“Nos” For Canada GDP
Similar to the United States’ weaker GDP print in the first quarter of the year, Canada’s economic growth has slowed as well. Statistics Canada’s April 30 GDP publication provided a preliminary estimate of 0.4% on a quarter-over-quarter basis. When looking at recent economic data, I think tomorrow’s revision could be adjusted meaningfully to the downside, but I don’t think a sharp upgrade is in the cards. In light of my expectation for a 0.3% rate of expansion, I like purchasing the “No” answers at the 0.6% and 1% thresholds for $0.84 and $0.96. The combination trade costs a total of $1.80 and would deliver $2.00 back to the investors on a number at or below 0.6%.
“Yes/No” Combo For US PCE
Tomorrow’s update on US inflation is expected to reflect a 2.2% year-over-year increase and the PCE figures have a heavy tendency to arrive near the median estimate. The reason for a subdued deviation rate is that the consumer and producer price indices are released earlier in the month and those inputs offer great predictability for the PCE. In light of the dynamic, I like a combination trade pairing the “Yes” answer at the 2% threshold for $0.92 and the “No” answer at the 2.4% threshold for $0.94. This high-conviction trade idea costs a total of $1.86 and would deliver $2.00 back to the investor on a number as low as 2.1% or as high as 2.4%, providing wiggle room in case of a modest miss or significant beat.
“Yes” For UMich Consumer Sentiment
The initial read on the University of Michigan’s Consumer Sentiment Index came in at 50.8 for this month and the institution is scheduled to release the final figure tomorrow morning. I see the potential for a significant upgrade because conditions in financial markets and on the trade front improved during the month, but I don’t see strong odds for a significant downward revision. Furthermore, excluding the COVID-era downgrade of -6.8 in March 2020, the most significant adjustment was just -3.1. I like the “Yes” answer at the 47 threshold which is priced at $0.91, since a downward revision of 3.8 would be required for this trade to lose money. That’s a stretch.
Double “Nos” For US Energy Production
Tomorrow’s thresholds nearest to 50-50 odds related to releases of US crude oil and natural gas production for the month of March are at 13.3 million barrels per day and 3.25 billion cubic feet for the entire month. I think the “No” answers in combination offer a strong risk-reward profile, since prices for both commodities are down year-to-date, limiting production gains. The contracts cost $0.87 together and I think there are low odds that both will exceed the specified thresholds. Indeed, I believe the probability is much higher of both indicators failing to exceed the specified levels. Since the combination costs $0.87, only one needs to work out for the investor to receive $1.00 back. Now if both come in below, the investor would receive $2.00. Finally the “Yes” answers face the tall bars of nearing all-time high production levels amidst sinking energy prices in order to make a profit.
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Note: Prices are highest bids as of the morning of May 29, 2025.
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Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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Displayed outcome information is based on current market sentiment from ForecastEx LLC, an affiliate of IB LLC. Current market sentiment for contracts may be viewed at ForecastEx at https://forecasttrader.interactivebrokers.com/en/home.php. Note: Real-time market sentiment updates are only active during exchange open trading hours. Updates to current market sentiment for overnight activity will be reflected at the open on the next trading day. This information is not intended by IBKR as an opinion or likelihood of a potential outcome.
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Disclosure: CFTC Regulation 1.71
This is commentary on economic, political and/or market conditions within the meaning of CFTC Regulation 1.71, and is not meant provide sufficient information upon which to base a decision to enter into a derivatives transaction.
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