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The Economic Calendar:
MONDAY: Fed Kugler Speech (9:25a CT), NY Fed Treasury Purchases (9:30a CT), WASDE Report (11:00a CT), Monthly Budget Statement (1:00p CT)
TUESDAY: NFIB Business Optimism Index (5:00a CT), CPI (7:30a CT), Redbook (7:55a CT), Total Household Debt (10:00a CT)
WEDNESDAY: Fed Waller Speech (4:15a CT), MBA Mortgage Applications (6:00a CT), Fed Jefferson Speech (8:10a CT), EIA Petroleum Status Report (9:30a CT), Fed Daly Speech (4:40p CT)
THURSDAY: Jobless Claims (7:30a CT), PPI (7:30a CT), Empire State Manufacturing Index (7:30a CT), Philly Fed Manufacturing Index (7:30a CT), Retail Sales (7:30a CT), Fed Chair Powell Speech (7:40a CT), Industrial Production/Capacity Utilization (8:15a CT), Manufacturing Production (8:15a CT), Business Inventories (9:00a CT), NAHB Housing Market Index (9:00a CT), Retail Inventories (9:00a CT), EIA Natural Gas Report (9:30a CT), NOPA Crush Report (11:00a CT), Fed Barr Speech (1:05p CT), Fed Balance Sheet (3:30p CT)
FRIDAY: Building Permits (7:30a CT), Import/Export Prices (7:30a CT), Housing Starts (7:30a CT), University of Michigan Consumer Sentiment (9:00a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
Traders are closely watching the CPI inflation report for signs of tariff price increases.
The Nasdaq Composite Index is trading near the critical 20,200 level, a juncture closely watched by market technicians. A decisive close above this mark would signify a break above the 200-day moving average and a short-term negative trend line, potentially paving the way for a significant rally should a large inverted head and shoulders pattern materialize.
Despite this technical setup, bearish sentiment among individual investors remains remarkably persistent. According to Goldman Sachs derivatives strategist Garrett, the prevailing market view is bearish, with the AAII sentiment survey showing over 50% of respondents holding a negative outlook for an unprecedented 11 consecutive weeks.
This raises the question of who is currently providing the buying pressure, with some attributing it to systematic trading strategies that have reportedly deployed approximately $100 billion into global equities over the past ten days.
Adding a layer of concern is the recent performance of Apple (AAPL), a heavily weighted stock in both the S&P 500 and the Nasdaq 100. Apple shares fell last week and are trading below their 50-day and 200-day moving averages.
Interestingly, U.S. companies announced nearly $234 billion in share buybacks in April, nearing a record high. This surge in buyback activity, led by major firms like Apple and Visa, suggests renewed confidence amid easing trade uncertainty and better-than-expected earnings, potentially offering short-term support to stock prices. However, some analysts view this as “smart money selling to monkeys,” a potentially unsustainable dynamic.
Concerns also extend to the underlying health of the broader economy, with some characterizing the S&P 600, and by extension, much of the privately-owned sector, as representing lower-quality companies. Finally, the intense focus on a few momentum stocks, such as Palantir (PLTR), is seen as a speculative frenzy rather than indicative of a fundamentally sound market.
Hartnett, JPMorgan, and Tudor Jones foresee equity market weakness post-tariff deals.
Strategist Michael Hartnett has aligned with the bearish views of JPMorgan and Paul Tudor Jones, anticipating that equity markets are likely to decline (“will fade”) as the recently announced tariff deals are finalized and their impact becomes clearer. This perspective is shared, based on the assessment that the current tariff reset is unlikely to be a mutually beneficial (“win-win”) scenario and will fall short of President Trump’s objective to balance the U.S. deficit. The expectation is that the economic consequences of these tariffs will ultimately weigh on equity valuations.
Despite recent market rallies, concerns about potential downside risk are mounting due to unusual positioning in the options market. According to analysis from Spotgamma, the current landscape is characterized by a prevalence of short put positions held by dealers, contrasting with long put positions held by end clients. This imbalance has led to dealers being net short gamma, which could exacerbate any significant downward price movement.
Even amidst the recent market squeeze, the lack of substantial call buying suggests a limited appetite for upside protection. Spotgamma warns, “…the fuel to drive renewed downside remains in place, which leaves this market with a lot of risky positioning.” Should a more pronounced move to the downside materialize, the short gamma held by dealers would likely compel them to aggressively sell deltas, potentially amplifying the selloff.
Prominent investor Paul Tudor Jones anticipates the U.S. stock market will breach new lows, citing a confluence of policy headwinds. Jones points to President Trump’s firm stance on tariffs and the Federal Reserve’s apparent commitment to maintaining current interest rates as key factors contributing to a bearish outlook.
“For me, it’s pretty clear,” Jones stated, “You have Trump who’s locked in on tariffs. You have the Fed, which is locked in on not cutting rates. That’s not good for the stock market. We’ll probably go down to new lows.”
Even a potential de-escalation of trade tensions with China, with Trump reducing tariffs to 50% or 40%, would not alleviate the underlying pressure, according to Jones. He argues that the cumulative effect of tariffs represents “the largest tax increases since the ’60s,” effectively subtracting 2% to 3% from economic growth.
Jones believes that only a significantly dovish shift from the Federal Reserve, involving substantial rate cuts, could avert a market decline to new lows. Once these lows are reached, he predicts a period of heightened market stress that would ultimately compel both the Fed and the Trump administration to adjust their respective policies, leading to a “reality” check for the markets.
The World Agricultural Supply and Demand Estimates (WASDE) report, scheduled for release on May 12, 2025, is expected to provide initial projections for the 2025/26 marketing year for corn and soybeans.
Corn: U.S. Production and Stocks:
The trade expects a significant increase in U.S. new crop corn carryout, potentially reaching around 2 billion bushels, reflecting a bearish outlook due to larger supplies. Production estimates for the 2025/26 season are pegged at approximately 15.8 billion bushels, driven by anticipated planted acres of around 90 million and trendline yields near 181.1 bushels per acre.
The season-average corn price is projected to remain under pressure, potentially around $4.30–$4.35 per bushel, reflecting ample supply.
Soybeans: U.S. Production and Stocks:
Trade expectations point to a 2025/26 soybean crop of about 4.325 billion bushels, with yields around 52.5 bushels per acre. Ending stocks are projected to be bearish, potentially higher than prior years, due to reduced Chinese export demand. Recent reports suggest U.S. soybean ending stocks could be around 435–470 million bushels, depending on adjustments to crush and exports.
The season-average soybean price is projected to be around $9.95–$11.10 per bushel, down slightly due to ample global supply and weaker export demand.
Market expectations for Federal Reserve interest rate cuts have slightly receded, with current pricing indicating 2.6 cuts by the end of the year, down from 3.1 cuts priced in previously.
This shift in sentiment comes as the Fed signals a cautious approach, indicating it is in no rush to ease monetary policy and is awaiting greater clarity on the impact of government trade policies on the economy.
Adding a layer of intrigue to market positioning, short-term interest rate (SOFR) traders executed a notable trade, purchasing $25 million of 3-month December 2025 SOFR put options with a strike price of 95.6875 (equivalent to a 4.3125% interest rate). Priced at 0.05 on the offer, this out-of-the-money bet would only become profitable if the (SOFR) rises above 4.3625%, exceeding the current Federal Funds Rate (FFR) of 4.33%, suggesting a wager on potential Fed hawkishness.
Globally, the Bank of England (BoE) took a different approach, cutting its key interest rate by a quarter point to 4.25% amid the ongoing pressures of President Trump’s trade war on UK economic growth. The decision revealed a split among policymakers, and despite the possibility of a U.S.-U.K. trade agreement, the BoE cautioned that tariffs could negatively impact UK output and inflation. The market reaction saw a rally in the British pound and higher gilt yields.
Source: CME Group Market Data
In the short-term interest rate market, a “1 Cut” favored put fly structure in Secured Overnight Financing Rate (SOFR) futures has seen some profit-taking, with traders now adding new risk in later-dated contracts, suggesting a continued, albeit slightly moderated, expectation for future rate cuts.
The 96.00/95.875/95.75 put fly has been a ‘1 Cut’ fan favorite, as traders have been trading out of their long position in SFRK5 over the past couple of weeks for a profit, and they begin to add to more new risk in SFRN5.
Alright, listen up. April’s volatility wasn’t about nuanced analysis but about capitalizing on headline risk. You got paid to have skin in the game, ready to react. Some periods demand patience and observation, but April forced you to be glued to the tape and your trading seat, prepared to execute a news-driven strategy on a dime. Stay disciplined, stay nimble.
The Federal Open Market Committee (FOMC) is cautious regarding interest rate cuts, prioritizing greater clarity on government policy and its economic ramifications.
Rabobank anticipates that the emerging “stagflationary dilemma” will ultimately lead to a cessation of the Fed’s easing cycle. Nevertheless, a weakening labor market could still prompt the FOMC to implement one additional rate cut in the near term.
Currently, Rabobank projects one final rate reduction on June 18th before the anticipated pause.
However, this outlook is contingent upon forthcoming economic data, particularly the May Employment Report scheduled for release on June 6th. Nonfarm payroll growth has moderated to the 100,000-200,000 range this year. Given that the full impact of recently enacted tariffs is likely yet to materialize, the May employment figures could provide crucial insight into their effect on the labor market.
A significant negative impact could strengthen the Fed’s justification for a June rate cut. Conversely, should the tariffs’ effects on employment data take longer to manifest, a final rate cut could be delayed until July or September.
Source: X.com
Bitcoin surged past the $100,000 mark last Thursday, fueled by a confluence of positive catalysts including renewed optimism regarding easing trade tensions between the United States and the United Kingdom, sustained inflows into spot Bitcoin exchange-traded funds (ETFs), and a brightening global macroeconomic outlook.
The resurgence of strong inflows into Bitcoin ETFs, coinciding with fading macroeconomic worries, is viewed by market participants as a particularly encouraging sign for the cryptocurrency’s near-term price prospects, with some now eyeing the $105,000 level as the next potential target.
However, the cryptocurrency market also faced a regulatory hurdle. Democrats in Congress voted on Thursday to block the GENIUS Act, a bipartisan bill that had long awaited to establish a clear regulatory framework for stablecoins. The bill’s failure to advance introduces continued uncertainty for the stablecoin sector within the U.S.
Source: TradingView
Source: X.com
In a notable shift from conventional Republican tax policy, the Trump administration’s proposal directly requested House Speaker Mike Johnson to raise the top income tax bracket for the highest earners in the United States.
The proposed new tax rate of 39.6%, an increase from the current 37%, would apply to individuals with annual incomes of at least $2.5 million and couples earning $5 million or more.
The individual also advocated eliminating the carried interest tax break, a provision frequently utilized by hedge funds and private equity firms. Additionally, proposals include imposing higher tax burdens on the owners of major stadiums and arenas.
Source: X.com
The U.S. Dollar Index (DXY) has broken above its negative trend channel and is trading comfortably above its 21-day moving average, although the 50-day moving average remains significantly higher.
This move suggests the DXY may have established a bottom and is now rallying to fill the void created in early April, a period marked by forced liquidation of U.S. assets to meet margin calls.
Notably, the dollar had declined since the stock market downturn began on February 20th. While the S&P 500 staged a substantial 1,000-point rally over the following month, the DXY traded sideways below the 100 level until last week’s breakout.
The current rally in the dollar is likely being fueled by the return of foreign buyers to U.S. assets, driven by progress in tariff negotiations. The positive sentiment expressed during recent meetings suggests a correlation between easing trade tensions and renewed international investment in the U.S. currency.
Source: TradingView
