US TSYS: Late SOFR/Treasury Option Roundup
Mixed SOFR and Treasury options segued yet again to better upside call buying Thursday, well before a debatable WSJ article rekindled some hope over a 50bp cut at next week's meeting as short end SOFR futures gapped higher (SFRU4 +.0425 at 95.095). Still off early week highs projected rate hikes have drifted off morning lows (*) : Sep'24 cumulative -31.5bp (-29.4bp), Nov'24 cumulative -68.6bp (-65.9bp), Dec'24 -107.5bp (-104.5bp). Note, overall volumes were much better than noted below, much of which were September options that expire Friday.
- SOFR Options:
- +15,000 SFRH5 95.75/96.00/96.25 call flys ref 96.50
- +10,000 SRZ4 95.87/96.00/96.12/96.25 call condors 2.5 vs. 95.87.5 to -86.5/.05%
- Block, another +10,000 SFRZ5 95.25/96.00/96.75 put flys 12.5 ref 97.19
- Block, 3,000 0QV4 96.50/96.87 put spds 0.5 over 2QV4 96.56/96.93 put spds
- Block, 20,000 SFRU4 95.00 puts, cab
- Block, +22,500 SFRZ5 95.25/96.00/96.75 put flys 12.5 ref 97.135 to -.14
- Block/screen 7,500 0QV4 97.00/97.50 2x3 call spds, 31.0 ref 97.14
- Block, 9,000 SFRH5 95.50/95.75/96.25/96.50 iron condors, 9.0
- 3,000 SFRZ4 95.25/95.37/95.50/95.62 call condors ref 95.835
- 3,000 0QV4 97.12/97.37 call spds ref 97.145
- over 20,000 SFRU4 95.00/95.12/95.25 call flys, 4.25 on screen/Block
- Treasury Options:
- 5,000 TYX4 115 calls, 106 ref 115-04.5
- 2,750 TUV4 104.5/TUX4 104.75 call diagonal
- 2,000 TYV 116/TYX 117 call diagonals, 16
- 2,000 TYX4 115/115.5 call spds, 11
- 2,200 TYV4 111.25/112/113 put trees ref 115-06.5
- 2,500 TYV4 114/115 put spds, 17 ref 115-06.5
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US STOCKS: Late Equities Roundup:
- Stocks continued to extend session highs in second half trade, shrugging off geopolitical risk/safe haven support for Tsys and data risk ahead of Wednesday's CPI as semiconductor makers continued to gain. Currently, the DJIA trades up 368.07 points (0.94%) at 39723.9, S&P E-Minis up 82.25 points (1.53%) at 5452 (August 2 highs), Nasdaq up 384.1 points (2.3%) at 17164.26.
- Information Technology and Consumer Discretionary sectors continued to lead gainers in late trade, semiconductor makers trading strong for the second day running: Nvidia +5.87%, Monolithic Power +5.35%, Intel +5.17%.
- Autos and consumer services led the Consumer Discretionary sector higher with Starbucks surging 21.75% higher after company officials announced former Chipotle CEO Brian Niccol will take the reins from Laxman Narasimhan. Elsewhere, Tesla +4.84% while Nike gained 5.0%.
- Conversely, Energy and Consumer Staples sectors continued to underperform, oil and gas stocks pared Monday gains as crude prices traded weaker (WTI -1.60 at 78.46): EQT Corp -3.55%, Coterra Energy -1.97%, Occidental Petroleum -1.92%. Retail distribution stocks weighed on the latter with Kroger -1.82%, Dollar Tree -1.74%, Walmart -1.41%.
- Still a number of earnings announcements expected this week: Brinker Int, Samsonite and Cisco late Wednesday; Walmart, Applied Materials and Deere & Co on Thursday.
COMMODITIES: WTI Crude Futures Fall 2% on Session, Gold Consolidates
- Crude markets have weakened today amid a slight downward revision in the IEA’s demand forecast and easing concerns of a wider war in the Middle East. IEA forecast for global oil demand was just slightly lower than predicted in last month’s report with growth of 970kb/d in 2024 and 953kb/d in 2025.
- WTI SEP 24 is down 2.2% at 78.33$/bbl approaching the APAC crossover and despite the decline, the contract remains higher on the week following the sharp rally higher on Monday. The move undermines a recent bearish theme and price has traded through both the 20- and 50-day EMAs. A continuation higher would signal scope for a climb towards $80.77, a Fibonacci retracement. Clearance of this level would open $83.58, the Jul 5 high.
- For Natural Gas, Henry Hub lost ground today as traders weigh a continued stock surplus and strong production levels against further forecasts of warmer weather. US Natgas SEP 24 down 1.6% at 2.15$/mmbtu.
- In precious metals, spot gold respected a $2460/80 range and consolidated the strong advance made on Monday. The softer greenback was unable to provide further impetus to the rally. For bulls, attention is on $2483.7, the Jul 17 high and a bull trigger. Clearance of this hurdle would resume the uptrend.
USDJPY TECHS: Oversold Condition Unwinds
- RES 4: 153.93 50-day EMA
- RES 3: 150.73 20-day EMA
- RES 2: 149.77 High Aug 2
- RES 1: 148.22 High Aug 12
- PRICE: 147.06 @ 16:08 BST Aug 13
- SUP 1: 144.29 Low Aug 7
- SUP 2: 141.70/140.82 Low Aug 5 and the bear trigger / Low Jan 2
- SUP 3: 140.25 Low Dec 28 ‘23 and a key support
- SUP 4: 138.07 Low Dec 28
USDJPY remains bearish and the recent impulsive sell-off has strengthened the trend condition. The move down signals scope for an extension towards the next key support at 140.25, Dec 28 ‘23 low. Note that the bear cycle remains in an extreme oversold condition, and the latest recovery - a correction - is allowing this set-up to unwind. Initial firm resistance is seen at 150.73, the 20-day EMA. The bear trigger is 141.70, the Aug 5 low.
