Softer Inflation Print Boosts Stocks as Rate Cut Bets Grow
Softer Inflation Print Boosts Stocks as Rate Cut Bets Grow
Also, 10-year T-note, gold, crude oil and euro futures
- S&P 500 E-mini futures (/ES): +0.2%
- 10-year T-note futures (/ZN): +0.2%
- Gold futures (/GC): +0.08%
- Crude oil futures (/CL): -0.89%
- Euro futures (/6E): +0.02%
A softer-than-expected wholesale inflation report and a mixed bag of earnings results pushed stocks slightly higher in early trading today, with real estate stocks leading the charge while energy lagged. The producer price index (PPI) was unchanged on a monthly basis. Traders are focused on two rate cuts this year, but the softer inflation data added some fuel to the dovish side of the bet. Several Federal Reserve speakers are scheduled to deliver commentary today as traders focus on the earnings season, which is now underway. A stronger dollar put some pressure on commodity markets, with concerns about trade dragging down oil prices.
| Symbol: Equities | Daily Change |
| /ESU5 | +0.2% |
| /NQU5 | +0.08% |
| /RTYU5 | +0.78% |
| /YMU5 | +0.38% |
The softer-than-expected inflation print sent stocks higher this morning, with S&P 500 futures (/ESU5) rising about 0.2% ahead of the New York open. Goldman Sachs (GS) rose 0.5% after the bank posted a record-breaking quarter. Morgan Stanley (MS) fell almost 2% despite beating estimates. Johnson & Johnson (JNJ) rose 1.8% after raising its outlook and beating estimates. ASML Holdings (AMSL) trimmed 8% from its stock price in pre-market trading after warning that uncertainty about tariffs and its impact on macroeconomic uncertainty. United Airlines (UAL) and Alcoa (AA) are scheduled to report results after the market closes today.
| Strategy: (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 6175 p Short 6200 p Short 6350 c Long 6375 c | 18% | +937.50 | -312.50 |
| Short Strangle | Short 6200 p Short 6350 c | 48% | +9262.50 | x |
| Short Put Vertical | Long 6175 p Short 6200 p | 61% | +345 | -900 |
| Symbol: Bonds | Daily Change |
| /ZTU5 | +0.05% |
| /ZFU5 | +0.12% |
| /ZNU5 | +0.2% |
| /ZBU5 | +0.31% |
| /UBU5 | +0.38% |
Bond yields fell across the curve after wholesale inflation data supported the view for Federal Reserve rate cut bets. 10-yer T-note futures (/ZNU5) rose 0.2% in early trading. Prices were trading at the lowest level since mid-June before the data release. Meanwhile, President Trump continues to call on the Fed to cut rates, most recently claiming that a 1% policy rate would save the US nearly a trillion dollars.
| Strategy (37DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 109.5 p Short 110 p Short 111 c Long 111.5 c | 29% | +343.75 | -156.25 |
| Short Strangle | Short 110 p Short 111 c | 53% | +1125 | x |
| Short Put Vertical | Long 109.5 p Short 110 p | 71% | +171.88 | -328.13 |
| Symbol: Metals | Daily Change |
| /GCQ5 | +0.08% |
| /SIU5 | +0.07% |
| /HGU5 | -0.8% |
Gold futures (/GCQ5) were slightly higher this morning as prices moved back into the middle of its June trading range. The metal has lacked direction for several months following a rally during the first half of the year. Rate cut bets for the remainder of the year have moderated to about two cuts through the end of 2025, but the inflation data helped to support the dovish side of expectations. Several Fed speakers are on the docket today, which could further influence rate cut bets and gold with them.
| Strategy (41DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 3320 p Short 3325 p Short 3410 c Long 3415 c | 20% | +400 | -100 |
| Short Strangle | Short 3325 p Short 3410 c | 55% | +9740 | x |
| Short Put Vertical | Long 3320 p Short 3325 p | 60% | +220 | -280 |
| Symbol: Energy | Daily Change |
| /CLQ5 | -0.89% |
| /HOQ5 | -1.94% |
| /NGQ5 | +0.17% |
| /RBQ5 | -2.79% |
Crude oil prices (/CLQ5) fell about 1% early today despite data that showed signs of stiffer oil consumption in China. The European Union is putting a retaliatory tariff package together in response to Trump’s latest threats. Fears of a reignited trade war outweigh other positives for crude, such as strong summer travel demand. The Energy Information Administration (EIA) will report weekly crude oil inventory data today.
| Strategy (63DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 62 p Short 62.5 p Short 66.5 c Long 67 c | 18% | +390 | -110 |
| Short Strangle | Short 62.5 p Short 66.5 c | 50% | +4930 | x |
| Short Put Vertical | Long 62 p Short 62.5 p | 55% | +210 | -290 |
| Symbol: FX | Daily Change |
| /6AU5 | +0.08% |
| /6BU5 | +0.1% |
| /6CU5 | -0.04% |
| /6EU5 | +0.02% |
| /6JU5 | +0.15% |
Euro futures (/6EU5) continued to slide today as the possibility of more US tariffs on European goods dampens sentiment for the currency. Prices have been trading at the lowest since June 23 after falling about 0.25% this morning. Meanwhile, broader dollar strength is persisting in the market as it gains against its major peers. The drop in volatility is also supporting the dollar. Investors who were looking to hedge against dollar volatility earlier this year are being reduced as inflation data in the US trends in a positive direction.
| Strategy (51DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 1.15 p Short 1.155 p Short 1.17 c Long 1.175 c | 24% | +462.50 | -162.50 |
| Short Strangle | Short 1.155 p Short 1.17 c | 55% | +2475 | x |
| Short Put Vertical | Long 1.15 p Short 1.155 p | 67% | +237.50 | -387.50 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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