Good morning, traders,
Here’s a scenario playing out in the macro landscape this week: Everyday people are pulling back on household spending while the U.S. is suddenly buying a lot less from overseas.
So, does this activity — or lack of it — signal a slowdown, or are we laying the groundwork for another growth leg in the economy?
If you’re paying attention, the message to traders is pretty clear: Expectation is everything.
Markets don’t move on whether the economy is “good” or “bad.” They move on whether it’s better or worse than priced in.
Right now, we’re seeing signs that things are a little better than expected, but not so hot that the Fed needs to hit the brakes harder.
That’s a sweet spot. And if it holds through this afternoon, we could see another round of momentum build across equities, bonds — and yes, options.
Here’s what to watch.
Consumer Confidence: Still Lukewarm
On Tuesday, the Conference Board reported that consumer confidence rose to 97.2 in July, up from 95.2 in June.
That’s a two-point bump. It’s not nothing but still far from levels that would scream, “Party on, America!”
Consumers are still hesitant. They’re not exactly splurging at Target or booking back-to-back vacations.
But they’re also not panicking.
That matters.
It tells us that despite all the talk about inflation fatigue, folks are adjusting. They’re settling into this rate environment.
They’re not thrilled, but they’re not collapsing either.
And from the Fed’s perspective, that’s permission to stay steady on rates, not accelerate with cuts.
Trade Deficit Narrows — That’s Huge
Now this one flew a little under the radar, but it’s a big deal.
The U.S. goods trade deficit narrowed to $86 billion in June, its lowest level in nearly two years.
That’s because imports fell sharply.
At first glance, that might sound like a red flag: “Oh no, Americans are buying less!” But zoom out for a second.
Fewer imports means we’re keeping more production domestic. It also means net exports are boosting GDP.
And when economists see this shift, it changes the tone around Q2 growth.
Now there’s growing confidence that the second quarter will show a solid rebound, potentially enough to help corporate earnings stabilize and keep the “soft landing” narrative alive.
For traders, that’s bullish. Or at the very least, less bearish than people feared a month ago.
What’s the Fed Thinking?
The big show wraps up this afternoon, when the Federal Open Market Committee announces its latest rate decision following a two-day meeting.
Here’s what the smart money’s betting on:
- No rate hike this week.
- But language that keeps one more possible for later this year.
- A tone that acknowledges inflation progress without declaring victory.
Fed Chair Jerome Powell doesn’t want to slam the brakes and risk recession, but he also doesn’t want markets thinking we’re back to zero rates by Christmas.
So the market’s walking this tightrope: trying to front-run a Fed pause without getting too giddy.
That’s why macro data like this matters. It shapes expectations before Powell ever opens his mouth.
And right now? Expectations are shifting in a way that gives us room to the upside — especially in options, where implied volatility has been getting cheaper again.
What to Do With This
When you see numbers like we’ve had this week — steady confidence, shrinking trade deficits, possibly an improved GDP forecast (this number will be released this morning) — you’ve got to ask yourself:
What’s been priced in?
If the market was bracing for a hard landing, but we’re getting evidence of a soft landing, then you’ve got room to push long.
But don’t get cute.
Pick your spots. Use spreads. Look for setups where the macro shift gives you a tailwind but the technicals give you a clean entry.
The Fed’s decision today is the next domino.
And the traders who have been paying attention to this week’s data are already three steps ahead.
Stay street smart,
Jeff Zananiri
P.S. Join Danny Phee and I tonight at 8 p.m. ET for APEX Live, where we’ll walk you through the setups we’re watching, how the market’s reacting, and where the real opportunities are right now.
This is the most critical session of the quarter.
📅 Today | ⏰ 8 p.m. | APEX Live
*Past performance does not indicate future results
