SPX floats near record highs while housing cracks, layoffs creep, and Iran simmers. Traders sell 62k put spreads for pennies.

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The surface looks smooth. The engine is not. The S&P 500 is printing near 5,960. Volatility is dead. The VIX is under 12. But the macro board is flashing yellow. Housing is softening. Construction is slowing. Manufacturing is contracting. And the market is acting like none of it matters.

Mortgage rates are stuck near 6.9%. Inventory is up 30% from last year but still 16% below pre-COVID levels. Prices are no longer climbing. They are stalling. The Fed held rates steady again this month at 4.25% to 4.5%. Inflation ticked up to 2.4% in May. Core CPI is stuck at 2.8%. That is not enough to trigger a cut. But it is enough to keep pressure on credit and real estate.

The labor market is softening. Job creation slowed to 152,000 in May. That is the weakest print since late 2022. ISM manufacturing has been in contraction for three straight months. Construction payrolls are flat. Layoffs are creeping into industrials and materials. The Fed says it is watching. It is not moving.

Now the tape. SPX options flow shows a customer selling 62,000 contracts of the Aug 8th 4900/4950 put spread at $0.50. That is a $3.1 million premium collected with a $6.2 million max loss. The trade makes 1% in 6.5 weeks if the index stays above 4950. The downside buffer is 18%. The risk is real. The conviction is louder.

JPMorgan’s desk is reportedly turning bullish again. They cite resilient earnings and strong liquidity. But the unresolved list is long. Tariffs are still working through supply chains. Iran’s nuclear program is delayed, not dismantled. Commercial real estate is under stress. The Fed is boxed in. And the leverage train is still rolling.

The market is pricing perfection. The economy is not delivering it. The cracks are visible. The reaction is not.

Sources:

https://www.housingwire.com/articles/federal-reserve-interest-rates-steady-june-2025-inflation-job-market/

https://cardinalrealtywi.com/blog/housing-market-trends-june-2025-or-what-our-heroes-need-to-know

https://finance.yahoo.com/quote/%5ESPX/options/

https://themortgagereports.com/120608/fed-holds-rates-june-2025