S&P 500 Moves Lower as the Focus Shifts to the Fed
S&P 500 Moves Lower as the Focus Shifts to the Fed
Also, 10-year T-note, gold, crude oil, and Japanese yen futures
Nasdaq 100 E-mini futures (/NQ): -0.08%
10-year T-note futures (/ZN): -1.45%
Gold futures (/GC): +1.13%
Crude oil futures (/CL): -2.32%
Japanese yen futures (/6J): +0.57%
U.S. equity markets pulled back today as investors took stock of the week, which saw solid gains across risk assets. Yesterday’s retail sales data helped relieve economic concerns, seeming to secure the soft-landing narrative conducive to the bull picture for markets. The dollar softened this morning, and the energy complex across crude oil and natural gas took a hit.
Symbol: Equities | Daily Change |
/ESU4 | -0.08% |
/NQU4 | -0.25% |
/RTYU4 | +0.60% |
/YMU4 | +0.01% |
S&P 500 contracts (/ESU4) fell this morning, dropping about 0.08%, although prices remain on track to close much higher for the week. In fact, prices are still up about 3.5%, which would be the best weekly gain on a percentage basis since October 2023. That said, the prevailing mood of some profit taking into the weekend makes sense. Next week brings the Federal Open Market Committee (FOMC) minutes ahead of the Federal Reserve's Jackson Hole Economic Symposium, where Fed Chair Jerome Powell is scheduled to speak.
Strategy: (34DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5500 p Short 5510 p Short 5610 c Long 5620 c | 16% | +395 | -105 |
Short Strangle | Short 5510 p Short 5610 p | 48% | +6400 | X |
Short Put Vertical | Long 5500 p Short 5510 p | 61% | +157.50 | -342.50 |
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Symbol: Bonds | Daily Change |
/ZTU4 | +0.03% |
/ZFU4 | +0.04% |
/ZNU4 | +0.08% |
/ZBU4 | +0.23% |
/UBU4 | +0.31% |
Bond yields rose after consumer confidence data showed inflation expectations remained suppressed, offering some relief to yesterday’s move higher in bond yields. The 10-year T-note futures (/ZNU4) rose 0.07% after the open. Next week brings several data points that could inject some volatility into the Treasury space if Fed rate cut bets are altered.
Strategy (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 112.5 p Short 113 p Short 114.5 c Long 115 c | 34% | +328.13 | -171.88 |
Short Strangle | Short 113 p Short 114.5 c | 58% | +1234.38 | X |
Short Put Vertical | Long 112.5 p Short 113 p | 71% | +187.50 | -312.50 |
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Symbol: Metals | Daily Change |
/GCZ4 | +1.14% |
/SIU4 | -0.19% |
/HGU4 | -0.87% |
Gold futures (/GCZ4) found some upside after bond yields and the dollar fell this morning. The revival of rate cuts driven by a soft landing narrative is helping underpin the metal’s appeal. Record highs are in view for the metal, which could help propel a new wave of buying once those levels are broken.
Strategy (40DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2460 p Short 2465 p Short 2535 c Long 2540 c | 21% | +390 | -110 |
Short Strangle | Short 2465 p Short 2535 c | 56% | +7920 | X |
Short Put Vertical | Long 2460 p Short 2465 p | 62% | +220 | -280 |
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Symbol: Energy | Daily Change |
/CLU4 | -2.32% |
/HOU4 | -1.98% |
/NGU4 | -2.37% |
/RBU4 | -1.75% |
China is dragging down the crude oil market after reporting dismal figures on refinery runs for July. That, along with poor housing data out of the country, put a dim view on the potential for any growth in demand from Asia. The data is weighing on prompt spreads in West Texas Intermediate (WTI) and Brent crude futures today, reflecting the concerns in the physical market. The good news is that it might signal a bottom for Chinese refiners. But for now, markets are pricing in the weakness.
Strategy (32DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 73.5 p Short 74 p Short 77 c Long 77.5 c | 21% | +380 | -120 |
Short Strangle | Short 74 p Short 77 c | 52% | +3560 | X |
Short Put Vertical | Long 73.5 p Short 74 p | 58% | +210 | -290 |
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Symbol: FX | Daily Change |
/6AU4 | +0.19% |
/6BU4 | +0.19% |
/6CU4 | +0.03% |
/6EU4 | +0.08% |
/6JU4 | +0.57% |
Japanese yen futures (/6JU4) bounced off its 21-day exponential moving average (EMA) after this morning’s from the United States helped soften the dollar. The move still leaves the yen lower on the week, but it puts a further decline in question. Traders are betting the yen gently glides lower with the Bank of Japan set to leave rates unchanged over the next several meetings. However, the extent and pace of that decline is subject to how fast U.S. rates come in.
Strategy (49DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.0067 p Short 0.00675 p Short 0.00695 c Long 0.007 c | 31% | +375 | -250 |
Short Strangle | Short 0.00675 p Short 0.00695 c | 52% | +1650 | X |
Short Put Vertical | Long 0.0067 p Short 0.00675 p | 70% | +200 | -425 |
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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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