Market Wrap
The SPX ended the session 0.3% lower, overshadowed by hawkish commentary from Fed officials who started to walk back exuberant hopes of a more dovish central bank and media reports, according to which House Speaker Pelosi would visit Taiwan despite warnings from China.
Gamma discussion: Dealer gamma (132M) remained positive, which speaks for reduced volatility ahead at least from a gamma standpoint.
Below 4080 dealer gamma flips negative and the market would again re-enter are more turbulent region.
Support can be identified at 4100, resistance at 4150/4200.
Flows: According to Deutsche Bank: positioning of systematic strategies remains very underweight equities, despite a slight move up this week and Vol control funds only modestly raised their equity exposure further to 51% (vs a historical maximum of 71.7%).
Overall, the equity positioning of systematic traders remains low (chart not included).
Economic data: Data released today showed a deceleration in US manufacturing PMIs, while PMIs in Europe, China and South Korea declined into contractionary territory. Japan’s Manufacturing PMI expanded for the 18th month in a row.
The July ISM Manufacturing Index decreased to 52.8% (consensus 52.5%) from 53.0% in June. July marked the 26th consecutive month of expansion in the manufacturing sector, although the reading was the lowest reading since June 2020.
The key takeaway from the report is that it connotes a clear slowdown in manufacturing activity, highlighted by the contraction in new order activity, employment, and the biggest monthly drop in the prices index since June 2010, which is also the fourth steepest decline on record going back to 1948.
Outlook: On Tuesday and Wednesday participants will receive a new batch of service PMIs from Japan, China, the Euro Area and the US.
Front and center will be Pelosi’s visit in Taiwan, on Tuesday. On Friday the Nonfarm Payrolls for July will get released.
Gamma discussion: Dealer gamma (132M) remained positive, which speaks for reduced volatility ahead at least from a gamma standpoint.
Below 4080 dealer gamma flips negative and the market would again re-enter are more turbulent region.
Support can be identified at 4100, resistance at 4150/4200.
Flows: According to Deutsche Bank: positioning of systematic strategies remains very underweight equities, despite a slight move up this week and Vol control funds only modestly raised their equity exposure further to 51% (vs a historical maximum of 71.7%).
Overall, the equity positioning of systematic traders remains low (chart not included).
Economic data: Data released today showed a deceleration in US manufacturing PMIs, while PMIs in Europe, China and South Korea declined into contractionary territory. Japan’s Manufacturing PMI expanded for the 18th month in a row.
The July ISM Manufacturing Index decreased to 52.8% (consensus 52.5%) from 53.0% in June. July marked the 26th consecutive month of expansion in the manufacturing sector, although the reading was the lowest reading since June 2020.
The key takeaway from the report is that it connotes a clear slowdown in manufacturing activity, highlighted by the contraction in new order activity, employment, and the biggest monthly drop in the prices index since June 2010, which is also the fourth steepest decline on record going back to 1948.
Outlook: On Tuesday and Wednesday participants will receive a new batch of service PMIs from Japan, China, the Euro Area and the US.
Front and center will be Pelosi’s visit in Taiwan, on Tuesday. On Friday the Nonfarm Payrolls for July will get released.
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