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S&P 500 Stalls After Economic Data Bolsters Fed Cut Bets

By:Thomas Westwater

Also, 10-year T-note, gold, crude oil and Japanese yen futures

S&P 500 E-mini, 10-year T-note, gold, crude oil and Japanese yen,
S&P 500 E-mini, 10-year T-note, gold, crude oil and Japanese yen,

  1. S&P 500 E-mini futures (/ES): -0.21% 
  2. 10-year T-note futures (/ZN): +0.36% 
  3. Gold futures (/GC): +0.53% 
  4. Crude oil futures (/CL): -3.08% 
  5. Japanese yen futures (/6J): +0.61% 

A flood of economic data has sent the odds slightly higher for bets on a Federal Reserve cut in interest rates. Wholesale prices fell in April, according to the producer price index (PPI), which printed a decline of 0.5% from the prior month. Retail sales data printed a tepid 0.1% gain from the previous month. The data sent Treasury yields and equity markets lower. The market sees a Fed that is more inclined to cut rates as a bad sign for the market because it would likely be driven by concern about the economy instead of a soft-landing scenario. For now, the effect of tariffs on the economy remains a pain point for the market.   

 


Symbol: Equities 

Daily Change 

/ESM5 

-0.21% 

/NQM5 

-0.31% 

/RTYM5 

-0.30% 

/YMM5 

-0.17% 


 

S&P 500 futures traded lower this morning following four sessions of gains. The mood reflects a cautious optimism among traders. Foot Locker (FL) rose over 80% in early trading after a merger with Dick’s Sporting Goods (DKS). United HealthGroup (UNH) continued to decline, falling 17% after the turbulent exit of its CEO and the withdrawal of guidance.  

 


Strategy: (46DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 5850 p 

Short 5875 p 

Short 6025 c 

Long 6050 c 

18% 

+925 

-325 

Short Strangle 

Short 5875 p 

Short 6025 c 

49% 

+9325 

Short Put Vertical 

Long 5850 p 
Short 5875 p 

60% 

+375 

-875 


 

S&P 500 E-mini futures (/ES)

 


Symbol: Bonds 

Daily Change 

/ZTM5 

+0.10% 

/ZFM5 

+0.22% 

/ZNM5 

+0.36% 

/ZBM5 

+0.22% 

/UBM5 

+0.24% 


 

Treasury futures rose and yields fell as bond traders priced in a slightly more aggressive path of rate cutting for the Federal Reserve following this morning’s economic data. The reduction in factory-gate prices gives the Fed a bit more room to cut if the economy falls into decline. The retail sales figures suggested consumers are pulling back on spending. The pullback may be because of concern over tariffs and the current administration's shift in spending priorities. Meanwhile, bond traders have their eyes on Congress where a new tax plan is being crafted.  

 


Strategy (36DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 109 p 

Short 109.5 p 

Short 110.5 c 

Long 111 c 

27% 

+359.38 

-140.63 

Short Strangle 

Short 109.5 p 

Short 110.5 c 

55% 

+1359.38 

Short Put Vertical 

Long 109 p 

Short 109.5 p 

68% 

+171.88 

-328.13 



10-year T-note futures (/ZN)

 

 

 

Symbol: Metals 

Daily Change 

/GCM5 

+0.53% 

/SIN5 

+0.18% 

/HGN5 

-0.09% 


 

Gold prices (/GCM5) rose today as yields and the dollar fell. The move makes sense, given the selling across equity markets. The safe-haven appeal of the metal is back in play after the retail sales figures underscored a potential softening in consumer spending, which could precede deeper cuts in economic activity. Gold prices bounced at the 50-day simple moving average (SMA), a level that supported prices back in April before gold went on to make all-time highs.  

 


Strategy (42DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 3180 p 

Short 3185 p 

Short 3290 c 

Long 3295 c 

21% 

+390 

-110 

Short Strangle 

Short 3185 p 

Short 3290 c 

57% 

+11360 

Short Put Vertical 

Long 3180 p 

Short 3185 p 

61% 

+210 

-290 


 

Gold futures (/GC)

 


Symbol: Energy 

Daily Change 

/CLN5 

-3.08% 

/HOM5 

-1.97% 

/NGM5 

-0.09% 

/RBM5 

-2.37% 


 

Crude oil prices (/CLN5) fell over 3% this morning. The retail sales data was concerning, but negotiations between the United States and Iran are removing geopolitical uncertainty from the market. The US may roll back sanctions on Iran. President Trump said this week that his administration is close to a deal with Tehran. A build in US inventories is also putting pressure on the commodity after the Energy Information Administration (EIA) released its inventory report yesterday.  

 


Strategy (42DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 58.5 p 

Short 59 p 

Short 63 c 

Long 63.5 c 

20% 

+400 

-100 

Short Strangle 

Short 59 p 

Short 63 c 

54% 

+5040 

Short Put Vertical 

Long 58.5 p 

Short 59 p 

56% 

+190 

-310 


 

 

Crude oil futures (/CL)

 


Symbol: FX 

Daily Change 

/6AM5 

-0.43% 

/6BM5 

+0.06% 

/6CM5 

-0.15% 

/6EM5 

+0.06% 

/6JM5 

+0.61% 


 

The Japanese yen (/6JM5) continued to move higher because traders see Japan’s economy as conducive to rate hikes from the Bank of Japan. At the same time, rate cut bets for the US increased. This behavior would likely decrease the US yield premium in bonds vs. Japanese counterparts. Japanese inflation data released earlier this week supported the outlook for higher rates.  

 


Strategy (49DTE, ATM) 

Strikes 

POP 

Max Profit 

Max Loss 

Iron Condor  

Long 1.115 p 

Short 1.12 p 

Short 1.135 c 

Long 1.14 c 

25% 

+462.50 

-162.50 

Short Strangle 

Short 1.12 p 

Short 1.135 c 

55% 

+2362.50 

Short Put Vertical 

Long 1.115 p 

Short 1.12 p 

67% 

+250 

-375 


 

Japanese yen futures (/6J)

 



Thomas Westwatera tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and #tastyliveTrending for stocks, futures, forex & macro. 
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