“The institutional bid 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 the six-month bias for options, a measure of how much traders pay to protect against a decline, has risen to the fourth-highest ever, with the only parallels in June and November 2022, both of which came near major cycle lows.
When downside insurance becomes so expensive, he said, the market pays for protection, just as the worst may already be priced in.
Oil came back into the picture overnight. Brent crude rose 0.6% to around $72.45 a barrel. barrel after a loaded liquefied natural gas ship was hit by a projectile near the Omani coast as it exited the Strait of Hormuz, according to Bloomberg, a new attack testing the peace deal reached in late June.
Energy shocks linked to the Iran conflict drove crypto sales earlier this year before the ceasefire eased them, and a renewed flare-up is the kind of macro risk that had disappeared from the market’s view.
Elsewhere, Asian stocks fell as technology stocks came under renewed selling, with South Korea’s Kospi down 6.7%, according to Bloomberg. Samsung Electronics fell 8.3% even after quarterly profit rose, and SK Hynix fell the same as it began marketing a US listing. U.S. futures pointed lower, suggesting Monday’s Wall Street rebound may not carry.
