S&P 500 Slips as Trump Attacks China Deal Progress; Bonds Up After PCE
S&P 500 Slips as Trump Attacks China Deal Progress; Bonds Up After PCE
Also, 30-year T-bond, silver, crude oil and euro futures
- S&P 500 E-mini futures (/ES): -0.39%
- 30-year T-bond futures (/ZB): -0.06%
- Silver futures (/SI): -0.49%
- Natural gas futures (/NG): -0.6%
- Euro futures (/6E): -0.43%
After he was chided by reporters for the “TACO” trade (Trump Always Chickens Out; buy the dip) and the US Court of International Trade nullified the Liberation Day tariffs, it seemed like it was only a matter of time before US President Donald Trump tried to reframe the narrative around his signature economic policy platform. And Trump delivered today, issuing a long missive on Truth Social about how China is breaking the terms of the deal reached in Geneva, Switzerland, earlier this month. The only question for today is this: Will the TACO trade reign supreme by the closing bell?
Symbol: Equities | Daily Change |
/ESM5 | -0.39% |
/NQM5 | -0.16% |
/RTYM5 | -0.6% |
/YMM5 | -0.17% |
S&P 500 futures slid this morning as traders looked to close out a winning month for equities. President Trump’s claim that China violated the trade agreement injected anxiety back into the market following a set of legal decisions that put the trade measures in jeopardy. Ulta Beauty (ULTA) rose 16% in early trading after the retailer raised its outlook for the year. Gap (GAP) fell 20% after forecasting flat sales for the quarter. Month-end rebalancing will likely be in play today as funds move to shift allocations following a winning month.
Strategy: (49DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5450 p Short 5500 p Short 6300 c Long 6350 c | 66% | +550 | -1950 |
Short Strangle | Short 5500 p Short 6300 c | 71% | +3137.50 | x |
Short Put Vertical | Long 5450 p Short 5500 p | 84% | +270 | -2230 |
Symbol: Bonds | Daily Change |
/ZTM5 | +0.02% |
/ZFM5 | +0.04% |
/ZNM5 | +0.06% |
/ZBM5 | -0.06% |
/UBM5 | -0.08% |
The 30-year T-bond futures (/ZBU5) were nearly unchanged this morning, with prices on track to record the largest monthly loss of the year. The uncertainty around trade amid an ongoing spending and tax package has weighed on US debt markets. This morning’s personal consumption expenditures (PCE) data did little to bolster Fed rate cut bets. Next week’s jobs report is quickly approaching and will likely serve as the next catalyst for a possible new direction in bonds.
Strategy (56DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 106 p Short 108 p Short 118 c Long 120 c | 62% | +515.63 | -1484.38 |
Short Strangle | Short 108 p Short 118 c | 68% | +1281.25 | x |
Short Put Vertical | Long 106 p Short 108 p | 83% | +281.25 | -1718.75 |
Symbol: Metals | Daily Change |
/GCQ5 | -0.71% |
/SIN5 | -0.49% |
/HGN5 | +0.29% |
Silver futures (/SIN5) fell nearly 1% this morning, but the metal remains on track to record a monthly gain following a loss from April. A stronger dollar is hurting precious metals despite some reduced appetite for risk in the broader market. Silver prices are trading at the 21-day exponential moving average (EMA), which has supported prices over the past week.
Strategy (59DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 29.5 p Short 30 p Short 36.5 c Long 37 c | 66% | +660 | -1840 |
Short Strangle | Short 30 p Short 36.5 c | 73% | +3300 | x |
Short Put Vertical | Long 29.5 p Short 30 p | 83% | +290 | -2210 |
Symbol: Energy | Daily Change |
/CLN5 | -0.25% |
/HON5 | -0.64% |
/NGN5 | -0.6% |
/RBN5 | -0.35% |
Natural gas prices (/NGN5) continued to fall today, pushing prices near the monthly swing low at 4.346. Output in the US has dropped recently as maintenance season takes its toll, but mild weather across much of the United States has allowed the market to absorb that lost production. Meanwhile, exports for liquefied natural gas (LNG) have dropped over the last week, indicating weaker foreign demand. However, above-average-heat is expected to move across the Eastern United States next week, which could provide an opportunity for bulls to advance.
Strategy (59DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2.7 p Short 2.8 p Short 4.4 c Long 4.5 c | 65% | +290 | -710 |
Short Strangle | Short 2.8 p Short 4.4 c | 73% | +1770 | x |
Short Put Vertical | Long 2.7 p Short 2.8 p | 82% | +160 | -840 |
Symbol: FX | Daily Change |
/6AM5 | -0.53% |
/6BM5 | -0.16% |
/6CM5 | +0.06% |
/6EM5 | -0.43% |
/6JM5 | 0% |
Euro futures (/6EM5) fell as concerns about tariffs moved back into focus. The contract remains slightly higher for the month and well off its lows from early May. Defense spending in Europe is increasing, and analysts expect that trend to continue in the coming years, which could help underpin the European economy. German data flashed a warning sign after retail sales did little to bolster the euro, but the upcoming US jobs report due next week will take the spotlight when traders return to the desk after the weekend.
Strategy (70DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.09 p Short 1.1 p Short 1.18 c Long 1.19 c | 66% | +312.50 | -937.50 |
Short Strangle | Short 1.1 p Short 1.18 c | 72% | +975 | x |
Short Put Vertical | Long 1.09 p Short 1.1 p | 88% | +137.50 | -1112.50 |
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
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