Gamma Expires Friday. This Week's Data Decides What's Next.

Bonds dipped their toes into the 112s on the Globex open… and apparently are starting to get used to the temperature. Not surprising, with the CME Group FedWatch projecting Fed Funds unchanged for the rest of my lifetime. Price lost ground after the U.S. Initial Balance, giving the Heisman to the day’s Point of Control (113`07). Cash yields this morning remain a skosh (i.e., a smidgen) under a spicy 5%.

Overnight, bonds extended their slide before stabilizing during the London Initial Balance near 112’22. Key levels for today remain 113’00, the HVL where acceptance above would signal bullish momentum, and 112’16, the GEX 1 level where breaks below would reinforce a bearish bias.

The market regime holds from the prior read, but the coil has been stress-tested and survived: CPI and the 10-year auction are now the immediate live wires, and the structure is still intact heading into them. Dealers remain long a significantly large gamma position, the buyback window is open, and the window of weakness is still technically closed, so the mechanical bid is in place through Friday.

The critical transition is now visible on the calendar: this gamma profile comes off the board Friday, and next week the tape trades without the cushion that has been suppressing realized vol and absorbing sell-the-news impulses all week. That means the sequence matters enormously: soft CPI today plus a clean 10-year auction gives the coiled energy a release valve into the expiry pin, and soft PPI Wednesday confirms it, setting up a cleaner tape for the Xi-Trump meeting on the 14th and 15th to drive directional follow-through.

Hot inflation or a sloppy auction today into elevated oil prices and the Iran backdrop is a more dangerous combination precisely because the gamma cushion absorbs it now but expires Friday, leaving any unresolved stress to detonate into an unprotected vol structure next week. VIX sitting in the 18-25 band reflects genuine uncertainty, not complacency, and that is the honest read on where risk sits.

The coil resolves this week, one way or the other, and the Xi-Trump meeting is the final catalyst that determines whether the released energy carries into next week as a trend or a reversal. Also keep an eye on UK Gilt yields which are making new highs as UK MPs pressure Prime Minister Keir Starmer to set out a timetable to stand down.

Silver, copper, and gold prices screamed higher in early Asia trading as Peru's energy crisis threatens supply. Peru is one of the world's top silver, gold, and copper producers. Amid the ongoing power crunch, smaller and higher cost mines, along with projects already operating on thin margins, face production cuts and temporary shutdowns.

Gold, silver, and copper have since pulled back into the European session as cash gilt yields raced higher on political uncertainty over whether Keir Starmer holds onto the UK premiership, and US Treasury yields rose in the futures market on renewed Iran tensions. Trump issued harsh words overnight, threatening to reinstate Project Freedom and rejecting Tehran's latest offer. That said, Trump has had multiple opportunities to re-escalate with Iran and so far, has chosen not to.

Fundamentals haven't changed. Silver and copper are both in structural supply deficit. Gold fundamentals have not changed either as central banks continue to buy, with China and Poland leading the charge. My view: this remains a buy the dips metals tape, not sell the rips.