scare Markets
Russell 2000 Continues Leadership as October CPI Fails to Scare Markets
Also, 30-year T-bond, silver, natural gas and euro futures
- Russell 2000 E-mini futures (/RTY): +0.71%
- 30-year T-bond futures (/ZB): +0.81%
- Silver futures (/SI): +1.12%
- Natural gas futures (/NG): -1.31%
- Euro futures (/6E): +0.14%
The October U.S. inflation report came in right on the screws, providing little reason for traders to rock the boat this morning. U.S. equities are chopping around after a step backward yesterday, although the Russell 2000 has reasserted itself as the leader. Bonds are trading higher across the curve following the consumer price index release, and the dip in yields is allowing other major currencies to claw back some ground vs. the U.S. dollar. All eyes remain on cryptocurrency markets, however, as spot Bitcoin is nearing $92,000.
Symbol: Equities | Daily Change |
/ESZ4 | +0.06% |
/NQZ4 | -0.03% |
/RTYZ4 | +0.71% |
/YMZ4 | +0.09% |
Russell 2000 futures (/RTYZ4) accelerated after inflation data matched expectations for October. That left the market expecting another rate cut from the Federal Reserve, and calmed concerns that the Fed could slow its pace of rate cuts. The Russell got a boost from bank stocks, which performed well considering the data. Starbucks Corp (SBUX) fell after an analyst downgrade. Spotify Technology (SPOT) rose nearly 10% after the company reported impressive subscriber growth. Rocket Lab USA (RKLB) rose over 40% after reporting rosy revenue growth.
Strategy: (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2200 p Short 2250 p Short 2600 c Long 2650 c | 67% | +590 | -1910 |
Short Strangle | Short 2250 p Short 2600 c | 72% | +1680 | x |
Short Put Vertical | Long 2200 p Short 2250 p | 87% | +220 | -2280 |
Symbol: Bonds | Daily Change |
/ZTZ4 | +0.15% |
/ZFZ4 | +0.31% |
/ZNZ4 | +0.43% |
/ZBZ4 | +0.81% |
/UBZ4 | +0.96% |
The long end of the yield curve fell this morning after the inflation data crossed the wires. That comes amid a market that is expecting inflation to run hotter in the future because of Trump’s policies on immigration and trade. The number of rate cuts through next year remains lower than expected a few weeks ago. 30-year T-bond futures (/ZBZ4) rose about 0.3% this morning.
Strategy (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 111 p Short 113 p Short 121 c Long 123 c | 64% | +593.75 | -1406.25 |
Short Strangle | Short 113 p Short 121 c | 69% | +1140.63 | x |
Short Put Vertical | Long 111 p Short 113 p | 83% | +31.50 | -1687.50 |
Symbol: Metals | Daily Change |
/GCZ4 | +0.54% |
/SIZ4 | +1.12% |
/HGZ4 | -0.56% |
Silver continued to struggle today after the metal broke its October swing low levels briefly earlier this week. The reduced pace of rate hikes over the past couple of weeks have sapped the appeal of precious metals, with traders fearing a higher terminal rate. That, along with fear in China around its economy, have pushed traders to ditch long bets.
Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 27.5 p Short 28 p Short 33.5 c Long 34 c | 64% | +660 | -1840 |
Short Strangle | Short 28 p Short 33.5 c | 71% | +3015 | x |
Short Put Vertical | Long 27.5 p Short 28 p | 86% | +235 | -2265 |
Symbol: Energy | Daily Change |
/CLZ4 | -0.81% |
/HOZ4 | -0.41% |
/NGZ4 | -1.31% |
/RBZ4 | -2.22% |
Natural gas futures (/NGZ4) remain higher on the week but traders continued to sell the commodity for a second day. Weather forecasts point to warmer-than-average temperatures across much of the Eastern United States over the next two weeks. That should keep demand down after an already warm start to the winter. The Energy Information Administration (EIA) will report inventory data tomorrow. As of last week, stocks were 157 billion cubic feet higher than this time last year.
Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2.2 p Short 2.3 p Short 3.65 c Long 3.75 c | 68% | +240 | -760 |
Short Strangle | Short 2.3 p Short 3.65 c | 75% | +1450 | x |
Short Put Vertical | Long 2.2 p Short 2.3 p | 88% | +80 | -920 |
Symbol: FX | Daily Change |
/6AZ4 | -0.09% |
/6BZ4 | +0.09% |
/6CZ4 | -0.13% |
/6EZ4 | +0.14% |
/6JZ4 | +0.13% |
A lack of upside surprise in the U.S. inflation report gave other major currencies some breathing room today, although the gains appear to be short-lived; at the time of writing, the U.S. dollar (via $DXY) was quickly recouping losses itself. The U.S. data trajectory has been stronger than most anticipated, and sentiment surveys suggest economic momentum will remain firm through 4Q ’24.
Strategy (51DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.03 p Short 1.04 p Short 1.08 c Long 1.09 c | 56% | +450 | -800 |
Short Strangle | Short 1.04 p Short 1.08 c | 64% | +987.50 | x |
Short Put Vertical | Long 1.03 p Short 1.04 p | 88% | +175 | -1075 |
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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