Insights 
VT 
US business inventories in May 2025 remained unchanged at 0.0%, aligning with expectations. The prior month also recorded a growth of 0.0%.
Retail inventories, excluding autos, saw a 0.2% increase in May, consistent with the previous month’s performance. Sales amounted to $1,913.9 billion, marking a 0.4% decline from April 2025 but a 3.1% rise compared to May 2024.
Inventory To Sales Ratio
The inventories-to-sales ratio stood at 1.39 in May 2025, a decrease from 1.41 in May 2024. This indicates a slight tightening in business stock compared to sales.
Based on the information from Michalowski, we view the flat business inventories as a sign of caution, but the lower inventory-to-sales ratio is the more critical signal for traders. This tightening ratio, now at 1.39, suggests demand is slightly outpacing supply, which generally supports economic stability. This reduces the immediate risk of a sharp economic downturn driven by an inventory glut.
This stability suggests that implied volatility in the broader market indices, like the S&P 500, may be overpriced. Historically, periods without major economic surprises have seen the VIX index fall, as it did for much of 2023 when it frequently traded below 15. We believe selling options premium through strategies like iron condors or credit spreads on major indices could be profitable in the coming weeks.
Opportunities In Manufacturing Sector
The data points toward potential strength in specific sectors that must replenish these inventories. Recent Purchasing Managers’ Index (PMI) data from the Institute for Supply Management showed the manufacturing sector is already in a modest expansion, and a need to restock could accelerate this. We see this as an opportunity to buy call options or bull call spreads on industrial and materials sector ETFs to capitalize on a potential ramp-up in production.
This type of in-line economic data also reinforces the market’s expectation that the Federal Reserve will not be making any sudden moves. According to the CME FedWatch Tool, probabilities for a change in the federal funds rate at the next meeting remain below 15%, creating a favorable environment for strategies that benefit from range-bound markets. This reinforces our view that derivative positions should be structured around a theme of stability rather than a major directional breakout.
