Insights 
VT 
Eurostoxx futures rose by 1.1% in early European trading, with optimism stemming from US-China talks over the weekend. German DAX futures also saw an increase of 1.1%, while UK FTSE futures were up by 0.4%.
S&P 500 futures experienced a 1.5% gain, largely holding earlier gains against the dollar. The market is anticipating Bessent’s briefing along with a joint statement from both the US and China following their recent discussions.
Market Optimism
The early moves in equity futures indicate there is appetite for risk following diplomatic signals from two of the largest economies. Eurostoxx and DAX futures climbing by more than a per cent suggests a return of confidence—or at the very least, a willingness among participants to re-enter positions previously scaled back due to geopolitical uncertainty. The FTSE, while lagging slightly in comparison, still points to broader market alignment in sentiment rather than sector-specific drivers.
Looking at US equity futures, the stronger performance of the S&P 500—rising 1.5%—confirms that the momentum is being carried across the Atlantic. The fact that these contracts are managing to preserve gains amid a relatively steady dollar indicates there is no immediate rush into safe havens. Risk positioning has shifted—not drastically, but clearly—in response to the weekend’s diplomatic progress.
Bessent’s upcoming remarks, coupled with the anticipated statement jointly issued by both countries, seem to be anchoring expectations. Markets are assuming no worsening in rhetoric, and perhaps even more collaboration going forward. That’s not based on speculation, but on the timing and content of the convocation—scheduled appearances like these rarely happen in the absence of coordinated messaging.
Strategic Positioning
For short-term volatility traders, this kind of convergence between monetary and political signals usually narrows the distribution of outcomes. For now, implied volatilities haven’t collapsed, which allows for premium selling opportunities—especially where skew is yet to adjust to this new base case. Positioning should reflect this skew compression potential, more so in indices directly linked to supply chain or trade dependencies given recent headlines.
In the coming days, any change to the tone or timing of the joint communication could lead to readjustments across the forward curve. Strategies that rely on expiry-linked convexity could benefit if trimmed by duration in the front and allocated more dynamically at the wings. We’re keeping risk-reversal ratios tighter than usual, given how sensitive the reactions have been to macro-political headlines this quarter.
One reading of these futures moves is that traders are shaking off the worst-case scenarios they had baked in over the past fortnight. This allows spreads to widen in places where compression trades had become too crowded, particularly between European and US indices. With the euro holding steady and bond yields stable, there’s room for delta-neutral strategies to breathe again without being disturbed by currency-driven divergence.
There’s also a noticeable shift in how calendar spreads are pricing in assumptions of market calm. As these assumptions firm up over the next sessions, it serves to highlight where the options market has lagged in reassessing tail risks. We’ve opted to roll some realised vol positions, thereby capturing edge created by an overshoot in last week’s vol buyers, many of whom have started unwinding.
This sort of follow-through from futures and options flow matters, not only because of what it implies for trend strength, but because it lets us measure confidence in directional setups without relying only on ETF rebalancing. For now, we watch for where liquidity increases, particularly around delayed policy statements, and will adjust risk accordingly.
