U.S. Indices ultimately finished Friday’s session with an upward bias, with SPX, NDX and DJI closing green, but the Russell 2000 lagged and closed lower. Sectors were also mixed. Communication, Tech and Consumer Discretionary led the gains, while Utilities, Health Care and Industrials underperformed. Focus on Friday was largely on US data, which saw PCE lean softer than expected in September, while the University of Michigan Survey beat forecasts with declining inflation expectations. The data had little impact on Fed expectations. Meanwhile, T-notes were sold across the curve with yields settling three basis points firmer across maturities tracking Canadian bonds lower after a very strong Canadian jobs report. There was also a slew of chunky block trades in the 5- and 10-year futures alongside commentary from NEC Director Hassett to digest. The potential Fed Chair said it is time for the Fed to proceed “cautiously” with rate cuts, with the cautious language perhaps not as dovish as you would expect from a close Trump ally. The Dollar managed to claw back losses to finish Friday trade flat, with Japanese Yen strength pared as the currency appears exhausted by further Bank of Japan hawkish sources, as well as weighed on by higher US yields. The Canadian Dollar was the clear outperformer after a stellar Canadian jobs report, which saw a hawkish shift in rate pricing to see a 25bps hike fully priced in from the Bank of Canada next year. Gold continues to hover around USD 4,200/oz while silver caught a bid. Oil prices settled in the green amid the lack of progress on the Russia/Ukraine peace talks. Core PCE rose 0.198% in September, in line with the 0.2% forecast and prior, seeing the Y/Y rise 2.8%, cooler than the 2.9% seen in August, despite expectations for another 2.9% print. On the headline, PCE rose 0.269%, in line with the 0.3% prior and forecast, with Y/Y rising 2.8%, in line with forecasts but ticking up from the prior 2.7%. Within the report, Personal Income rose 0.4%, above the 0.3% forecast, matching the prior pace, while adj. consumption rose 0.3%, in line with forecasts, while the prior was revised down to 0.5% from 0.6%. Real consumption was unchanged, beneath the 0.1% consensus. The cooler price data is welcome, albeit quite stale, given it is from September, with data delayed due to the government shutdown – it ultimately had little impact on Fed expectations. However, it may influence the projections the Fed are set to update next week. Pantheon Macroeconomics note the rise in core PCE should be small enough for most to revise down near-term inflation forecasts, helping justify more policy easing. PM expects most members to revise down their Core PCE Y/Y forecast to 2.9% next week. Within the report, Pantheon suggests, based on their calculations, that the inflation uplift from the tariffs is continuing to build to 0.41% in September, from 0.37% in August. The desk also writes that “Core PCE inflation probably still will slightly exceed 2% at the end of next year, but progress towards the FOMC’s target likely will be sufficient for the Committee to ease policy by a further 75bp in 2026.” If the Fed cuts by 25bps (as expected) on Wednesday, it takes the FFR to 3.50-3.75%. The Bloomberg dot plot median estimate for the 2026 dot is at 3.25-3.50%, which implies just one more rate cut in 2026. Money markets and Pantheon are more dovish than this. Money markets are pricing in rates between 3.00-3.25%; Pantheon expects rates between 2.75-3.00%.Tthe University of Michigan Sentiment Index saw its first rise in five months, hitting 53.3 in December from 51.0 in November (exp. 52.0). The increase was concentrated primarily among younger consumers. Current conditions fell to 50.7 from 51.1 despite expectations for an uptick to 51.3. Expectations rose to 55.0, matching the highest forecast among analysts surveyed (exp. 51.2, prev. 51.0), led by a 13% rise in expected personal finances, with improvements visible across age, income, education, and political affiliation. Director Hsu notes that consumers see modest improvements from November on a few dimensions, but the overall tenor of views is broadly sombre, as consumers continue to cite the burden of high prices. On inflation, year-ahead inflation expectations fell to 4.1% from 4.5%, the lowest reading since January, while the five-year-ahead fell to 3.2% from 3.4%. Elsewhere, Oil closed higher by 0.7% while Gold closed lower on Friday by 0.2% following a late sell-off.
To mark my 3275th 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 was made 430 points on Friday and is now ahead by 942 points for December after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, 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
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