U.S. Equity Markets closed mixed on Tuesday trade with overnight weakness on Trump steel and aluminum tariffs paring to see the S&P close flat, while both the NADSAQ and Russell 2000 closed down and Dow Jones higher. Sectors were also mixed with outperformance in Consumer Staples after strong Coca-Cola (KO) earnings. Energy and Materials also outperformed while Consumer Discretionary was hit as TSLA shares tumbled as Musk announced an apparent bid for OpenAI. Health care and Communications also underperformed. The focus was largely on tariffs after Trump announced 25% tariffs on steel and aluminum coming into the US, adding he will be announcing reciprocal tariffs within the next day or two. However, some of the moves were at odds with what you would expect on a fresh tariff announcement. Given Trump’s track record with Mexico and Canada in recent weeks, these new tariffs have a month grace period as well – which may potentially be used as a way for nations to negotiate with the US before facing such tariffs, with some analysts suggesting this announcement is to be used as a starting point for talks and perhaps the final version may not be as aggressive. In FX, the Dollar was sold while havens lagged but Sterling, the Euro and Antipodeans outperformed. The Pound was supported by hawkish commentary from Bank of England Member Mann, while the Japanese Yen was weighed on by rising US Treasury Yields. T-notes were lower across the curve in a steeper fashion with attention on tariffs, supply, Fed speak and key US data this week. On supply, the US 3 Year note auction was very strong ahead of the 10 and 30yr issuance on Wednesday and Thursday, respectively. Meanwhile, Fed Chair Powell spoke but largely reiterated his January messaging that the Fed is in no rush to alter policy due to uncertainties ahead. Hammack struck her usual hawkish tone, suggesting the Fed may be close to the neutral rate already. Attention turns to CPI on Wednesday, PPI on Thursday and Retail Sales on Friday. Gold prices were initially bid post Trump tariff announcement but reversed and finished lower sub USD 2,900/oz. Oil prices were firmer but settled off highs. There has been a lot of focus on geopolitics too with a potential end of the Gaza ceasefire due to violations while there are murmurings of progress regarding the Russia Ukraine war. The Dollar saw notable downside and stocks caught a brief bid on reports in AFP that Zelenskiy said they are prepared to offer a territory swap with Russia. Meanwhile, the US announced Russia released a US prisoner after talking with Trump envoy Witkoff – in what was seen as a show of good faith by Moscow. Overall, Fed Chair Powell largely reiterated commentary from the January FOMC. Between the FOMC and now, we have seen in line PCE, a strong US Labor Market report (with not as bad as feared annual revisions) and rising consumer inflation expectations. Given Powell’s language has not changed, it suggests the recent data has not altered the Fed Chair’s thinking on future policy. This is perhaps not too surprising given the main uncertainty at the minute is the economic impact of policies enforced by US President Trump, which will take some time to filter through into the data. Powell reiterated the Fed does not need to be in a hurry to adjust policy and that it is currently well positioned to deal with risks and uncertainties. Powell reiterated the message that the Fed can maintain policy restraint for longer if the economy remains strong and inflation does not move toward 2%, but they can also ease policy if the labor market unexpectedly weakens or inflation falls more quickly than expected. He also echoed the FOMC statement, noting the US economy is strong overall, inflation is closer to 2% goal, but still somewhat elevated. He said the unemployment rate is low and steady and the labour market is not a source of inflationary pressures (all reiterations). He touched on the framework too, noting the inflation target will remain at 2%. The Q&A with the Senate Banking committee was very political in nature, but Powell reiterated it remains to be seen what tariff policies will be implemented, and he does not know the effect. He repeated concerns about the labour market having diminished considerably since mid-last year, and he believes the neutral rate has risen from a very low pandemic level. The Fed Chair also stated the overall aggregate numbers on the economy are very, very good. Fed Member Hammack said it is likely appropriate to hold rates steady for some time with it still not clear that inflation will keep moving down to 2%. On inflation risks, Hammack noted they are skewed to the upside, while housing inflation pressures may be set to ease despite housing being a sticker part of the inflation equation. She said there are signs of optimism that they could see inflation easing. The 2026 voter believes monetary policy is only “moderately restrictive” and the policy rate may be close to the neutral rate (Fed FFR median for neutral = 3%, range 2.4-3.9%). Thus, the latter remarks suggest Hammack is likely towards the top end of that range, given the current target range of 4.25-4.50%. On the economy, Hammack said it is in a good place and the job market is solid, although it is unclear how much 2024 rate cuts have factored into the economy. The Cleveland President also added the Federal government debt is on an unsustainable path over the longer term. Meanwhile, Fed Member Williams struck a neutral tone, largely echoing fed Chair Powell. He noted that monetary policy is well positioned to achieve the Fed goals. He noted the US economy is in a good place, while inflation expectations are well anchored, and the unemployment rate should stay between 4% to 4.25%. Williams expects the US to grow by around 2% this year (vs Fed median of 2.1%) and next (median 2.0%). Inflation to hang around 2.5% this year before easing to 2% in the coming years. Williams noted the economic outlook is highly uncertain due in part to government policy, but modestly restrictive policy should return inflation to 2%. Elsewhere, Oil closed 1.3% higher while Gold was flat following a volatile trading session.
To mark my 3150th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 245 points yesterday and is now ahead by 1760 points for February. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.03% higher at a price of 6068.
The Dow Jones Industrial Average closed 123 points higher for a 0.28% gain at a price of 44,593.
The NASDAQ 100 closed 0.29% lower at a price of 21,693.
The Stoxx Europe 600 Index closed 0.18% higher.
Yesterday, the MSCI Asia Pacific closed 0.6% lower.
Yesterday, the Nikkei closed 0.03% higher at a price of 38,801.
Currencies
The Bloomberg Dollar Spot Index closed 0.41% lower.
The Euro closed 0.57% higher at $1.0365.
The British Pound closed 0.62% higher at 124.45.
The Japanese Yen fell 0.37% closing at $152.55.
Bonds
Germany’s 10-year yield closed 6 basis points higher at 2.43%.
Britain’s 10-year yield closed 5 basis points higher at 4.51%.
U.S.10 Year Treasury closed 3 basis points higher at 4.53%.
Commodities
West Texas Intermediate crude closed 1.3% higher at $73.26 a barrel.
Gold closed 0.2% lower at $2897.10 an ounce.
This morning on the Economic Front we have no Economic data of note from either the Euro-Zone or the U.K. At 12.00 pm we have U.S. MBA Mortgage Applications, followed at 1.30 pm by CPI. Next, we have Fed Chair Powell’s Testimony to Congress. Finally, we have a speech from Fed Member Bostic at 5.00 pm and a 10-Year Treasury Auction at 6.00 pm.
Cash S&P 500
No matter what the news buyers keep showing up on every dip. The S&P hit a morning low at 6036 before rallying 30 Handles into the close. Today is next hurdle for the market with U.S. CPI at 1.30 pm followed by the Powell Testimony to the Senate at 3.00 pm. Asa result I will not change my buy/sell ranges for today. We have had an excellent start to the year so there is no need to take unforeseen risks. The S&P has resistance from 6092/6108 where I will again be a seller with the same 6121 tight ‘’Closing Stop’’. The S&P has strong support from 5950/5970 where I will continue to be a buyer with the same 5935 ‘’Closing Stop’’. If I am taken short, I will have a T/P level 6074. If I am taken long, I will have a T/P level at 5992. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
My average 1.0325 average long Euro position worked well as the market rallied to my 1.0370 T/P level and I am now flat. Given how oversold the Euro is trading, I will continue to be a buyer of dips. The Euro has shot-term support from 1.0270/1.0330 where I will again be a buyer with a lower 1.0195 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
Dollar Index
I am still flat the Dollar as the market never came close to yesterday’s buy range. Ahead of this afternoon’s key inflation report, I will now lower my Dollar buy level to 106.80/107.40 with a lower 106.15 ‘’Closing Stop’’.
Russell 2000
No Change: I am still flat the Russell as I continue to be a buyer on any dip lower to 2170/2230 with the same 2115 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2270.
Cash FTSE
The ’Nothing Matters Theme’ has now moved to the FTSE. Every dip continues to attract buying despite the number of ‘’Open Gaps’’ below the market. History tells us that the FTSE never see these gaps go unfilled. Yesterday’s move higher saw the FTSE hit my 8790-sell level. I am still short, and I will continue to look to add to this position on any further move higher to 8870 with the same 8945 ‘’Closing Stop’’. I will now raise my T/P level on this position to 8730. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
I am still flat as the Dow again missed my buy range. Even though the Dow is trading higher at 44600, I do not want to chase the market higher especially ahead of the key CPI release at 1.30 pm. Therefore, I will continue to be a buyer on any dip lower to 43900/44150 with the same 43695 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 44360.
Cash NASDAQ 100
My latest 21710 average short NDX position worked well as the market sold off to my 21630 T/P level and I am now flat. The NDX has resistance from 21810/21970 where I will again be a seller with a higher 22005 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 21790.
December BUND
I am still flat the Bund as the market just missed yesterday’s sell range. Ahead of Powell’s speech this afternoon, I will now lower my sell level to 133.60/134.30 with a lower 135.05 ‘’Closing Stop’’.
Gold Rolling Contract
Gold hit a high a new all-time high at 2940 before falling $60. This move lower saw my 2889 T/P level triggered on Monday’s 2900 average short position and I am now flat. Gold has resistance from 2935/2951 where I will be a small seller with a higher 2965 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 2919. Given how severely overbought that Gold is trading I have no interest in buying the market at this time.
Silver Rolling Contract
My Silver plan worked well as the market sold off to my 31.30 buy level before rallying to my 31.80 T/P level and I am now flat. Silver has support below from 30.10/30.90 where I will again be a buyer with a lower 28.95 ‘’Closing Stop’’.
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