In early trading, US stock indices are showing only slight changes. The Dow Industrial Average and the S&P Index are up by 0.01%, while the NASDAQ Index stays the same. US bond yields are mixed. Short-term yields are going down, while long-term yields are going up, making the yield curve steeper. The 2-year yield drops to 3.695%, down 3.4 basis points. Meanwhile, the 10-year yield is steady at 4.282%, and the 30-year yield rises to 4.928%, up 4 basis points.

Upcoming Economic Data

The US consumer confidence and Richmond Fed index data are set to be released at 10 AM. Consumer confidence is expected to tick down to 96.2 from last month’s 97.2. The Richmond Fed index is forecasted to improve to -11 from -20 last month. In commodity markets, crude oil prices are down by $0.96, now at $63.84. With major indices not showing a clear trend, this reflects market uncertainty ahead of the Federal Reserve’s Jackson Hole symposium later this week. The VIX, which measures expected market volatility, is around 17, making it a good time to buy options. Traders might want to consider straddles or strangles on indices like the SPX to profit from any big price movements, no matter what the Fed decides.

Market Strategies and Economic Indicators

The yield curve steepening, where short-term yields fall and long-term yields rise, is an important trend to watch. This change indicates a return to normal from the deep inversions seen in 2023 and 2024. It suggests the market expects short-term economic weakness but has concerns about inflation in the long run. Traders can take advantage of this trend by going long on 30-year Treasury bond futures and short on 2-year Treasury note futures. We are also seeing mixed economic signals. Falling oil prices are at odds with the implications of the steeper yield curve. The drop in crude oil to around $63 a barrel, due to a surprise rise in inventory reported last week, shows weakening global demand. This makes puts on energy sector ETFs like XLE a smart hedge against further slowdowns. While today’s consumer confidence figures are usually not major news, any significant changes could influence a market seeking clarity. After the July 2025 CPI report revealed persistent inflation at 2.8%, weak consumer data might increase speculation about a Fed policy shift. Given this uncertainty, buying protective puts on the SPY or QQQ is a wise strategy to protect portfolios from a potential downturn in the coming weeks. Create your live VT Markets account and start trading now.

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