USO, TLT Options Signal Inflation Fears Easing as Crude Drops $10
Updated
Updated · CNBC · Jun 27
USO, TLT Options Signal Inflation Fears Easing as Crude Drops $10
2 articles · Updated · CNBC · Jun 27
Summary
Treasuries held firm despite strong U.S. GDP and the hottest Fed inflation gauge since October 2023, with the 10-year yield slipping below 4.4% and TLT rising about 0.7%.
A roughly $10 slide in crude from last Friday's high appears to be driving that resilience by lowering expectations for renewed inflation and a more hawkish Fed.
USO options flows pointed to further oil relief: about 30% more puts than calls traded Friday, while $81 million of the ETF's $114 million premium was tied to calls.
TLT options also reflected support for bonds, with put-selling the most common trade by volume; one large trade sold 55-strike and 80-strike puts for roughly $2.6 million.
If oil stays in the $60-$65 range, strategists say CPI may have already peaked, giving Fed Chair Kevin Warsh room to shift from hawkish toward neutral or dovish.