FED: Powell Says Fed Doesn't Take Anchored LT Inflation Expectations For Granted

With few exceptions (26k FVU5 put fly) Monday's option flow revolved around upside SOFR & Tsy calls, the latter likely consolidating ahead of Friday's Sep expiry. Projected rate cut pricing cooled slightly vs. morning (*) levels: Sep'25 at -20.9bp (-21.2bp), Oct'25 at -33.6bp (-34.6bp), Dec'25 at -52.9bp (-54.6bp), Jan'26 at -64.1bp (-65.6bp).

• SOFR Options:
  • Block/screen over +145,000 SFRU5 96.50 calls, 3.0-3.25
  • 2,000 SFRU5 95.68/95.75/95.81/95.87 put condors ref 95.9025
  • 1,500 0QH6 97.12/97.25 call spds ref 96.93
  • 1,775 SFRM6 97.00/97.25 call spds ref 96.67
  • 5,000 SFRU5 95.75/95.81 put spds
  • 1,500 SFRU5 96.12 calls, ref 95.9025
  • 1,200 SFRZ5 96.25/96.37/96.50/96.62 call condors
  • 2,000 SFRZ5 95.87/96.00/96.12 call flys, ref 96.22
  • Block/screen, +21,000 SFRU5 96.00/96.12/96.25 call flys, 0.75 ref 95.90
• Treasury Options: (Sep'25 options expire Friday)
  • -26,968 FVU5 107.5/108.25/109 put flys, 21.5 ref 108-20.5
  • +40,000 TYU5 112.5 calls, 2, total volume over 52,700
  • 4,000 FVU5 107.75/108/108.5 2x3x1 put flys
  • +30,000 FVU5 109.25 calls, 2
  • 1,650 FVX 110.25/FVZ5 110 call spds
  • 3,000 wk5 TU 104.12/104.37/104.62 call flys ref 104-02.5

• RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing 
• RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
• RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
• RES 1: 173.97 High Jul 28 and the bull trigger 
• PRICE: 172.55 @ 16:41 BST Aug 18
• SUP 1: 170.10 50-day EMA
• SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
• SUP 3: 168.46 Low Jul 1  
• SUP 4: 167.46 Low Jun 23   

The underlying bull trend in EURJPY remains intact and for now the recent move down is considered corrective. Key support to watch lies at the 50-day EMA at 170.10. A clear break of the EMA is required to highlight a stronger short-term bearish threat. Moving average studies remain in a bull-mode position highlighting an uptrend. A break of the Jul 28 high of 173.97, would resume the bull cycle.  

• US Stocks remain mildly weaker, holding narrow ranges late Monday as the week's event risk sidelines investors. Focus is on Wednesday's July FOMC minutes release and the annual economic symposium in Jackson Hole, Wy that officially kicks off Friday morning.
• Currently the DJIA trades down 40.35 points (-0.09%) at 44905.68, S&P E-Minis down 3 points (-0.05%) at 6468.5, Nasdaq down 0.7 points (0%) at 21622.13.
• Consumer Discretionary, Staples and Industrials sectors lead late session gainers, while individual stocks are more varied with IT services leading: Dayforce +28.65%, Paycom Software +3.4%, EPAM Systems +4.31%, Trade Desk +5.41%.
• Other leading stocks included First Solar +10.44%, Enphase Energy +3.93%, Royal Caribbean Cruises +4.61% Lululemon Athletica +3.93% and Axon Enterprises +4.56%.
• Conversely, oil & gas stocks underperformed EQT -4.9%, Coterra Energy -3.06%, Expand Energy -2.02%, Baxter Int -2.13%; followed by large cap tech stocks: Electronic Arts -3.26%, Intel -2.67%, Meta Platforms -2.35% and Palantir Technologies -2.22%.