U.S. GDP Beat Lifts Nasdaq 100, Russell 2000
U.S. GDP Beat Lifts Nasdaq 100, Russell 2000
Also 30-year T-bond, gold, crude oil and euro futures
- Russell 2000 E-mini futures (/RTY): +1.05%
- 30-year T-bond futures (/ZN): +0.52%
- Gold futures (/GC): +0.14%
- Crude oil futures (/CL): +1.36%
- Euro futures (/6E): +0.01%
The goldilocks trade is back today in the wake of the initial Q4 ’23 U.S. gross domestic product (GDP) report. The final quarter of last year produced a growth rate of 3.3% annualized in real terms, blowing past the consensus forecast of 2% (and well-above the Atlanta Federal Reserve GDPNow estimate of 2.4%). The personal consumption expenditures (PCE) inflation readings within the report came in at or below 2%, the Federal Reserve’s medium-term target. It was the ideal report for markets: Growth is stronger than anticipated and inflation is subsiding.
Symbol: Equities | Daily Change |
/ESH4 | +0.32% |
/NQH4 | +0.42% |
/RTYH4 | +1.05% |
/YMH4 | +0.17% |
Russell-2000 futures (/RTYH4) are leading equities higher this morning after inflation and GDP data helped fuel bets that the Federal Reserve can start cutting rates soon. Small cap stocks have lagged behind the rest of the market, which has caused some concern among investors. But today’s data might be the green light traders need to push /RTY up with the rest of the pack.
Strategy: (49DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1900 p Short 1925 p Short 2075 c Long 2100 c | 10% | +625 | -625 |
Long Strangle | Long 1900 p Long 2100 c | 84% | x | -2170 |
Short Put Vertical | Long 1900 p Short 1925 p | 49% | +310 | -940 |
Symbol: Bonds | Daily Change |
/ZTH4 | +0.02% |
/ZFH4 | +0.07% |
/ZNH4 | +0.17% |
/ZBH4 | +0.52% |
/UBH4 | +0.75% |
Falling inflation expectations and strong economic data are attracting bids into the longer-end of the Treasury curve, with 30-year T-bond futures (ZBH4) up about 0.5% this morning following the GDP print. Despite today’s action, prices are in a downtrend since the end of December, when traders started pushing back their expectations for a rate cut from the Fed.
Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 115 p Short 116 p Short 124 c Long 125 c | 51% | +421.99 | -578.13 |
Long Strangle | Long 115 p Long 125 c | 32% | x | -1406.25 |
Short Put Vertical | Long 115 p Short 116 p | 78% | +234.38 | -765.63 |
Symbol: Metals | Daily Change |
/GCG4 | +0.14% |
/SIH4 | +0.57% |
/HGH4 | -0.28% |
Gold prices (/GCG4) caught a small bid this morning after the U.S. GDP figures crossed the wires, with traders seeing it as a sign the Federal Reserve has achieved its soft landing. Short-term Treasury yields fell, helping to clear upside for precious metal prices. While gold is still down on the month to start the year, it’s held above the 2,000 level. Bulls may be waiting for a clearer stance on when the Fed will start cutting.
Strategy (39DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2000 p Short 2010 p Short 2070 c Long 2080 c | 36% | +600 | -400 |
Long Strangle | Long 2000 p Long 2080 c | 39% | x | -2730 |
Short Put Vertical | Long 2000 p Short 2010 p | 71% | +340 | -660 |
Symbol: Energy | Daily Change |
/CLH4 | +1.36% |
/HOH4 | +1.84% |
/NGH4 | +0.57% |
/RBH4 | +1.14% |
Crude oil future (/CLG4) are up over 1% this morning and prices are nearing levels not traded since November. The U.S. saw a huge crude inventory draw for last week, dropping nearly 10 million barrels. Other signs in futures, such as the prompt spread, have turned positive, indicating some tightening in the market. Ongoing attacks on shipping vessels in the Red Sea are also helping to underpin the bullish sentiment.
Strategy (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 72 p Short 72.5 p Short 79.5 c Long 80 c | 30% | +330 | -170 |
Long Strangle | Long 72 p Long 80 c | 42% | x | -3880 |
Short Put Vertical | Long 72 p Short 72.5 p | 64% | +170 | -330 |
Symbol: FX | Daily Change |
/6AH4 | +0.30% |
/6BH4 | +0.05% |
/6CH4 | +0.14% |
/6EH4 | +0.01% |
/6JH4 | +0.03% |
Euro futures (/6EH4) are inching higher this morning after trimming earlier strength that stemmed from the European Central Bank’s decision to hold rates steady at 4%—a record high. Expectations for a rate cut were tempered with the ECB reaffirming that leaving rates where they are would contribute greatly to keeping prices down.
Strategy (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.07 p Short 1.075 p Short 1.105 c Long 1.11 c | 50% | +275 | -350 |
Long Strangle | Long 1.07 p Long 1.11 c | 31% | x | -687.50 |
Short Put Vertical | Long 1.07 p Short 1.075 p | 81% | +150 | -475 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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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