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    In August, year-on-year pending home sales increased to 3.8%, up from 0.7% before.

    by VT Markets
    /
    Sep 30, 2025
    **Gold’s Record-Breaking Momentum** The recent increase in year-over-year pending home sales to 3.8% shows economic strength. This data indicates a rising housing market, unlike the slowdown we saw in 2023 when mortgage rates first went above 7%. We can expect this growth to influence broader inflation figures in the months ahead. However, this positive housing data contrasts with recent cautious comments from Federal Reserve officials. This creates uncertainty, as the Fed appears reluctant to change its policy after pausing rate hikes in 2024. Traders should be ready for the market to question whether the Fed will stick to this approach if more strong data comes in. **Opportunities in Interest Rate Derivatives** This situation creates chances in interest rate derivatives. According to CME’s FedWatch Tool, the market sees less than a 20% chance of a rate hike by year-end. This might be an incorrect prediction, and we could use options on SOFR futures to bet on a more aggressive Fed if upcoming inflation reports are also strong. With the current housing news, we should consider call options on homebuilder ETFs like ITB. This strategy allows us to invest directly in the housing sector’s strength while limiting our maximum risk. It works well if the Fed remains cautious but protects us if they need to raise rates and cool the market. Overall uncertainty between the data and the Fed’s stance points to increased volatility. We are keeping an eye on the VIX, which has been around 14, for a potential spike. Buying straddles on the S&P 500 could be a smart way to trade this expected rise in market movement without guessing the direction. Create your live VT Markets account and start trading now.

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