U.S. Indices closed lower on Monday with the Russell and NASDAQ lagging while sectors were predominantly firmer with Health Care, Utilities and Consumer Discretionary outperforming, but Tech, Energy and Communication lagged with tech still pressured after the ORCL and AVGO reports last week. Energy stocks were hit as oil prices declined on Russia/Ukraine peace progress – with talks taking place today with Ukraine, EU and the US, with all sides seemingly optimistic with President Trump suggesting they are closer than ever to peace. The pressure in crude prices gave a helping hand to T-Notes with the curve bull steepening. T-Notes hit a peak after the weak New York Fed Manufacturing survey, albeit the outlook was more optimistic. T-Notes then pared off highs into settlement. Fed speak saw Miran explain his dissent, Williams remarked Fed policy has moved toward neutral from modestly restrictive, while Collins wants more evidence of inflation returning to target before easing again. In FX, the Dollar saw mild weakness while the Japanese Yen outperformed as rate hike expectations built ahead of Friday’s decision, New Zealand Dollar lagged after the RBNZ Governor suggested that market conditions have tightened “beyond” what the RBNZ intended. The New York Fed Manufacturing Survey saw headline business conditions fall to -3.9 in December from 18.7 in November. The drop was led by a fall in new orders to 0, from 15.9, while shipments declined to -5.7 from 16.8, with unfilled orders also falling further into contractionary territory, to -14.9 from -5.8. Inventories fell slightly to 4.0 from 6.7. When looking at prices, both Paid and Received eased, falling to 37.6 from 49.0, and to 19.8 from 24.0, respectively. Employment was little changed, the number of employees ticked up slightly to 7.3 from 6.6, while the average employee workweek fell to 3.5 from 7.7. However, firms became more optimistic about the outlook. The six-month outlook for business conditions rose to 35.7 from 19.1, with new orders up to 38 from 23.3, shipments rose to 33.3 from 23.3, and unfilled orders rose to 12.9 from 1.0. Prices Paid are expected to ease, with the six-month index falling to 55.4 from 62.5, but the outlook on prices received rose to 46.3 from 41.3. The outlook for the number of employees declined slightly, to 8.8 from 11.9, while the average employee workweek rose to 12.9 from 5.8. The US NAHB Housing Market Index rose to 39 in December from 38, as widely expected. Current sales conditions rose by 1 to 4, sales expectations in the next six months increased by 1 to 52, while the traffic of prospective buyers held steady at 26. Additionally, the latest survey revealed that 40% of builders reported cutting prices in December (prev. 41%), marking the second consecutive month the share has been at 40% or higher since May 2020. Meanwhile, the average price reduction fell to 5% from 6%. The use of sales incentives was 67%, the highest percentage in the post-COVID period. Oxford Economics writes that the improvement in builders’ view of future sales is consistent with their forecast for Housing Starts to move sideways through Q4 but gradually increase in 2026 in response to lower mortgage rates and an improving economy and labour market. Fed Member Williams, in his initial remarks, said that Fed policy has moved toward neutral from modestly restrictive and monetary policy is well positioned for what lies ahead, which somewhat echoes what Chair Powell said after the rate decision that the Fed rate is in a “plausible range of neutral”, but it is “at the upper end.” Williams expects US unemployment to be 4.5% by the end of 2025, which is in line with the median projection seen in the recent Fed SEPs. In addition, Williams expects inflation to move to 2.5% in 2026 and 2% in 2027, and expects 2026 GDP growth to hit 2.25%, well above the 2025 rate. He reiterated he sees tariffs as a one-off price adjustment, not spilling over into broader inflation. In later remarks, he noted the Fed’s baseline forecast is a ‘pretty good outcome’ with recent rate cuts positioning the Fed to balance both mandates. On the labour market, added that a gradual cooling points to a modestly restrictive monetary policy. Lastly, ‘very supportive’ of the Fed’s decision to cut interest rates last week and expects the coming job data will show a gradual cooling, while it is too early to note what the Fed will need to do in January. Finally, Miran, argued that current excess inflation does not reflect underlying supply and demand dynamics, and said families are “rightly distraught” about the affordability challenges caused by past inflation. He asserted that prices are “once again stable” and that monetary policy should reflect this reality. Miran emphasised that shelter inflation, which is measured with a lag, overstates current conditions, while the rise in portfolio management fees is unrelated to underlying market forces. Stripping out housing and non-market-based components, he estimated that core PCE inflation may already be below 2.3%, effectively “within the noise” of the Fed’s 2% target. He does not believe recent goods inflation is primarily due to tariffs, though he acknowledged not having a complete explanation. Miran added that while goods inflation may now be structurally higher than before the pandemic, this could be more than offset by ongoing housing disinflation. He warned that if the expected decline in shelter inflation fails to materialise, the overall inflation outlook could change. For now, he sees no evidence of concern in inflation expectations data and maintains that there is no excess underlying inflation relative to the Fed’s target. He repeated that keeping policy too tight risks unnecessary job losses and affirmed that the labor market shows no signs of severe stress. He believes the Fed’s current policy stance is too tight and continues to contribute to housing affordability problems, in part due to past efforts to inject credit into the housing market. While he prefers an all-Treasury balance sheet, he opposes MBS sales due to the potential for realised losses and broader negative consequences that outweigh balance sheet purity. Finally, he said he anticipates remaining in his current seat until a replacement is confirmed and that President Trump has not spoken to him about the Fed seat or policy direction. Elsewhere, Oil closed lower by 1.5% while Gold was flat following a volatile session.
To mark my 3300th 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 80 points yesterday and is now ahead by 1712 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
Equities
The S&P 500 closed 0.16% lower at a price of 6816.
The Dow Jones Industrial Average closed 41 points lower for a 0.09% loss at a price of 48,416.
The NASDAQ 100 closed 0.51% lower at a price of 25,067.
The Stoxx Europe 600 Index closed 0.82% higher.
This morning, the MSCI Asia Pacific closed 0.9% lower.
This morning, the Nikkei closed 1.56% lower at a price of 49,383.
Currencies
The Bloomberg Dollar Spot Index closed 0.10% lower.
The Euro closed 0.09% higher at $1.1751.
The British Pound closed 0.02% higher at $1.3374.
The Japanese Yen rose 0.38% closing at $155.24
Bonds
U.K.’s 10-Year Gilt closed 1 basis points lower at 4.50%.
Germany’s 10-Year Bund Yield closed 1 basis points lower at 2.85%
U.S.10 Year Treasury closed 1 basis points lower at 4.18%.
Commodities
West Texas Intermediate crude closed 1.38% lower at $56.65 a barrel.
Gold closed 0.12% higher at $4304.10 an ounce.
This morning on the Economic Front we already had the release of the U.K. Unemployment Rate which came in at 5.1% as expected. Next, we have German, Euro-Zone and U.K Composite PMI at 8.30 am, 9.00 am and 9.30 am respectively. This is followed by the German and Euro-Zone ZEW Surveys at 10.00 am. At 1.15 pm we have U.S. ADP Employment Change, followed by Retail Sales, Building permits and Housing Starts at 1.30 pm. At the same time, we will receive November’s NFP data including the Unemployment Rate and Average Earnings. Next, we have Composite PMI at 2.45 pm and Business Inventories at 3.00 pm. Finally, we have a speech from Bank of Canada Governor Macklem at 5.30 pm.
Cash S&P 500
Despite sentiment reading printing off the chart numbers, the buy the dip continues to show up on any small sell-off. Ahead of us we have the Santa rally. Since 1929, the S&P has risen in 79% of Santa Claus Rally Periods with an average return of 1.6%. The Santa Claus rally covers the last five trading days of December and the first two trading days of January. Over the last eight years, the Index has declined just once during the Santa window. Personally, I have no interest in chasing the S&P higher from here without having a meaningful sell-off first as the risk/reward for new longs is not justified at current pricing. Due to the virtual non-stop assent over the past three years (April correction aside) the Monthly Charts are all massively extended. On top of this we have negative MACD Divergences on almost every chart. Yesterday the S&P just missed my 6870 sell level by one handle before falling to a low of 6802 before subsequently rallying into the close. Overnight, the Futures Markets are lower led by a renewed sell-off in the NDX. This move lower saw the S&P hit my 6777-buy level. I am still long with a now lower 6796 T/P level. I will add to this position at 6757 while leaving my 6739 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
I am still short the Euro from last Wednesday at 1.1700 with the same 1.1835 ‘Closing Stop’. I will continue to look to add to this position at 1.1770 while raising my T/P level to 1.1650. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still long the Dollar at an average rate of 98.80. I will now lower my T/P level to 99.10 while leaving my 97.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still short the Russell at an average rate of 2535. I will leave my 2605 ‘Closing Stop’ unchanged while raising my T/P level to 2510. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
The FTSE soared yesterday and I am still flat as the market never came close to Monday’s buy range. Today, I will raise my buy level to 9550/9630 with a higher 9485 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9680. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat. There is no doubt that the Dow has been one of the most difficult markets to get an edge in over the past few months. I do not have a firm view in the Dow and for this reason I am going to stay flat to see how the market behaves over the coming days. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX traded in a wide range on Monday before finally selling off overnight to my 24920-buy level. I am still long with a now lower 25070 T/P level. I will add to this position at 24720 while leaving my 24595 ‘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
I am still long the Bund at 127.30 with a now lower 127.70 T/P level. I will add to this trade at 126.60 while leaving my 125.95 ‘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: I am still flat. I have no interest in chasing the price of Gold higher. Neither do I want to be short. As a result, I will wait for a sell-off to initiate a new long position. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
My Silver plan worked well with the market trading higher to my 64.00 sell level before trading lower to my revised 63.20 T/P level and I am now flat. The 14-Day RSI closed above 90 again last night. As a result, I will again be a seller from 64.20/66.00 with a higher 67.05 ‘Closing Stop’. If I am taken short, I will have a T/P level at 62.70.
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