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A private survey shows a larger than expected crude oil draw, highlighting discrepancies with official data.
A private survey by the American Petroleum Institute (API) found a larger drop in crude oil inventory than expected. Analysts predicted a decrease of 1 million barrels, alongside an increase of 1 million barrels in distillates and 0.6 million barrels in gasoline stocks.
This survey gathers data from various oil storage facilities and companies. The official government report from the US Energy Information Administration (EIA), which is more reliable, is due on Wednesday.
Truth Social seeks NYSE listing for Bitcoin ETF, owned by Trump, according to crypto media sources
Truth Social, owned by Donald Trump, has applied to launch a Bitcoin Exchange-Traded Fund (ETF). The plan is to list this ETF on the New York Stock Exchange (NYSE) Arca.
This step aims to take advantage of the rising cryptocurrency market. Details about the filing have been shared by various crypto media outlets.
Trump’s media company, having created a public social platform, is now moving towards financial products linked to digital assets, especially Bitcoin. By proposing a Bitcoin ETF through NYSE Arca, the goal is to offer an investment option that lets a wider audience invest in Bitcoin without needing to own the asset directly. This filing shows their intent to connect their media business with the cryptocurrency world, which has been separate until now.
As regulatory responses have been inconsistent, we can see this move as a strategic positioning rather than just following trends. Bitcoin ETFs have gained popularity, with several issuers experiencing significant inflows and unexpectedly high trading volumes. This filing can be viewed as an effort to join the growing segment of traditional finance that is starting to welcome digital assets.
According to Castellano’s remarks last month, institutions are gaining clearer insights into how regulators differentiate between spot and futures-based products. Combined with a bounce in trading volumes for key Bitcoin futures contracts, it’s becoming harder to overlook the opportunities in front of us. The number of open futures positions has been increasing daily, indicating a return of leveraged traders looking to hedge or speculate.
If you are analyzing derivative markets, the pricing of volatility no longer shows signs of panic; instead, it reflects careful positioning. Implied volatility is easing from its recent peaks, while realized volatility remains just above six-week averages. This presents a focused trading range. There’s particular interest in medium-term contracts beyond the front month, suggesting more cautious bets on sustained price movements, especially in the $62,000 to $66,000 range.
When developing your short-term strategies, note that contracts expiring within 30 days have a premium that is balanced—not too high or too low. This indicates that the market is being cautious rather than defensive. The use of spreads has increased, often reflecting expectations based on policies rather than market sentiment. Short gamma exposure is still more sensitive near the $60,000 level, so any approach to that number should be monitored closely.
Option chain volumes have increased for slightly out-of-the-money strikes, suggesting ongoing interest in moderate risk-taking, but not to extremes. What we seem to be witnessing is preparation rather than reaction, which influences our perspective on mid-month expiry clusters.
It’s important to note that this ETF filing hints at potential interest from those who cannot or do not want to access crypto directly. This could lead to more analyst coverage, media focus, or speculative trading—activities that may not change the larger market dynamics but can impact order flow. Instead of chasing headlines, it’s crucial to read between the lines.
Chao, in his latest update, noted that miners have slowed their reserve sales. This has allowed longer-dated futures to maintain their premiums, even as spot prices fluctuate within tight ranges. If this trend continues, traders may seek to express their views further out on the curve. Monthly rollover costs are moderate, helping to keep a directional bias for longer-term positions. Use this flexibility to reassess when to scale into leverage.
We don’t expect immediate approval for this decision, giving everyone the opportunity to assess how much of the movement is anticipated and how much remains speculative. In the meantime, liquidity is highest around the weekly futures rolling into monthly contracts, so it’s essential to remain agile and responsive to shifts in implied carry. Sometimes, the best approach is to wait for stabilization before taking action.
Trump aims to discuss trade tensions personally with Xi, according to sources.
Reports indicate that Trump and Xi are likely to have a conversation on Friday, according to unnamed sources. This discussion will focus on trade talks between the US and China.
There is speculation about Trump’s desire to speak directly with Xi, but it’s expected that the call will follow terms they have already agreed upon. This conversation could happen after a deal is made, allowing Trump to take credit for any progress.
Direct Exchange Between Leaders
Recent comments suggest a direct exchange between the US and Chinese leaders could happen on Friday. This call is not intended for real-time negotiations but to formally acknowledge discussions that have already taken place through other channels. Although there is speculation about the desire for personal diplomacy, it seems the call will proceed only after negotiators finalize the details. This call is framed as a ceremonial gesture rather than an intense negotiation. Its purpose is to show unity and confirm the progress made by lower-level negotiators. This indicates that any changes will likely be reflected in the market before the call takes place. As we approach Friday, it’s important to keep an eye on how news might affect the market. Quiet sessions at the start of the week might shift as traders adjust their positions starting Thursday afternoon, preparing for the expected communication on Friday. Reports suggest that there are expectations surrounding tariffs or mutual commitments, but we should not assume that announcements will definitely follow the call.Market Reactions and Strategies
One key area to monitor is how the implied volatility curve reacts when the Friday call is confirmed. A steep curve at the short end might indicate rising short-term hedging costs as the announcement approaches. This reflects market uncertainty and suggests that traders expect some direction to emerge, whether from the call itself or from comments made afterward. When it comes to options—especially weekly contracts in major indexes and large export-related companies—caution is necessary. The call may not lead to a policy change but rather serve to reinforce existing progress. Thus, any market changes may come from how participants interpret the situation and assess stability, rather than from unexpected policy shifts. We should avoid relying on high-conviction strategies before we have clear information. Calendar spreads are a good choice if they are aligned with key policy meetings or meetings between the US and China in the coming months. However, using short straddle strategies could be risky due to the potential for a strong market reaction after the call. In addition to examining the derivatives themselves, we should also analyze market flow in the days leading up to the call, focusing on both the volume and pacing of trades. If the market tightens midweek without a clear reason, it could signal that traders are adjusting their positions earlier than usual. This could impact premiums leading into Friday, potentially narrowing realized ranges, even if historical data suggests they should widen. Ultimately, it’s not just the call that matters—it’s how expectations build and are communicated as we get closer to it. Create your live VT Markets account and start trading now.Petra Tschudin of the SNB considers monthly inflation data insignificant and focuses on the medium term instead.
Swiss National Bank board member Petra Tschudin commented on the inflation data in Switzerland, highlighting that it has dropped to the lowest level since COVID. Consumer prices fell by 0.1% year-on-year in May. Despite this, the bank is focused on its medium-term goals.
Currently, markets predict there is a 70% chance the SNB will reduce the interest rate by 25 basis points at the meeting on June 19, bringing the rate down from 0.25% to zero. There’s also a 30% chance of a return to a negative rate of -0.25%. The recent drop in inflation is mainly due to the strong Swiss franc, which has affected the prices of imported goods.
SNB Leadership’s Perspective
SNB Chair Martin Schlegel pointed out that occasional negative data is to be expected. He noted that one weak month doesn’t always mean the bank needs to react immediately. What we see now shows that policymakers are taking their time to understand the recent changes in prices. The decrease in consumer prices was anticipated due to foreign exchange fluctuations and has highlighted the issue of imported inflation. While a strong franc helps lower costs for goods from abroad, it also affects domestic prices, leading to lower overall inflation without suggesting weak demand within the country. Tschudin’s comments support the idea that long-term targets are more important than monthly changes. Small drops like the one in May don’t require sudden shifts, especially since changes in inflation can reverse quickly. Instead, they emphasize a steady approach—maintaining confidence in medium-term inflation expectations is more important than reacting to short-term numbers. From a trading perspective, the money markets have reacted strongly. The likelihood of a slight rate cut shows that investors believe the SNB remains supportive of easing, as long as the data continues to be subdued. The 30% chance of moving to a negative rate is also significant. There’s some expectation—although not universal—that the SNB may return to negative rates if disinflation continues.Implications for Future Policy
Schlegel adopted a cautious tone, reminding us not to base policy expectations solely on one weak data point. This suggests that the bank prefers to wait for trends before taking action. It implies that the upcoming decision may stick to the expected plan unless there’s a consistent trend of weak data. One poor month doesn’t create a pattern, and policy won’t shift based only on eye-catching statistics. Looking ahead to the next two weeks, we expect volatility to increase around the policy meeting, especially if forward guidance suggests more than just a one-time adjustment. For those managing risk, it would be wise to consider scenarios where Swiss rates might test lower levels again. While the range of possible outcomes has slightly widened, the central expectation remains a quarter-point cut. Given the SNB’s careful approach and their tendency to hint at future moves, the market will closely analyze their language more than the decision itself. Attention should focus on how they describe inflation drivers, whether they mention energy or exchange rate effects, and their outlook for their persistence. This language will quickly influence future pricing, and changes can happen faster than expected. We should be prepared to adjust our views once their assessment tone and details are clearer. Create your live VT Markets account and start trading now.Barclays improves its outlook on oil prices due to strong fundamentals, stable supply, and easing trade conditions.
Barclays has updated its outlook on oil, feeling more optimistic thanks to several positive developments. The current market conditions are better than expected.
There’s been a reduction in trade tensions, which helps create a stable demand outlook. Supply levels are in line with forecasts.
Barclays’ Positive Outlook on Oil
These factors have led Barclays to adopt a more optimistic view of oil. They’ve reassessed their position based on these insights. This shows that the Barclays team has noticed better market performance than initially predicted. Demand remains strong, partly due to the easing of trade concerns that usually impact sentiment and predictions. The supply chain is also steady, reducing major uncertainties. As a result, Barclays is more positive about oil’s future. From our point of view, this situation offers reduced uncertainty, as the market signals are clearer. In such conditions, prices can stabilize, which influences implied volatility and forward curves. The reliable supply side has alleviated fears of sudden shortages or unexpected surpluses. To respond effectively, we should pay attention to changes in liquidity around front-month contracts. Price differences between immediate and future months could shrink again, especially if optimism continues. We may need to conduct stress tests for both downside and upside scenarios, particularly if physical inventories begin to diverge from current futures.Reviewing Market Conditions
Patel’s team appears to be estimating a stronger base level for demand in the upcoming quarter. This doesn’t mean we’re in a long-lasting bullish phase, but it does suggest that the risk of sudden price drops is lower for now. Timing is crucial, so we will closely monitor any shifts in guidance from OPEC members, as such updates often come sooner than expected. For us, this is not the time to be reckless, but it may be reasonable to consider lighter hedging on the downside. Current pricing indicates a shift in market sentiment, and our positioning should reflect this, while still being cautious. We’re analyzing historical pricing patterns during stable demand-supply periods to refine our short-term delta management strategies. When you eliminate distractions, it seems there could be increased gamma around certain expiry dates, especially if open interest continues to move outward. It’s also beneficial to observe refinery margins. They usually tighten or widen before significant price movements, and recently they’ve remained steady. This stability shows that physical demand is not just theoretical—it’s evident in the numbers, adding confirmation that current price levels may be more sustainable than they were last month. Traders dealing with spreads might think about shifting their focus to later quarters, where better backwardation or flat contango could offer more yield opportunities than targeting the front. Recent volume data shows that more participants are joining or adjusting their positions, supporting the idea that confidence is returning, at least temporarily. All of this emphasizes the need to adjust risk buffers not just weekly, but almost continuously as new information from swaps and options flows becomes available. Overall, it’s clear that while oil markets are never entirely predictable, they are currently facing fewer challenges than we’ve grown accustomed to. Create your live VT Markets account and start trading now.A new Japanese think tank will evaluate economic security, with a focus on tariffs and tensions in Taiwan.
Japan is planning to set up a think tank to examine how economic security issues influence supply chains and related areas. This decision comes in response to rising trade tensions and the situation involving Taiwan.
Japan’s Economic Risk Strategy
The think tank will operate under the National Security Secretariat (NSS) as part of Japan’s broader strategy to enhance its ability to manage economic security risks. Information about this plan will be included in the government’s upcoming annual economic and fiscal policy guidelines, expected later this month. The NSS intends to “review industry risks, boost economic intelligence capabilities, enhance think tank functions, and strengthen critical infrastructure.” This initiative highlights Japan’s increasing concern about the vulnerability of key supply chains, especially those linked to sensitive geopolitical regions. The proposed think tank, guided by the National Security Secretariat, aims to provide actionable insights for policymakers and industry planners by translating changing political and trade dynamics. This connection between trade and security emphasizes their growing interdependence. Tokyo is reacting to heightened worries about possible disruptions, particularly concerning Taiwan. That region is a critical point of tension: unresolved issues and China’s ambitions raise the chances of disruptions to trade routes or production links, either directly or indirectly. This isn’t just a theoretical risk—it requires practical actions. Including this plan in the annual economic and fiscal guidelines indicates a structured approach to integrating national preparedness into economic management. The government doesn’t just want to monitor developments—they’re ready to take action if needed. This could involve altering procurement policies, reviewing foreign investment, or supporting domestic production of essential components.Preparing For Economic Volatility
The message is clear: when governments take steps to strengthen supply chain resilience or enhance economic intelligence, it usually affects commodity prices, manufacturing inputs, and logistics significantly. Industries linked to semiconductors, specific metals, and industrial equipment are particularly vulnerable to the scrutiny the think tank may bring. If the NSS pushes for localizing or duplicating supply chains, price volatility could rise in related derivatives and shipping rates. Timing is also important. The upcoming fiscal policy guidelines could provide deeper incentives or directives, such as subsidies or changes in trade flow assumptions. If these guidelines change, it’s crucial to test hedging strategies and correlation assumptions right away. Delaying updates risks missing out on initial price shifts. Given this, reviewing current exposures, especially those related to East Asia-focused indices or complex supply-dependent sectors, is advisable. If needed, adjust the parameters in volatility models or realign net positions across mid-curve options. Traders may have overlooked how economic security initiatives can lead to immediate responses. As policymakers like Takagi integrate economic risk into security strategies, we need to view these developments as potential sources of volatility rather than simply background changes. Factors such as option skew, credit default swap spreads, and basis curves may begin to reflect rising concerns about fragility instead of relying solely on historical pricing trends. The assumption that trade operates smoothly is becoming more challenging to maintain. Finally, we should focus on instruments tied to infrastructure—especially those involving natural gas transport, communication networks, or foreign-involved industrial facilities. Once the think tank starts releasing briefings or risk assessments, these insights could quickly influence market sentiment or future guidance. Positioning in anticipation of this could be beneficial—provided that we’ve assessed our exposure. Create your live VT Markets account and start trading now.Steel tariffs will increase to 50% for most countries, but UK tariffs will stay the same at 25%
The White House has announced that new steel tariffs will start at 12:01 a.m. on Wednesday, June 4, 2025. The general steel tariff will increase from 25% to 50%.
However, the United Kingdom is exempt from this increase. Steel tariffs for the UK will remain at 25%.
Summary Of Tariff Changes
The White House has clearly set a timeline, announcing a major increase in tariffs on foreign steel. The general tariff will double from 25% to 50%, starting in early June 2025. This shows a stronger policy aimed at preventing cheaper steel from entering the U.S. market. Importantly, the UK will not see a rise in its tariffs. The 25% rate for UK-origin steel will remain, giving some producers a temporary advantage in costs. This change is expected to have a noticeable effect on the metal markets. We anticipate immediate changes in demand for futures contracts related to U.S. steel supplies. The higher tariff will raise the minimum price for steel not included in exceptions, which may tighten the supply-demand balance once logistics adjust and inventories reflect the policy shift.Market Reactions And Implications
This situation has straightforward implications for the market. We expect more price fluctuations than usual, especially when the U.S. markets open after the new tariffs take effect. Look for increased activity in U.S. contracts in late May ahead of the changes. Don’t assume prices will remain stable overnight in the week leading up to the announcement. Johnson’s team may see this announcement as a tool for domestic policy, but it’s likely to impact global trading, particularly for those involved with steel-heavy indexes, industrial sectors, or materials ETFs. This might lead risk managers at large U.S. manufacturers to reorder or adjust their plans, possibly resulting in increased trading volumes for related options before June 4. We’ll need to remain alert for these movements. The stability of UK steel may create differences in pricing between UK contracts and those in the broader market. Keep an eye on profit margins. As the price differential becomes more appealing, spreads between U.S. and UK contracts may begin to widen. Price discovery might slow down slightly as traders adjust their expectations. Additionally, we may see increases in the unusual put skews within the industrial sector if companies signal concerns about profits. More businesses may begin hedging against price changes in unexpected areas, so stay vigilant for these signs. Finally, treat any short-term price drops in steel-sensitive stocks as indicators rather than signs that the overall impact is lessening. Use those rebounds to reevaluate your hedges instead of cutting them too soon. Timing is crucial now—dates carry more weight than before. Create your live VT Markets account and start trading now.The US dollar strengthened due to trade talks and improvements in job openings, leading to positive market sentiment.
In North American trading on June 3, 2025, the US dollar gained strength for several reasons. The JOLTS report revealed 7.391 million job openings, surpassing expectations. Trade talks between China and the US progressed, easing worries about trade tensions. However, US factory orders for April fell by 3.7%, worse than the anticipated drop of 3.1%. Additionally, New Zealand’s GDT Price Index declined by 1.6%.
Key market highlights include gold falling by $27 to $3351, while WTI crude oil increased by 90 cents to $63.43. The S&P 500 rose by 0.6%, and US 10-year yields stayed unchanged at 4.46%. The USD was particularly strong against the Japanese yen (JPY), with USD/JPY rising 135 pips to 144.05, recovering from the previous day’s losses.
The euro decreased, undoing earlier gains and remaining stable for the week. While the USD saw less significant gains against commodity currencies, increased trade optimism uplifted commodities and stocks. Financial markets are looking forward to upcoming trade announcements, ECB decisions, and the US non-farm payrolls report due this Friday.
The unexpected strength in the JOLTS report, showing 7.391 million job openings, indicates that the US labor market is still strong. This positive news helped the dollar gain momentum, overshadowing the disappointing US factory orders figure of -3.7%. This suggests a slowdown in demand for durable goods, though businesses remain ready to hire.
Improved sentiment from positive developments in China-US trade discussions also stabilized global markets. Eased tensions, at least for now, enhanced the appetite for risk. This was evident in the rise of US equities, with the S&P 500 gaining 0.6%, showing that corporate earnings are being viewed favorably against recent macroeconomic data.
Despite this improved sentiment, government bonds remained steady, with the US 10-year yield unchanged at 4.46%. This suggests that traders in both bonds and equities are not dramatically adjusting their views on growth. Generally, strong job data would lead to speculation about policy changes and affect yields, but current stability indicates that rate expectations are already accounted for.
The significant rise in USD/JPY—up 135 pips to 144.05—suggests renewed confidence in the dollar’s yield advantage. The previous strength of the yen seems to have been overdone, given Japan’s shaky economic signals and the current lack of strong currency intervention from officials. As volatility in different asset classes remains low, such rapid shifts may occur more frequently. For those trading yen-based options or futures, this volatility means staying alert to short-term market movements is critical.
Gold’s drop of $27 to $3351 is influenced by more than just the dollar’s strength. Lower factory orders indicate weaker industrial demand for metals, but this alone shouldn’t have caused a 0.8% decline. The unwinding of safe-haven positions as traders take on more risk also plays a part. Without a flight to safety, there’s less demand for precious metals. For those holding short-term positions in metal derivatives, watching inflation expectations leading up to Friday’s labor data is crucial.
Crude oil’s $0.90 rise to $63.43 reflects better trade expectations. Traders are optimistic about a pick-up in global shipping and manufacturing in the coming months. This increase during a modest sentiment shift suggests that traders were overly cautious. Historical supply-driven surges in oil prices teach us that futures contracts can quickly adjust to even small improvements in cross-border outlook.
As for the euro, it has struggled to maintain earlier gains and is flat for the week. This raises concerns about upcoming communications from Lagarde’s team. Core inflation in parts of the Eurozone remains stubbornly high, but the euro has performed poorly against this backdrop. The market appears skeptical of the ECB’s forward guidance, reflected in cautious trading positions. This trend needs close monitoring over the next few days.
Finally, traders should pay attention to Friday’s US non-farm payrolls figure. Many investment strategies may change based on whether this confirms the strength seen in Tuesday’s JOLTS data. If hiring remains strong while inflation moderates, commodities, bond yields, and the dollar could act differently. It’s essential to consider positioning across these assets together, as inter-market exposure brings additional risk, especially when data outcomes diverge like this.
Today’s Asian economic data includes Australian GDP and Japanese services PMI, while AUD traders remain less engaged.
The latest regional data is not expected to significantly affect major foreign exchange markets. While Australian GDP figures may interest economics enthusiasts, the Australian Dollar is unlikely to respond strongly.
Japan’s services PMI is expected to attract more attention. The Yen has faced pressure recently since Bank of Japan Governor Ueda changed the conversation about monetary policy.
Economic Calendar for Asia
The economic calendar for Asia highlights events on June 4, 2025. Timing is listed in GMT, with previous results and consensus expectations included for reference. Current observations suggest that while some scheduled updates may seem crucial, their influence on trading decisions is limited for now. For instance, Australian GDP numbers are projected to stay within a familiar range, which reduces the incentive to take a directional stance on the Aussie Dollar based solely on these figures. Even a slight positive or negative deviation from expectations is overshadowed by wider factors like commodity prices and global interest rate expectations. The situation in Japan requires more focus. Following Governor Ueda’s recent changes to the monetary policy narrative, the Yen has come under renewed pressure. Market participants are increasingly wary that the Bank of Japan might alter bond-buying practices or adjust rates later this year. The services PMI will be an important short-term indicator to evaluate if domestic demand is stable and if any policy shifts are backed by solid economic performance. Unlike manufacturing PMIs, which Japan often finds hard to bring into growth, the services PMI closely mirrors local economic activity. An increase here would strengthen the case for tighter financial conditions in the future. Traders who prepare for this possibility won’t be caught off guard, especially as changes in interest rates happen more quickly on the short end of the spectrum.Changing Policy Assumptions
For us, this means we are entering a phase where simply looking at headline figures is not enough. It becomes increasingly important to compare unexpected data against central bank guidance. The key question isn’t just whether a figure is better or worse than expected, but whether it affects future policy decisions. Ueda’s recent comments highlight that even slight shifts in language can have a significant impact, especially in a currency still shaped by a history of negative rates. In the coming weeks, the market’s sensitivity to domestic data in Japan could increase. This isn’t due to volatility but because there is a growing concern that decisions could change if inflation and service sector strength continue. Any further gains in the Yen would likely reflect anticipated policy changes rather than improvements in fundamental factors. While we might not see clear signals regarding other central banks’ responses, small movements now carry larger consequences in currencies affected by rate spreads. Flexibility in positioning may be more important than strong convictions. As these data releases occur, the critical question will be whether they challenge prior assumptions about policy stability. Create your live VT Markets account and start trading now.Logan discusses the Fed’s framework, focusing on inflation, employment balance, and effective risk communication.
The Federal Reserve needs a strong and flexible approach that works in different situations. Its main goal should be to keep inflation at 2%, without trying to make up for past inflation dips.
It’s important to focus not just on employment levels, but also on what it means when employment goes beyond full capacity. The Federal Reserve should communicate better about risks, uncertainties, and its policy changes.
