The busiest trading day of the year 💥
The Sandbox Daily (6.26.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
one busy trading day
Let’s dig in.
Blake
Markets in review
EQUITIES: Russell 2000 +1.68% | Dow +0.94% | Nasdaq 100 +0.94% | S&P 500 +0.80%
FIXED INCOME: Barclays Agg Bond +0.27% | High Yield +0.29% | 2yr UST 3.717% | 10yr UST 4.242%
COMMODITIES: Brent Crude +0.50% to $68.02/barrel. Gold +0.07% to $3,345.7/oz.
BITCOIN: +0.06% to $107,601
US DOLLAR INDEX: -0.39% to 97.297
CBOE TOTAL PUT/CALL RATIO: 0.81
VIX: -1.01% to 16.59
Quote of the day
“Worrying doesn't take away tomorrow's troubles. It takes away today's peace.”
- Randy Armstrong
The busiest trading day of the year
Mark your calendar right now.
Friday, June 27 will be one of the most important trading days of the entire year. It’s reconstitution day.
Every year, the FTSE Russell reconstitutes, or refreshes, the underlying components to its full suite of indexes. With roughly $10.5T benchmarked to Russell U.S. indexes, the trading session overlapping with the annual reconstitution is considered a significant market event given the size of asset flows, elevated trading volume, and possible spike in volatility.
Accordingly, the reshuffle forces fund managers and benchmark-tracking ETFs to adjust their portfolios to reflect the new weightings and components.
The size of the rebalance provides risk, as well as opportunities, for market participants – particularly in light of ongoing equity market volatility.
Investors readjusting their positions to reflect index changes must avoid slippage and the subsequent tracking error. At the same time, the rebalance presents potential opportunities for investors who can step in to provide liquidity.
Eric Kuby, chief investment officer at North Star Investment Management in Chicago, had this to say: “We do pay attention to it because we own a lot of companies that are on that borderline between being in or out of the Russell 2000.”
This process differs from the S&P 500 index, which rebalances quarterly, so only a few companies fall off or get added. It's also a much smaller universe of big, stable companies.
A similar process, although smaller in scope, will follow on Monday, June 30.
The $21B JP Morgan Hedge Equity Fund, managed by revered portfolio manager Hamilton Reiner, will reset its options overlay strategy on Monday. In the past, this event has attracted investor interest due to the potential source of additional volatility at month and quarter end.
Look for any increase in volatility or market dislocation to prove temporary in nature.
Sources: Bloomberg, CME Group
That’s all for today.
Blake
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Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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