The Market Brief

An in-line inflation reading lifted stocks and bonds, easing concern over imminent Fed rate hikes despite elevated oil prices.

The data offered relief to Wall Street traders wary of geopolitical risks, with the S&P 500 poised to extend its monthly advance.

Following Friday’s weak July jobs report, the moderation in price growth may temper some of the Fed’s inflation anxiety, after three officials dissented on July 29 in favor of raising rates.

SPX is trading in a positive gamma regime, with spot sitting above the gamma flip level and dealer exposure building through the strikes just above current price.

In this setup, dealers tend to hedge by buying weakness and selling strength. That flow works against big directional moves, dampening realized volatility and keeping price action more contained.

It also tends to improve liquidity. Market makers hedging in the same direction as price tightens bid-ask spreads and deepens order books, making it easier to enter and exit positions without excessive slippage.

Key takeaway: positive gamma generally means calmer, more orderly markets with better liquidity for retail. That backdrop can flip quickly if spot drops back below the flip level, so it’s worth watching that line as the boundary between stability and a more volatile, thinner-liquidity regime.

In todays brief we break down why we remain constructive on equities heading into 2H despite mounting cross-currents in rates, geopolitics, and market concentration. We unpack what a shift in market breadth could mean for which stocks lead the next leg higher.