S&P 500 and 10-year Notes Start FOMC Week with Modest Rallies
S&P 500 and 10-year Notes Start FOMC Week with Modest Rallies
Also 10-year T-note, gold, crude oil and euro futures
S&P 500 E-mini futures (/ES): +0.33%
10-year T-note futures (/ZN): +0.21%
Gold futures (/GC): +0.5%
Crude oil futures (/CL): -0.09%
Euro futures (/6E): -0.41%
The most important week of the summer has begun. On the macro side of the calendar, look for a riveting week ahead for bonds, FX and commodities as we focus on Treasury refunding financing estimates (today), the July Federal Open Market Committee (FOMC) rate decision (Wednesday) and the July U.S. jobs report (Friday). On the earnings side of the calendar, reports from Microsoft (MSFT), Meta Platforms (META), Apple (AAPL) and Amazon (AMZN) between tomorrow and Thursday will help accentuate or demolish the recent rebound in the Nasdaq 100.
Symbol: Equities | Daily Change |
/ESU4 | +0.33% |
/NQU4 | +0.62% |
/RTYU4 | +0.26% |
/YMU4 | +0.25% |
S&P 500 futures (/ESU4) rose this morning to start the week as traders focus on technology earnings and the Federal Reserve’s rate decision. McDonald’s (MCD) missed estimates this morning amid softer consumer behavior. Microsoft and Advanced Micro Devices (AMD) will report tomorrow to kick off this week’s technology stocks.
Strategy: (46DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5175 p Short 5200 p Short 5800 c Long 5825 c | 65% | +282.50 | -967.50 |
Short Strangle | Short 5200 p Short 5800 c | 71% | +2400 | x |
Short Put Vertical | Long 5175 p Short 5200 p | 86% | +145 | -1105 |
Symbol: Bonds | Daily Change |
/ZTU4 | +0.03% |
/ZFU4 | +0.09% |
/ZNU4 | +0.21% |
/ZBU4 | +0.55% |
/UBU4 | +0.77% |
Treasury yields are lower across the curve but the middle- and long-end are falling faster to start the week. 10-year T-note futures (/ZNU4) were 0.21% higher at the New York open. Traders have their eyes on an announcement due from the Treasury on its financing needs for the quarter. The refunding announcement could inject some volatility into the bond markets if the Treasury’s guidance changes from last quarter.
Strategy (53DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 108.5 p Short 109 p Short 114 c Long 114.5 c | 60% | +140.63 | -359.38 |
Short Strangle | Short 109 p Short 114 c | 67% | +562.50 | x |
Short Put Vertical | Long 108.5 p Short 109 p | 91% | +62.50 | -437.50 |
Symbol: Metals | Daily Change |
/GCZ4 | +0.5% |
/SIU4 | +0.57% |
/HGU4 | -1.41% |
Gold prices (/GCZ4) are starting the week higher on this morning following a second weekly loss. The metal is making a move on lower yields ahead of the Fed’s rate announcement tomorrow. Meanwhile, demand in China has weakened, according to a report from the Gold Council. The report cited things such as jewelry demand in the country falling more than 50% in the second quarter. The weakness in consumer demand follows a pullback in buying from China’s central bank.
Strategy (58DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2275 p Short 2300 p Short 2550 c Long 2575 c | 64% | +770 | -1730 |
Short Strangle | Short 2300 p Short 2550 c | 71% | +2930 | x |
Short Put Vertical | Long 2275 p Short 2300 p | 83% | +430 | -2070 |
Symbol: Energy | Daily Change |
/CLU4 | -0.09% |
/HOU4 | +0.13% |
/NGU4 | +0.49% |
/RBU4 | -0.01% |
Crude oil prices (/CLU4) rose 0.44% this morning after climbing out of negative territory around the New York open. Geopolitical concerns are being weighed against further weakness in China, putting two of the biggest narratives for the commodity in sharp contrast. China’s fuel oil imports fell 11% in the first of this year. Meanwhile, the world waits for Israel’s response to the recent rocket attack that left 12 children dead.
Strategy (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 68 p Short 70 p Short 84 c Long 86 c | 63% | +450 | -1550 |
Short Strangle | Short 70 p Short 84 c | 69% | +1420 | x |
Short Put Vertical | Long 68 p Short 70 p | 84% | +280 | -1720 |
Symbol: FX | Daily Change |
/6AU4 | -0.21% |
/6BU4 | -0.26% |
/6CU4 | -0.01% |
/6EU4 | -0.41% |
/6JU4 | -0.14% |
Euro futures (/6EU4) fell to start the week, with concerns over a far-left attack on France’s SNCF rail network amid the Olympic games weighing on sentiment for the currency. Euro traders have Euro Zone gross domestic product (GDP) data on the radar, although the dollar’s direction around the Fed rate decision may drive the direction this week.
Strategy (39DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.065 p Short 1.07 p Short 1.1 c Long 1.105 c | 59% | +200 | -425 |
Short Strangle | Short 1.07 p Short 1.1 c | 66% | +562.50 | x |
Short Put Vertical | Long 1.065 p Short 1.07 p | 86% | +100 | -525 |
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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