U.S. Indices ended Wednesday day in the green after a session that saw plenty of two-way price action in wake of the Fed decision and Powell press conference. The decision was largely as expected, with rates left unchanged, although in the accompanying statement added risks to the economic outlook increased further, and that risks to both sides of the mandate have risen. In the presser, Powell repeatedly reiterated the wait-and-see approach, to see how tariffs affect the economy before adjusting policy. Through both, markets were choppy but ultimately, not much movement was seen. Sectors were largely in the green with a couple in the red, but Communication Services was the clear laggard and hit by Alphabet (GOOGL) (-7.5%) after an Apple exec said it is exploring adding AI to search browser. Elsewhere, the Dollar was firmer to the detriment of G10 FX peers, with Antipodeans seeing the strongest selling, followed by the Japanese Yen. Treasuries chopped to the aforementioned Fed statement tweaks and Powell’s wait-and-see approach, while the crude complex was lower and sold off through the duration of the day as risk sentiment soured alongside trade updates. On the latter, EU is to reportedly announce a provisional list of tariffs against the US on Thursday, and EU is expected to target US-made cars with tariffs if trade talks fail. On China, US/China are set to meet this weekend, but Treasury Secretary Bessent stated that the Saturday talks are the beginning of talks, not advanced discussions. Moreover, US President Trump is not open to pulling back 145% tariffs to get China to the negotiating table. On Chips, Bloomberg reported that the Trump administration is planning to rescind Biden-era chip curbs as part of a broader effort to revise semiconductor trade restrictions. It looks to refashion a policy launched under Biden that created three broad tiers of countries for regulating the export of chips from Nvidia (NVDA) and others. The FOMC left rates on hold between 4.25-4.50%, as expected, in a unanimous decision. Within the statement, it said that economic outlook uncertainty has increased further (prev. uncertainty around the economic outlook has increased), and added a line that “risks of higher unemployment and higher inflation have risen.” The Fed maintained language from the March meeting that “recent indicators suggest that economic activity has continued to expand at a solid pace”, although it acknowledged “swings in net exports have affected the data”. It maintained its description of the current state of inflation and the labour market, saying “The unemployment rate has stabilised at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.” All in all, the rate decision was largely as expected, but the tweaks in language surrounding uncertainty in the economic outlook and increased risks to both sides of the mandate were the highlights. In Powell’s presser, attention will be on any further clarity surrounding the path ahead for the Fed, and whether he maintains his “wait-and-see” approach, while also paying attention to any communications around Trump tariff impacts. In Chair Powell’s press conference and Q&A, he largely reiterated a familiar tone, stating that the current stance of policy leaves the Fed well-positioned to respond in a timely manner, and that the Committee is in “wait-and-see” mode to assess the impact of tariffs before making the next move. Speaking on tariffs, the Chair said so far they have been significantly bigger than expected and the Fed has not seen big economic effects in the data yet, adding people are worried but the shock has not yet hit. Powell added that as the economy continues to evolve, the Fed will determine the appropriate policy stance, and if dual mandate goals are in tension, they will consider distance from the goal, and time to close gaps. When further questioned about what side of the mandate is at greater risk, he said it is too early to say which way risks will shake out, and once again reiterated that are in no hurry, and can they be patient. However, the Chair did state that when things develop, the Fed can move quickly if appropriate. Powell was later questioned about the path for a soft landing, and if higher inflation and higher unemployment were seen, the Fed would not see further progress towards their goals and would see a delay in getting to goals for the next year. Right now, it is not a situation where they can be pre-emptive and need to see more data. On future rate decisions, when asked about March projections for two rate cuts, stated the Fed can’t make a projection now, and we will have to wait until June [for updated SEPs]. Fed Chair Powell stressed that until they know more, the Fed can wait and see, adding that everyone on the committee supported waiting. He also added that the costs of waiting are fairly low. Note, Governor Waller has recently been dovish and warned if the Fed waits until the new policies are seen in the hard data, it would likely be too late. Elsewhere, both Oil and Gold closed lower by 1.75%.
To mark my 3175th 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 350 points yesterday and is now ahead by 1853 points for May after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. 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 2300 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 0.43% higher at a price of 5631.
The Dow Jones Industrial Average closed 284 points higher for a 0.70% gain at a price of 41,113.
The NASDAQ 100 closed 0.39% higher at a price of 19,867.
The Stoxx Europe 600 Index closed 0.54% lower.
This Morning, the MSCI Asia Pacific closed 0.4% higher.
This Morning, the Nikkei closed 0.45% higher at a price of 36,945.
Currencies
The Bloomberg Dollar Spot Index closed 0.65% higher.
The Euro closed 0.65% lower at $1.1294.
The British Pound closed 0.51% lower at 1.3284.
The Japanese Yen fell 0.98% closing at $143.93.
Bonds
Germany’s 10-year yield closed 6 basis points lower at 2.48%.
Britain’s 10-year yield closed 5 basis points lower at 4.46%.
U.S.10 Year Treasury closed 3 basis points lower at 4.28%.
Commodities
West Texas Intermediate crude closed 1.73% lower at $58.07 a barrel.
Gold closed 1.79% lower at $3371.10 an ounce.
This morning on the Economic Front we have German Industrial Production at 7.00 am. This is followed by the Bank of England Rate Decision at 12.00 pm. Next, we have U.S. Weekly Jobless Claims and Non-Farm Productivity at 1.30 pm. At 2.15 pm we have a press conference with Bank of England Governor, followed by U.S. Wholesale Inventories at 3.00 pm. Finally, we have the Atlanta GDPNOW at 6.00 pm and a 30-Year Treasury Auction.
Cash S&P 500
There was a lot of back-and-forth trading, followed by a late surge on news that the Trump team plans to rescind the Biden-era AI diffusion rule and replace it with something better. I am not exactly sure what that means or what it will look like, but it is probably no coincidence this news came yesterday, as the public comment period on Section 232 for semiconductors ended on Wednesday. Maybe “something better” means tariffs—I’m not sure. The S&P 500 ended the day up about 43 basis points. There is little to take away from yesterday’s price action, except that the market seems more anxious than ever and is clinging to every Trump headline. Overnight we had another tweet from Trump saying that a significant deal with a trading country will be announced on Thursday. This headline saw the S&P hit a high at 5681. It is so difficult to be short as one bullish headline will just eat your capital. Liquidity conditions certainly have not improved much, but they were pretty bad initially. The top of the book remains below where it was before Liberation Day and below the levels seen at the end of last year. Unfortunately, it does not take much to move the market these days, and that is precisely what we have been witnessing. “Uncertainty” was the word of the day at Powell’s press conference. He did his best to avoid answering any questions about the path of monetary policy, other than to emphasise that conditions remain highly uncertain. July Fed Funds futures are now trading at 4.265%, suggesting that the odds of a rate cut in July are below 50%. Meanwhile, the 10-year yield dipped about three basis points to 4.27% on the Fed news. I am not sure what happens next, but I still believe the bias is for rates to move higher. What does seem clear is that this consolidation phase appears to be nearing its end, potentially by May 15, based on the wedge pattern on the Daily Chart. The Dollar Index rebounded somewhat yesterday, but my guess is that the Dollar still has further to weaken. The fact that rates have not fallen while the Dollar remains weak suggests a market pricing in stagflation. Equities are the only part of the market that has yet to catch on to this. Analysts expect both core and headline CPI to rise by 0.3% in April, while Retail Sales are projected to increase by just 0.1%. Next week could be critical for the stagflation narrative, especially if initial and Continuing Jobless Claims are higher than expected when released this afternoon. Overall, I am bearish the S&P but as I mentioned at the start that it is so difficult to have a short position especially overnight. In my opinion all the good news is now priced into the S&P. I am still flat as the market fell shy of my 5685 initial sell level. Ahead of the weekend, I will now raise my sell level to 5702/5732 with a higher 5748 ‘Closing Stop’. The S&P will have short-term support at yesterday’s post FOMC Statement low at 5577. Therefore, I will move my buy level higher to 5560/5590 with a higher 5545 ‘Closing Stop’. If I am taken short, I will have a T/P level at 5678. If I am taken long, I will have a T/P level at 5625. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat. The market closed 0.5% lower. However, for Euro bears to regain control we need to see a close below 1.1150. Today, I will lower my Euro buy level slightly to 1.1100/1.1180 with a tight 1.1045 ‘Closing Stop’. Meanwhile, I will continue to be a seller on any further rally to 1.1420/1.1520 with the same 1.1605 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1260. If I am taken short, I will have a T/P level at 1.1340.
Dollar Index
My latest long 99.40 Dollar position worked well as the market rallied this morning to my 99.90 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 98.70/99.50 with the same 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.20.
Russell 2000
I am still flat. I will now raise my buy level to 1900/1970 while leaving my 1825 ‘Closing Stop’ unchanged. If I am taken long, I will have a T/P level at 2010. Given how much the Russell is underperforming the rest of the American Indexes, I still do not want to be short the market at this time.
FTSE 100
I am still flat. Ahead of the Trump Tariff announcement (rumoured to be with the U.K.) I will now raise my FTSE sell level to 8670/8750 with a higher 8815 ‘Closing Stop’. If I am taken short, I will have a T/P level at 8595. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
I am still flat as the Dow just missed Wednesday’s sell range on the overnight spike. The Dow has short-term resistance from 41600/41850. I will now raise my sell level to this area with a higher tight 42005 ‘Closing Stop’. If I am taken short, I will have a T/P level at 41350. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
My NDX plan worked well yesterday. After the market traded lower to my 19710 buy level we rallied to my revised 19830 T/P level. Subsequently, I emailed my Platinum Members to buy the NDX again at a price of 19630 before rallying to my 19810 T/P level. News that Trump will announce a tariff deal later today saw the NDX spike to my 20100-sell level. I am still short with a now higher 19980 T/P level. I will add to this position at 20300 while leaving my 20405 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
Late in Wednesday’s session the Bund rallied to my 131.90 sell level. I am still short with a now higher 131.50 T/P level. I will add to this position at 132.70 while leaving I am still flat. The Bund has resistance from tight 133.55 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: Gold never came close to Wednesday’s buy level despite closing lower by 1.75%. Today, I will continue to be a buyer on any dip lower to 3265/3295 with a lower 3238 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3322.
Silver Rolling Contract
During Powell’s press conference Silver sold off to my buy range for a now 32.35 long position. I will continue to look to add to this position on any further move lower to 31.45 while leaving my 30.45 ‘Closing Stop’ unchanged. I will now lower my T/P level to 32.95. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Recent Comments