Key Takeaways with Craig

As we begin the last week of August trading and, incidentally, the last week before we celebrate the unofficial end to summer here in the US, equity index prices were mostly higher while US Treasury Yields at the longer end of the curve declined a bit.  The stock price gains were moderate, as none of the four major indexes rose by more than 1%, while the Micro 10-Year Treasury Yield future fell by about 4 basis points.  The Micro 2-Year Treasury Yield was nearly unchanged today so the inversion between the two has grown back to about 80 basis points as you can see in the graph below. 

Implied volatility in CME’s Equity Index options fell, as did the CVOL levels in the Treasury options, but both remain above the 3-month average closing level.  The skew in the 2-Year options, again in Yield terms, remains below the 10 and 30-Year options, though the 10-Year is now trading with a slight Put skew as well, as you can see in the bottom CVOL graph below. 

Looking forward, investors can’t sleep on the week ahead of Labor Day, as it holds some economic reports and events that have market-moving potential. These include, but may not be limited to, several speeches from FOMC Federal Reserve officials, Consumer Confidence and JOLTS tomorrow and the PCE report that the Fed watches for indications of current inflation levels set to be released on Thursday. 

Today's Future Price Action

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