“Institutional supply has all but disappeared,” said Yusuf Fakhro, partner at ARP Digital, pointing to CME futures open interest at a 32-month low and a maturity structure at its tightest since early 2023.
He added that six-month options bias, a measure of how much traders pay to protect against a downside, reached its fourth highest level on record, with the only parallels in June and November 2022, both of which approached major cycle lows.
When downside insurance becomes this expensive, he said, the market pays for protection, even though the worst may already be priced in.
Oil returned to the forefront overnight. Brent crude rose 0.6% to around $72.45 a barrel after a loaded liquefied natural gas carrier was hit by a projectile near the Omani coast as it left the Strait of Hormuz, according to Bloomberg, a new attack that tests the peace deal reached in late June.
Energy shocks linked to the Iran conflict drove cryptocurrency sales earlier this year before the truce dampened them, and a new surge is the kind of macro risk that has faded from a market perspective.
Elsewhere, Asian stocks fell as technology stocks saw further selling, with South Korea’s Kospi falling 6.7%, according to Bloomberg. Samsung Electronics fell 8.3% even after a sharp rise in quarterly profits, and SK Hynix fell similarly as it began marketing a U.S. listing. U.S. futures are trending lower, suggesting Monday’s Wall Street rebound may not bear fruit.
