Nasdaq Falls as Economic Concerns Overshadow Rate Cut Bets
Nasdaq Falls as Economic Concerns Overshadow Rate Cut Bets
Also, 10-year T-note, gold, crude oil and euro futures
Nasdaq 100 E-mini futures (/NQ): -0.89%
10-year T-note futures (/ZN): +0.17%
Gold futures (/GC): +0.40%
Crude oil futures (/CL): -0.71%
Euro futures (/6E): +0.40%
Despite an inflation report that made a Federal Reserve interest rate cut a near certainty. U.S. traders decided to sell equities at the open on today. The dollar eased, enabling the euro to rise near levels not traded since 2023. Economic concerns are overshadowing a Fed rate cut, as traders weigh how a possible recession would impact corporate earnings. Upcoming retail sales data may help to ease those concerns if it shows a strong consumer. Elsewhere, oil prices fell as geopolitical concerns ease in the Middle East.
Symbol: Equities | Daily Change |
/ESU4 | -0.35% |
/NQU4 | -0.89% |
/RTYU4 | -1.00% |
/YMU4 | -0.08% |
Nasdaq futures (/NQU4) rose this morning before trimming gains at the open as investors digested updated inflation data, which didn’t do much to change the outlook on Fed rate cut bets. The question for markets now is, will the Fed cut by 25 basis points or 50 basis points? Alphabet (GOOG) is down in pre-market trading as the U.S. government considers a breakup of the company.
Strategy: (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 18600 p Short 18700 p Short 19250 c Long 19300 c | 58% | +1110 | -860 |
Short Strangle | Short 18700 p Short 19250 c | 43% | +14660 | X |
Short Put Vertical | Long 18600 p Short 18700 p | 57% | +690 | -1310 |
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Symbol: Bonds | Daily Change |
/ZTU4 | +0.02% |
/ZFU4 | +0.09% |
/ZNU4 | +0.17% |
/ZBU4 | +0.53% |
/UBU4 | +0.80% |
Treasuries fell along the short and middle end of the curve with this morning’s inflation update doing little to change bets on the Fed’s path forward. There isn’t much in the way of the auction schedule from the Treasury with no notable auctions until Aug. 22, when a 30-year offering will occur. Meanwhile the spread between the 10-year yield and two-year yield steepened slightly but remains inverted.
Strategy (37DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 113 p Short 113.5 p Short 115 c Long 115.5 c | 30% | +343.75 | -156.25 |
Short Strangle | Short 113.5 p Short 115 c | 53% | +1328.13 | X |
Short Put Vertical | Long 113 p Short 113.5 p | 73% | +171.88 | -328.13 |
Symbol: Metals | Daily Change |
/GCZ4 | -0.71% |
/SIU4 | -0.58% |
/HGU4 | +0.48% |
Gold futures (/GCZ4) shed about 0.6% this morning. The metal remains slightly higher on the month and traders are hopeful that new all-time highs will be put in soon as the Fed prepares to cut interest rates. For now, some weakness in short-term yields is weighing on prices. Still, there is some caution amid economic headwinds over the past few weeks, reflected by a pullback in bullish bets among speculators who have reduced long positions, according to data from the Commodity Futures Trading Commission.
Strategy (42DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2470 p Short 2475 p Short 2495 c Long 2500 c | 8% | +470 | -30 |
Short Strangle | Short 2475 p Short 2495 c | 56% | +10100 | X |
Short Put Vertical | Long 2470 p Short 2475 p | 52% | +280 | -220 |
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Symbol: Energy | Daily Change |
/CLU4 | -0.71% |
/HOU4 | -0.54% |
/NGU4 | +5.40% |
/RBU4 | -0.74% |
Crude oil contracts (/CLU4) moderated today after prices declined yesterday. Easing tensions in the Middle East are weighing on the commodity despite yesterday’s report from the American Petroleum Institute (API), which showed a larger-than-expected decline in crude oil stocks in the United States. Oil prices remain on track to record a weekly gain, but for now the easing geopolitical situation appears to be driving sentiment. Traders are watching inventory numbers due this morning.
Strategy (34DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 74.5 p Short 75 p Short 78.5 c Long 79 c | 20% | +380 | -130 |
Short Strangle | Short 75 p Short 78.5 c | 49% | +3660 | X |
Short Put Vertical | Long 74.5 p Short 75 p | 58% | +210 | -290 |
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Symbol: FX | Daily Change |
/6AU4 | -0.34% |
/6BU4 | -0.06% |
/6CU4 | +0.13% |
/6EU4 | +0.40% |
/6JU4 | -0.03% |
Dollar weakness is driving euro futures (/6EU4) higher this morning as traders see the Federal Reserve outpacing on rate cuts vs. the European Central Bank (ECB). The divergence between bond yields that reflect that policy divergence is helping to support Euro prices. Tomorrow’s U.S. retail sales data could help to push the euro higher if it underpins U.S. economic strength.
Strategy (51DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.095 p Short 1.1 p Short 1.12 c Long 1.125 c | 35% | +337.50 | -287.50 |
Short Strangle | Short 1.1 p Short 1.12 c | 55% | +1350 | X |
Short Put Vertical | Long 1.095 p Short 1.1 p | 78% | +175 | -450 |
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Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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