Insights 
VT 
The Atlanta Fed GDPNow model projects a 2.5% growth rate for the third quarter of 2025, remaining steady from August 5 to August 7. This prediction follows the recent wholesale trade report by the US Census Bureau.
The contribution of inventory investment to third-quarter real GDP growth increased slightly from 0.76 percentage points to 0.82 percentage points after the report. The next GDPNow update is scheduled for Friday, August 15.
The Economic Environment
The steady 2.5% growth estimate for the third quarter suggests the economy is neither booming nor busting, creating a stable backdrop. This kind of environment often leads to lower market volatility. We anticipate that implied volatility on major indices like the S&P 500 will likely drift lower in the coming weeks.
Recent data supports this view of a “soft landing” finally taking hold. The July 2025 inflation report showed the Consumer Price Index cooling to a 2.8% annual rate, down from the higher figures we saw at the start of the year. Combined with a July jobs report that showed a healthy but not excessive 190,000 jobs added, the Federal Reserve has little reason to act aggressively.
Given this, traders should consider strategies that benefit from declining volatility and time decay. Selling premium through strategies like iron condors or credit spreads on broad market ETFs could be advantageous. The VIX, a measure of expected volatility, has been hovering just below 15, a significant drop from the levels above 20 we experienced during the market uncertainty in the spring of 2025.
The upward revision in the inventory component of the GDP forecast, though small, is also a key detail. It suggests that businesses in the industrial and manufacturing sectors are starting to restock their shelves. This could present targeted bullish opportunities in options on sector ETFs like the XLI.
Market Projections And Strategies
This stability in economic projections also calms the bond market. We are seeing futures markets price in less than a 10% chance of another rate adjustment by the Fed for the remainder of 2025. This reduces the risk of sharp moves in Treasury yields, making it a good time to sell volatility on interest rate-sensitive instruments like the TLT.
The current market character reminds us of the low-volatility environment we saw for much of 2017. During that period, consistent, methodical strategies outperformed speculative directional bets. A focus on high-quality companies and profiting from the passage of time may be the most sensible approach.
