US Indices closed flat/down on Wednesday as rising oil prices limited any rebound from Tuesday’s late-staged selloff. The IEA confirmed it is to release 400 million barrels of oil into the market, but the timing depends on each country, while there is still plenty of uncertainty about the Strait of Hormuz, with Trump attempting to get shippers to sail the Strait again, but he is being met with resistance due to safety concerns, particularly amid reports of mines being placed there. There had also been reports suggesting Iran aspired to attack California with drones in response to the war, which also briefly hit sentiment and lifted oil prices. The move higher in crude saw yields move higher across the curve while there was likely dealer concession taking place ahead of the 10-year auction this afternoon, following the weak 3-year supply on Tuesday. Meanwhile, the US CPI data, although in line with expectations, saw the PCE components lean hot – also adding to downward pressure in Treasuries. In FX, the Dollar was bid as yields moved higher while the Euro was in focus after ECB’s Kazimir touted a sooner than expected rate hike, but not at the next meeting. AUD outperformed on more hawkish RBA bets with Westpac now expecting an RBA hike in March. Gold prices were marginally lower, while silver lagged, with bitcoin rising back above USD 70k. Headline inflation rose 0.267% M/M, in line with the 0.3% consensus and up from the prior 0.171%. The annual rate remained at 2.4% Y/Y, in line with expectations. Core inflation rose 0.216% M/M, in line with the 0.2% forecast, and cooler than the prior 0.295%. The annual rate rose at a rate of 2.5% Y/Y, in line with expectations and matching the prior reading. Core goods prices were little changed (0.08% vs 0.04%), while core services cooled to 0.27% M/M from 0.39% – a welcome sign for those at the Fed concerned about this area of pricing. Super core rose to 2.74% Y/Y from 2.67%. The data continues to show inflation is sticky around these levels, though ahead, analysts see potential upside risks amid the Middle East conflict, the rising oil prices and the risks of severe supply chain disruptions at the Strait of Hormuz. Meanwhile, Wall Strret Journalist and Fed watcher Timiraos highlighted that the very favourable data imputation in the October report, due to the government shutdown, unwinds after March. Pantheon Macroeconomics noted that CPI components feeding through to the core PCE deflator were hot and it expects the core PCE inflation at 0.4% M/M in February, after rising 0.4% in January (January PCE is due Friday). Overall, the report is unlikely to change the Fed’s stance for now, as policymakers prefer to wait and see the impact of the war in the Middle East and tend to look through one-off energy price rises. Nonetheless, Pantheon wrote that “the Fed’s rules of thumb imply that the 30% increase in oil prices since February will lift the core CPI by just 0.15ppts”. Elsewhere, Oil surged 4.5% rebounding from some of Tuesday’s 11% fall while Gold closed basically flat.
To mark my 3325th 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 60 points yesterday and is now ahead by 2758 points for March having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, 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 whe 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 0.08% lower at a price of 6775.
The Dow Jones Industrial Average closed 289 points lower for a 0.61% loss at a price of 47,417.
The NASDAQ 100 closed 0.03% higher at a price of 24,965.
The Stoxx Europe 600 Index closed 0.59% lower.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 1.43% higher at a price of 55,025.
Currencies
The Bloomberg Dollar Spot Index closed 0.48% higher.
The Euro closed 0.37% lower at $1.1570.
The British Pound closed 0.05% lower at $1.3409.
The Japanese Yen fell 0.54% closing at $158.88.
Bonds
U.K.’s 10-Year Gilt closed 13 basis points higher at 4.63%.
Germany’s 10-Year Bund Yield closed 8 basis points higher at 2.94%
U.S.10 Year Treasury closed 7 basis points higher at 4.23%.
Commodities
West Texas Intermediate crude closed 4.55% higher at $87.25 a barrel.
Gold closed 0.28% lower at $5176.10 an ounce.
This morning on the Economic Front we have a speech from Bank of England Governor Bailey at 9.30 am. This is followed by U.S. Weekly Jobless Claims, Housing Starts and Building Permits at 12.30 pm. Finally, we have a Thirty-Year Treasury Auction at 5.00 pm.
Cash S&P 500
The S&P 500 finished yesterday flat, and there is not much to really say here, because literally nothing changed during the session, at least not from an equity market standpoint. Interest rates, on the other hand, rose sharply following the CPI report, with the 10-year climbing 7 basis points to 4.23% and the 2-year rising 6 bps. The 2-year seems more interesting of the two at this point, only because of where it is and its relationship with oil over the past years. The 2-year climbed above resistance at 3.65% and closed just above the 200-day moving average. A move back to 3.8% on the 2-year at least, based on the technical chart, seems like a real possibility. The connection between rates, oil, and even the Dollar has been very strong in recent years, so if oil is going to be trading up to these higher levels, the more likely it is that rates will rise and the Dollar will strengthen. Meanwhile, oil continues to trend higher overall, with the 10-day exponential moving average acting as support and the upper Bollinger band as resistance. So, for now, as long as oil stays above the 10-day Moving Average (82.00) the higher trend will remain intact. This is having many effects in the market that are not visible in the S&P 500. First off, HY credit spreads continue to widen, and second, cross-currency basis swaps have turned more negative, which tells a few things. Demand for Dollar hedging is growing, liquidity flows have diminished, and financial conditions are tightening. If this continues, the road to the equity market will not be fun. We are seeing some of these risks overnight as a result of Oil trading 6% higher at 93.50 as I go to post. This move lower in the S&P saw the market hit my 6715-buy level. I will add to this position at 6690 while leaving my 6677 tight ‘Closing Stop’ unchanged. I will now lower my T/P level to 6741. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
Wrong! The Euro just missed my 1.1660 exit level yesterday before stopping out of my 1.1670 average long position at 1.1575 and I am now flat. The Euro is short-term oversold having fallen 3% in the last two weeks. The Euro has support below from 1.1420/1.1500 where I will be an aggressive buyer with a lower 1.1355 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1580.
Dollar Index
I am still flat. Today, I will continue to be a seller from 99.70/100.40 with the same 100.95 ‘Closing Stop’. If I am taken short, I will have a T/P level at 99.10.
Russell 2000
I am still flat as the Russell never came close to Wednesday’s buy range. Today, I will leave my 2425/2485 buy level unchanged with the same 2385 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2540.
FTSE 100
I am still flat. The FTSE got hit hard following a 12-basis point rise in UK Gilt Yields. Today, I will lower my FTSE sell level to 10420/10520 with a lower 10605 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10350.
Dow Rolling Contract
My Dow plan worked well as the market traded lower to my 47190 buy level before rallying to my revised 47345 T/P level and I am now flat. Today, I will again be a buyer on any further dip lower to 46500/46800 with a lower 46295 ‘Closing Stop’. If I am taken long, I will have a T/P level at 47210. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
I am still flat. The NDX has short-term support below from 24450/24650. I will continue to be a buyer on any dip to this area with the same 24295 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 25840. If any of these views change, I will be back with a new update for my Platinum Members.
December BUND
The Bund got hit hard on Wednesday as Yields rose almost 10 basis points. This move lower saw the Bund hit my 127.10 buy level. I am still long with a lower 127.70 T/P level. I will add to this position on any further move lower to 126.40 while leaving my 125.75 ‘Closing Stop’ unchanged.
Gold Rolling Contract
No Change: I am still flat. Gold has strong support below from 4650/4750 where I will continue to be a strong buyer with the same 4545 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4920.
Silver Rolling Contract
Silver continues to trade in wide daily ranges without threatening my buy range. I have no interest in chasing the market higher believing there are a number of trapped long positions above $100 and these positions will get stopped before the market moves higher in my opinion. Today, I will continue to be a buyer from 73.50/76.00 with the same 71.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 79.35.
Recent Comments