Nasdaq 100 Inches Higher as Yields Pullback
Nasdaq 100 Inches Higher as Yields Pullback
Also five-year T-note, gold, crude oil and Japanese yen futures
- Nasdaq 100 E-mini futures (/NQ): +0.12%
- Five-year T-note futures (/ZF): +0.06%
- Gold futures (/GC): +0.25%
- Crude oil futures (/CL): +0.63%
- Japanese yen futures (/6J): +0.31%
U.S. equity markets continue to chop around as traders await the release of the Federal Reserve’s preferred gauge of inflation on Thursday. Bonds are mostly higher, though for the second consecutive day yields bottomed overnight ahead of the European trading session. Lower yields are undercutting the U.S. dollar, which in turn is giving metals some breathing room after yesterday’s disappointing price action.
Symbol: Equities | Daily Change |
/ESH4 | +0.12% |
/NQH4 | +0.25% |
/RTYH4 | +0.92% |
/YMH4 | -0.07% |
Nasdaq futures /NQH4) gained this morning as investors wait for economic data due later this week that could change the view on Federal Reserve interest rate cut bets, which were already tempered over the past several months. Meanwhile, S&P 500 futures (/ESH4) are nearly flat, potentially setting up a base for the next push higher if Thursday’s data green lights a risk-on move.
Strategy: (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 17300 p Short 17700 p Short 18800 c Long 19200 c | 18% | +3675 | -4325 |
Short Strangle | Short 17700 p Short 18800 c | 25% | +9010 | x |
Short Put Vertical | Long 17300 p Short 17700 p | 57% | +1715 | -6285 |
Symbol: Bonds | Daily Change |
/ZTH4 | +0.03% |
/ZFH4 | +0.06% |
/ZNH4 | +0.07% |
/ZBH4 | +0.16% |
/UBH4 | +0.07% |
Five-year T-note futures (/ZFH4) are unchanged this morning ahead of commentary from Federal Reserve speakers, whose comments may impact the outlook on rate cut bets. However, it won’t be until Thursday that we’ll likely see a direction picked by bond traders, with the Fed’s preferred inflation gauge set to cross the wires. Today will see the Treasury auction off seven-year notes. A five-year note auction was weaker yesterday.
Strategy (59DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 105 p Short 105.25 p Short 108.25 c Long 108.5 c | 49% | +109.38 | -140.63 |
Short Strangle | Short 105.25 p Short 108.25 c | 61% | +609.38 | x |
Short Put Vertical | Long 105 p Short 105.25 p | 87% | +54.69 | -195.31 |
Symbol: Metals | Daily Change |
/GCJ4 | +0.25% |
/SIH4 | +0.62% |
/HGH4 | +0.14% |
Gold futures (/GCJ4) inched higher this morning but prices remain below last Friday’s high. While markets have already pushed back bets for the first interest rate cut from the Federal Reserve, several data points and Federal Reserve speakers are scheduled this week, and that may influence the outlook. If expectations for the first cut are pushed back farther, it could push gold prices back down.
Strategy (34DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2020 p Short 2030 p Short 2100 c Long 2110 c | 46% | +460 | -540 |
Short Strangle | Short 2030 p Short 2100 c | 61% | +2020 | x |
Short Put Vertical | Long 2020 p Short 2030 p | 78% | +240 | -760 |
Symbol: Energy | Daily Change |
/CLH4 | +0.63% |
/HOH4 | -0.15% |
/NGH4 | +3.84% |
/RBH4 | +1.08% |
Crude oil futures (/CLH4) are slightly higher this morning after trimming some earlier gains. Several factors are impacting the commodity, with the White House touting a potential cease fire in Gaza. Meanwhile, the situation in the Middle East continues to support prices to an extent. In a positive for oil bulls, Chinese demand after the Lunar New Year appears to be picking up, and Russia, on Tuesday, implemented a six-month gasoline export ban. The American Petroleum Institute (API) will report inventory data for the U.S. today.
Strategy (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 73 p Short 73.5 p Short 81.5 c Long 82 c | 37% | +290 | -210 |
Short Strangle | Short 73.5 p Short 81.5 c | 59% | +3260 | x |
Short Put Vertical | Long 73 p Short 73.5 p | 69% | +150 | -350 |
Symbol: FX | Daily Change |
/6AH4 | +0.16% |
/6BH4 | +0.04% |
/6CH4 | +0.11% |
/6EH4 | +0.02% |
/6JH4 | +0.31% |
Japanese yen futures (/6JH4) jumped after hotter-than-expected inflation data increased odds for the Bank of Japan (BOJ) to end negative interest rates, possibly as soon as April, according to swap markets. The policy-sensitive two-year yield surged to help the yen against its peers overnight, dragging the currency higher from yearly lows. While it’s hard to call a bottom in the currency, the inflation data makes now about as good of a time as any to make such a call.
Strategy (38DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.00655 p Short 0.0066 p Short 0.0069 c Long 0.00695 c | 62% | +150 | -475 |
Short Strangle | Short 0.0066 p Short 0.0069 c | 68% | +450 | x |
Short Put Vertical | Long 0.00655 p Short 0.0066 p | 88% | +56.25 | -568.75 |
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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