Stocks Are Recovering Because Traders Believe Trump Will Back Off From Aug. 1 Tariff Deadline
Stocks Are Recovering Because Traders Believe Trump Will Back Off From Aug. 1 Tariff Deadline
Also, 30-year T-bond, silver, crude oil and Japanese yen futures
- Nasdaq 100 E-mini futures (/NQ): -0.38%
- 30-year T-bond futures (/ZB): -0.16%
- Silver futures (/GC): +1.01%
- Crude oil futures (/CL): -2.09%
- Japanese yen futures (/6J): -0.17%
Stocks are off to a choppy start today but overnight losses are being trimmed. Traders are continuing to look past the torrent of tariff talk from Washington and instead continue to believe the administration will back off its newly minted Aug. 1 deadline. Better than expected weekly US jobless claims, albeit during the July 4 holiday week, have undercut Treasuries as July rate cut odds have dissipated. Higher yields are helping the US dollar, whose gains are not proving too problematic for precious metals.
| Symbol: Equities | Daily Change |
| /ESU5 | -0.03% |
| /NQU5 | -0.38% |
| /RTYU5 | +0.34% |
| /YMU5 | +0.37% |
Nasdaq futures (/NQU5) fell this morning as the chances for a July rate cut disappeared. Traders are facing uncertainty on tariffs as the chances of an economic slowdown increase. The drop in initial jobless claims did little to revive sentiment in the market. There is little economic data left this week, with traders focusing on next week’s inflation numbers. Delta Air Lines (DAL) rose over 13% after the airline reported positive numbers and renewed full-year guidance. Advanced Micro Devices (AMD) rose over 4% after HSBC upgraded the stock to buy and set a $200 price target. Tesla (TSLA) rose 2.7% after the company reported it will hold its annual shareholder meeting in November.
| Strategy: (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 21250 p Short 21500 p Short 24500 c Long 24750 c | 63% | +1185 | -3815 |
| Short Strangle | Short 21500 p Short 24500 c | 70% | +5865 | x |
| Short Put Vertical | Long 21250 p Short 21500 p | 83% | +640 | -4360 |
| Symbol: Bonds | Daily Change |
| /ZTU5 | -0.04% |
| /ZFU5 | -0.11% |
| /ZNU5 | -0.15% |
| /ZBU5 | -0.16% |
| /UBU5 | -0.29% |
Treasuries were lower ahead of today’s 30-year bond auction that will act as a gauge for debt appetite for longer-dated bonds as concerns about the deficit linger following the passage of the latest US tax and spending package. 30-year T-bond futures (/ZBU5) were 0.19% lower in early trading. The pullback comes after a rally in bonds yesterday, which brought prices off one-month lows. Bond traders are especially interested in how foreign buyers will act during today’s auction. But if the results impress, it could help to push up bond prices and improve appetite for U.S. debt.
| Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 109 p Short 110 p Short 118 c Long 119 c | 64% | +265.63 | -734.38 |
| Short Strangle | Short 110 p Short 118 c | 70% | +875 | x |
| Short Put Vertical | Long 109 p Short 110 p | 84% | +140.63 | -859.63 |
| Symbol: Metals | Daily Change |
| /GCQ5 | +0.11% |
| /SIU5 | +1.01% |
| /HGU5 | +2.04% |
A risk-off tilt in the stock market is helping to push up silver prices (/SIU5) this morning. Prices are up over 1%, but earlier gains were trimmed as New York trading kicked off. A stronger dollar isn’t decreasing appetite for silver, nor is the reduced odds for the Federal Reserve to cut interest rates. Still, silver prices remain in the middle of their range from the June swing low and the July swing high.
| Strategy (47DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 33 p Short 33.5 p Short 40.5 c Long 41 c | 66% | +650 | -1850 |
| Short Strangle | Short 33.5 p Short 40.5 c | 73% | +3470 | x |
| Short Put Vertical | Long 33 p Short 33.5 p | 84% | +300 | -2200 |
| Symbol: Energy | Daily Change |
| /CLQ5 | -2.09% |
| /HOQ5 | -0.57% |
| /NGQ5 | +2.52% |
| /RBQ5 | -1.46% |
Crude oil prices (/CLQ5) fell over 2% this morning as traders weighed how tariffs would affect the global economy. President Trump renewed threats to trading partners yesterday, targeting Brazil with a 50% tariff rate. The move came despite positive signs in the fuels market after the Energy Information Administration reported declines in gasoline and distillate inventories for the last week.
| Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 64 p Short 64.5 p Short 68 c Long 68.5 c | 21% | +360 | -140 |
| Short Strangle | Short 64.5 p Short 68 c | 51% | +3720 | x |
| Short Put Vertical | Long 64 p Short 64.5 p | 57% | +200 | -300 |
| Symbol: FX | Daily Change |
| /6AU5 | +0.17% |
| /6BU5 | -0.32% |
| /6CU5 | -0.01% |
| /6EU5 | -0.35% |
| /6JU5 | -0.17% |
The Japanese yen (/6JU5) is lingering around monthly lows, with prices down about 0.17% this morning. Earlier this week, President Trump said he would impose a 25% tariff on Japanese goods. The yen lost ground in its share of global currency reserves, according to the International Monetary Fund’s latest data. Traders remain weighted to the long side on the yen trade, however. Tonight, Japan will release data on its purchases of Japanese government bonds (JGBs).
| Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 0.00675 p Short 0.0068 p Short 0.00695 c Long 0.007 c | 29% | +425 | -200 |
| Short Strangle | Short 0.0068 p Short 0.00695 c | 55% | +1850 | x |
| Short Put Vertical | Long 0.00675 p Short 0.0068 p | 68% | +225 | -400 |
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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