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The Digital Asset Market CLARITY Act has passed in the House and is now awaiting uncertain revisions in the Senate.
The House of Representatives passed the Digital Asset Market CLARITY Act with a vote of 294–134, with support from 78 Democrats. This bill is the first major effort to regulate the cryptocurrency industry. It sets clear roles for regulators like the SEC and CFTC while creating a new category for registered digital assets. This aims to better connect crypto with traditional finance.
Even with strong bipartisan support, the bill’s future in the Senate is unclear. Senators are currently drafting their version and are likely to make changes. Some Senate Democrats want the bill to address President Trump and his family’s cryptocurrency holdings.
The CLARITY Act follows last year’s failed Senate effort with the FIT21 measure, which received wide Democratic support in the House. It is part of the House GOP’s larger “Crypto Week” package, which includes two other key digital asset bills aimed at updating regulations for blockchain and digital finance.
We believe that the House’s approval of this bill will create significant volatility in the digital asset market in the coming weeks. The bill’s uncertain future can lead to price swings that derivative traders might find profitable. We have already seen a direct impact on the derivatives market, with the Bitcoin Volatility Index (DVOL) rising over 15% to above 60 around the time of the vote.
Now, our attention is on the Senate, where the bill’s path is very uncertain and could change significantly. This legislative delay suggests traders prepare for large price swings in either direction soon. They might look at strategies that benefit from volatility, regardless of which way prices move.
In the past, positive regulatory news has often triggered strong price increases, like the approval of spot Bitcoin ETFs in January, which led to a price jump of more than 50% in two months. If a similar bill passes in the Senate, we could see a similar reaction in the market, especially as institutional investors find a clearer path to enter. This indicates that holding long-dated call options might be a smart way to take advantage of the potential upside.
The involvement of a former president’s cryptocurrency portfolio, valued at over $7 million according to blockchain data, adds a layer of political risk that could complicate the process. This uncertainty makes it sensible to hold protective puts as a safeguard against a possible market downturn if the bill stalls. It serves as a reminder that political news will significantly affect short-term price movements.
The EU is still interested in trade negotiations despite potential tariffs from the Trump administration.
The EU is keen to enter trade talks.
The White House Press Secretary announced that President Trump shared a new tariff plan with the EU.
New Tariff Announcement
Beginning 1 August 2025, a 30% tariff will apply to all EU imports unless a trade deal is made beforehand. About 150 countries were informed of new tariffs of 10% or 15%. However, the EU and Mexico are facing a 30% tariff. This decision comes from the trade imbalance between the U.S. and the EU, along with the high tariffs the EU levies on cars and industrial products. These tariffs are described as a matter of national security.Possible Market Reactions
There is a warning that more tariffs could arise if the EU decides to retaliate. We expect that the main market reaction to the tariff letter will be increased volatility. The uncertainty of a potential trade war is likely to cause large price fluctuations, especially as the August 1, 2025, deadline gets closer. Derivative traders should think about strategies to benefit from this market turbulence. Given Leavitt’s remarks on the EU’s willingness to negotiate, any news from Brussels will spark strong market reactions. European equities, especially in the German auto and French luxury goods sectors, face significant downside risks due to their reliance on American consumers. In 2023, the EU exported over €500 billion worth of goods to the U.S., showing substantial economic risk from this situation. In the currency market, the EUR/USD pair will be a key measure of these trade tensions. If negotiations break down, the Euro may weaken significantly, as the 30% tariff would hurt the Eurozone’s economic outlook. We expect higher demand for options that protect against a drop in the euro’s value compared to the dollar. Mr. Trump’s claim of national security will not shield U.S. companies dependent on European supply chains. Sectors like aerospace and pharmaceuticals might see increased costs and disruptions, affecting their profit margins. We recommend buying protection for U.S. industrial and healthcare stocks with significant European exposure. We foresee that broad market volatility measures, such as the VIX index, will rise and stay elevated. During the peak tariff escalations with China in mid-2019, the VIX soared over 60%, illustrating how markets respond to such uncertainties. Long positions on VIX futures or call options on volatility-tracking ETFs are direct ways to capitalize on this outlook. Create your live VT Markets account and start trading now.Crude oil futures increase by $1.04 to $66.23, with August contracts up 1.75%
September crude oil futures rose by $1.04, ending at $66.23. Today’s highest price reached $66.27, while the lowest was $65.02.
In August, the contract price increased by $1.16, or 1.75%, closing at $67.54.
Market Sentiment Shift
The recent rise in crude oil futures indicates a need to focus on essential supply and demand factors. Although the daily gains are small, they suggest a shift in market sentiment that we believe is supported by real data. This isn’t random; it’s a response to several important issues. Recent inventory reports are especially significant. The U.S. Energy Information Administration announced a crude inventory drop of 2.5 million barrels, exceeding analysts’ expectations. This tightening supply in the world’s biggest consumer is a strong bullish signal for the near future. Globally, OPEC+ has chosen to extend its voluntary production cuts of 2.2 million barrels per day through the third quarter, creating a solid price floor. Historically, when OPEC+ has shown similar discipline, like after the 2020 price crash, it has helped stabilize the market. This will likely reduce downside risks in the upcoming weeks.Geopolitical Tensions and Potential Upside
We’re also seeing strong seasonal demand as the summer driving season begins in the Northern Hemisphere. U.S. gasoline demand recently neared 9.3 million barrels per day, marking a peak for this year and indicating increased consumption. This trend will likely draw down crude stockpiles and support prices. The ongoing geopolitical tensions in the Middle East are another major factor to watch. Any escalation involving key oil-producing countries or shipping routes could lead to rapid price spikes, similar to past incidents that added significant risks to oil prices. Traders need to be prepared for sudden changes driven by news. Given these conditions, we suggest that traders consider positioning for short-term price increases. The decrease in U.S. inventories, ongoing international production discipline, and rising seasonal demand create a strong case for higher prices. Bullish strategies, like buying call options, look promising in this situation. However, we should keep in mind that international producers plan to start unwinding their cuts in the fourth quarter. This indicates that the current price strength might only last a few months. A smart strategy would be to employ tactics that can benefit from rising prices while also managing risk effectively. Create your live VT Markets account and start trading now.Netflix is about to announce earnings, with expectations for higher EPS and revenue growth.
Netflix will soon announce its earnings, with analysts predicting a 44.87% rise in earnings per share (EPS), going from $4.88 last year to $7.08. Revenue is also expected to grow by 15.7%, reaching around $11.06 billion, up from $9.56 billion last year. After the earnings report, the stock may move by about 6%.
Key focus areas include advertising growth, subscriber engagement, and profit margins. Although price targets are high, ranging from $1.33k to $1.4k, even minor disappointments could affect the stock. The company’s price-to-earnings (P/E) ratios indicate strong earnings growth expectations, with a trailing P/E of 59.5× and a forward P/E of 46.8.
Currently, Netflix shares are trading at $1269, which is a 42.4% increase this year. The stock saw significant gains in 2023 and 2024 but dropped by 51.05% in 2022. It hit a high of $1341.15 in June and a low of $821.10 in April. If it dips below its 50-day moving average of $1225.95, it could signal a decline. Other support levels to watch are $1176.28, $1141.24, $1100.26, and $1080.12. The 200-day moving average is $982.62, last near during an April correction.
With the market bracing for a 6% movement after earnings, this is a critical time for derivative traders. The high expectations for profit and revenue growth suggest a possible major price swing, making options strategies that capitalize on volatility appealing.
The company’s high valuation, with a trailing P/E near 60, offers little room for error. A slight miss in subscriber engagement or a cautious outlook on margins could lead to a sell-off. If results disappoint, the stock may revisit its 50-day moving average near $1226, in line with expected market movements.
Conversely, a strong performance could push the stock towards its recent high of $1341.15. Reports from May 2024 indicated that its ad-supported plan has gained 40 million monthly active users, which supports the growth story. Positive commentary about this tier would greatly benefit call option holders.
Given that the company added an impressive 9.33 million subscribers in Q1, expectations for this report are very high. Past strong performances have set the stage for elevated expectations. Any signs of slowing momentum could lead to significant backlash.
For traders who expect a large move but are unsure of the direction, buying a straddle or strangle could be a good strategy, despite the high costs due to implied volatility. A more affordable option would be to use debit spreads, buying a call spread if bullish or a put spread if bearish. This approach limits both potential profit and risk.
Looking beyond the immediate earnings report, we see strong underlying strength, indicating that buying on dips could be rewarding. Demand for the service remains steady, and its plan to broadcast two NFL games on Christmas Day 2024 is a notable new revenue opportunity. This long-term potential may provide a safety net for the stock, as investors are likely to step in during any significant downturn.
Daly emphasizes ongoing inflation challenges despite strong economic growth and a solid labor market.
Mary Daly highlights that the economy is growing steadily, and the job market is strong. However, we still face challenges as we have not yet achieved price stability.
The main focus is on controlling inflation without getting sidetracked by other issues. Current economic policies and conditions are viewed positively.
Interest Rate Environment
Interest rates have been high for several years. The impact of tariffs was seen in the June Consumer Price Index (CPI), although other factors causing inflation are decreasing. There is a tendency to lower rates proactively. It is reasonable to expect two rate cuts this year. Given Daly’s outlook, it seems likely that interest rates will decrease, making it an important time to adjust our investment strategies. The market indicates this possibility, with CME’s FedWatch Tool showing over a 90% chance of a rate cut by September. We should respond by going long on interest rate futures, like those linked to the Secured Overnight Financing Rate (SOFR). These insights suggest that the equity market rally can continue, driven by proactive rate cuts. Historically, “insurance” rate cuts that begin when the economy is stable can lead to significant market gains, as seen in 1995. Therefore, we should consider buying call options on major indices like the S&P 500 to take advantage of this potential boost.Inflation and Market Volatility
While her main focus is inflation, the move to cut rates ahead of time aims to ensure a soft landing and ease market fears. This means that after an initial spike around the announcement, overall market volatility is expected to lessen. We see an opportunity to sell VIX call options or short VIX futures in the medium term. The expectation of two rate cuts this year could also weaken the US dollar. A lower dollar is a typical reaction when a central bank cuts borrowing costs compared to other countries. We should consider buying call options on currency pairs like the EUR/USD or shorting the U.S. Dollar Index (DXY). Daly’s view that the economy is in a “good place” is backed by recent data showing a strong labor market with 206,000 jobs added in June and an unemployment rate near 4.1%. However, her concerns about price stability are confirmed by the June Consumer Price Index, which, although it dropped to a 3.0% annual rate, remains above the target. This combination of data supports the idea of a carefully managed easing cycle rather than a drastic emergency response. Create your live VT Markets account and start trading now.US 30-year mortgage rate rises to 6.75% amid recent fluctuations
The US 30-year mortgage rate has risen to 6.75%, up from 6.72%, according to Freddie Mac. Earlier in the week of April 10, the lowest yield for 2025 was 6.62%. In mid-January, this rate peaked at 7.04%.
Mortgage rates have mostly fluctuated between 6.10% and 7.22%. Last year, there was a significant jump in rates from September to November, peaking at 7.79%.
Current Market Trends
The current 10-year yield is above its 100-week moving average, while the mortgage rate is below its 100-day moving average. This raises questions about how the mortgage market will respond, especially given the low demand. Recent reports from financial institutions show strong earnings, contrasting with the 10-year yield nearing its high compared to the 30-year mortgage. The slight increase in the 30-year mortgage rate suggests a broader market struggle. While Treasury yields indicate rates should be higher, the housing market seems unable to keep up. This inconsistency presents opportunities for traders betting on which side will ultimately prevail. Recent government data supports the strength in the Treasury market. The latest Consumer Price Index showed a 3.5% annual increase in March, indicating persistent inflation. This is driving bond yields higher and explains why the 10-year yield is above its long-term moving average. It also suggests the Federal Reserve may not lower rates anytime soon.Market Opportunities and Risks
Conversely, the weakness in the mortgage market appears linked to declining housing affordability. The National Association of Realtors reported a 4.3% drop in existing-home sales in March, the largest monthly fall in over a year. Lenders might hesitate to fully pass on rate hikes to an already vulnerable consumer base, which helps explain why mortgage rates are lagging. Given the tension between stubborn inflation and a weak housing market, we expect increased interest rate volatility. The Treasury volatility index, or MOVE index, has stayed above 100 for most of the year, indicating ongoing uncertainty. Traders may want to consider purchasing options, such as straddles or strangles on Treasury futures, to benefit from a significant rate shift in either direction. Additionally, one could trade the spread between different parts of the interest rate market. For instance, a trade could profit if the gap between short-term rates and long-term mortgage-backed securities widens. This strategy would likely perform well if the Federal Reserve maintains high rates while the housing market continues to cool. Historically, discrepancies like the one between government yields and consumer rates can indicate stress in the financial system. While the situation is not as critical as before 2008, it serves as a reminder to watch for signs of credit tightening that could impact the overall economy. In the coming weeks, a key question will be whether the bond market’s dynamics will push mortgage rates higher or if a slowing economy will lower Treasury yields. Create your live VT Markets account and start trading now.European indices rise, driven by Germany’s DAX and France’s CAC, both up over 1.25%
European stock markets ended the day positively. The German DAX rose by 1.49%, and France’s CAC climbed by 1.29%. The UK’s FTSE 100, Spain’s Ibex, and Italy’s FTSE MIB all saw increases of 0.52%, 0.78%, and 0.92% respectively.
In the United States, stock indices also went up, but not as much as in Europe. The Dow industrial average increased by 0.43%, the S&P index grew by 0.46%, and the NASDAQ index rose by 0.79%. The Russell 2000 performed particularly well with a gain of 1.26%.
US Bond Yields and Gold Trends
US bond yields had mixed results. Short-term yields went up while long-term yields went down. The 30-year yield dropped below 5.0% to 4.992%, and the 2-year yield was at 3.910%. Gold prices fell by $11.19, a decrease of 0.34%, leaving gold at $3336.21. Bitcoin showed volatility, rising by $278 to $119,000. It had earlier peaked at $119,244, after which it fell from over $123,000 earlier in the week down to $115,729 on Tuesday. The strength of European markets, especially the DAX and CAC, looks promising. Recent inflation data from the Eurozone shows a drop to 2.4% in April, increasing the chances that the European Central Bank may cut interest rates as soon as June, possibly before the US Federal Reserve. This trend suggests we should explore strategies that focus on European gains rather than American ones in the upcoming weeks.Russell 2000 and Market Trends
The strong rally in the Russell 2000 signals growing confidence in smaller companies beyond just major tech stocks. Historically, there has been a considerable gap in valuation between small and large caps. The Russell 2000’s forward price-to-earnings ratio is currently around 25% lower than that of the S&P 500. This trend indicates a shift towards smaller, domestically focused companies that may have better growth potential if the US economy remains stable. The bond market’s recent patterns, with rising short-term yields and falling long-term yields, suggest a complicated outlook. This reflects the market’s response to Federal Reserve Chairman Powell’s recent comments, indicating a need for more assurance on inflation before any rate cuts, keeping policy tight in the near term. However, the drop in longer-dated yields hints at expectations for slower growth and inflation in the future. The rise in Bitcoin supports a current “risk-on” sentiment, moving in sync with the more aggressive parts of the equity market. Its recent 60-day correlation with the Nasdaq 100 is above 0.7, indicating a strong link to speculative interest. We should consider its price movements as a reflection of overall market sentiment rather than an isolated occurrence. Create your live VT Markets account and start trading now.GDPNow lowers Q2 growth forecast from 2.6% to 2.4% following recent data releases
The Atlanta Federal Reserve’s GDPNow model forecasts a small decline in second-quarter growth for 2025, dropping from 2.6% to 2.4% as of July 17. This change comes after recent data from the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors.
Expectations for real personal consumption expenditures growth in the second quarter decreased from 1.6% to 1.5%. This reflects the latest economic conditions affecting consumer spending. The next update for GDPNow will be released on July 18.
Slowdown In Consumer Spending
We are noticing the decline in the Q2 growth forecast to 2.4%, driven by a significant slowdown in consumer spending. This suggests the economy is starting to cool more than we previously expected. This trend should guide our strategy in the upcoming weeks. Recent government statistics confirm this view, showing consumer strain. For instance, retail sales in May rose only 0.1%, which was below expectations, indicating that households are tightening their budgets due to ongoing inflation. This serves as clear evidence supporting the revised lower growth forecast. Slowing economic activity raises the likelihood of a policy change from the Federal Reserve. According to the CME FedWatch Tool, the market now sees over a 60% chance of an interest rate cut by the September meeting. We should prepare for a more cautious approach from the central bank, which will directly influence asset prices.Strategies For Market Conditions
Given the possibility of more market fluctuations, we think volatility is currently undervalued. With the CBOE Volatility Index (VIX) near a low of 13, buying portfolio protection is particularly inexpensive. Now is a good time to buy put options on broad market indices as a hedge against a potential downturn. We also expect a noticeable shift away from sectors sensitive to economic changes. Historically, in slowing growth cycles, defensive stocks like utilities and consumer staples tend to perform better than cyclical sectors like industrials and consumer discretionary. Traders might consider selling call spreads on cyclical ETFs, believing their upside is now limited. Create your live VT Markets account and start trading now.Australian jobs report shows worse than expected figures, raising concerns about economic growth
The Australian jobs report for June revealed disappointing results. The unemployment rate rose to 4.3%, surpassing the expected 4.1%. This is the highest rate we’ve seen since late 2021. Employment saw a slight increase of just 2,000 jobs, while analysts had predicted a gain of 20,000. Full-time jobs dropped by 38,200, but part-time jobs increased by 40,200.
This report signals a higher jobless rate and a change in job quality, with full-time positions decreasing and part-time jobs rising. The unexpected job gains hint at growing weakness in the labor market. As a result, the AUDUSD initially fell as expectations for a Reserve Bank of Australia (RBA) rate cut increased. However, during the North American morning session, buyers pushed the price back up.
Technical Analysis Overview
The hourly chart showed that prices fell below important retracement levels. Prices dropped below the 38.2% retracement level at 0.65096 and the previous day’s low at 0.6495, extending to 0.64535, just under the 61.8% retracement level at 0.6457. A rebound brought prices back near the 50% midpoint at 0.64833, close to last week’s lows. If prices break above this midpoint, they could aim for the 38.2% retracement target again. The unexpected weakness in the Australian labor market could significantly affect policy expectations. Market estimates from sources like Reuters show that traders now see over a 70% chance of an RBA rate cut by November. This change alters the outlook for the Australian dollar, leading to a bearish outlook. In light of this, derivative traders might want to consider bearish positions on the AUDUSD in the upcoming weeks. Buying put options could be a smart move to take advantage of the anticipated decline. This strategy provides defined risk while allowing for potential gains in case prices fall.Investment Strategy Recommendations
We recommend using the current upward bounce to start these trades. The area around the 50% midpoint at 0.6483 acts as a key resistance level where sellers have previously entered. Establishing bearish trades near this point could provide a good risk-to-reward setup, similar to the rejection seen earlier at 0.6495. Historically, periods of weak domestic data leading to central bank easing cycles have led to ongoing currency depreciation. For instance, during the RBA’s 2019 easing cycle, the AUDUSD fell over 7% in six months due to narrowing interest rate differentials. We expect a similar scenario could happen now, suggesting that any short-term strength presents an opportunity to position for longer-term weakness. Create your live VT Markets account and start trading now.USDCAD bulls encounter resistance at key levels, suggesting a potential shift in market dynamics
The USDCAD has seen a significant rise, passing the 38.2% retracement level of the May decline at 1.37208. It also broke through an important price range between 1.37498 and 1.37590, getting close to the 50% retracement at 1.3777. However, the rally lost strength just below this target, stopping at 1.3774.
Since then, the pair has dropped back, trading within the 1.37498–1.37590 range, suggesting that buyers are losing energy. If it falls below 1.37498, it may test the 38.2% retracement at 1.37208 and the rising 100-hour moving average around 1.3704. On the other hand, if it rises above 1.37590, attention will shift back to the 1.3777 target.
