U.S. Indexes closed higher on Tuesday, reversing earlier pressure following the dismal earnings from IBM as a cooler than expected CPI Report helping the market to reverse earlier losses. Following the inflation metrics, which were cooler than expected across all gauges, immediate downside was seen in US yields and the Dollar, to the benefit of FX peers, spot gold, and equities. In addition, it tempered some of the hawkish bets recently seen and heard, namely, Fed Governor Waller saying that another firm core inflation reading this week would see him consider a near-term rate hike, and if it was hot, he would take it as a signal, not noise. Oil prices saw gains as US/Iran continue to trade strikes, again, across the region, with the US confirming it recently undertook further strikes on Iran ahead of the blockade restarting later today. President Trump backed off his plan to charge a 20% fee for safe passage through the Strait of Hormuz, and will pivot to trade deals to cover the US costs of assuring safe passage through the Strait. Elsewhere, Fed Chair Warsh testified in front of the House, and speaking on Tuesday’s inflation data, said it does not say mission accomplished, and does not think that after yesterday’s CPI report that everything is swell; it is one data point, and does not want to overread or cherry-pick data. The Chair will be in front of the Senate on Wednesday. Sectors were largely in the green, with Health and Consumer Staples the clear laggards, with Tech, Communications, and Financials sitting atop of the pile. Tuesday marked the start of earnings season, and the big banks issued largely excellent reports, but did see mixed price action. As mentioned above, Treasuries gained, and the Dollar lost out to G10 FX peers, with the Kiwi once again extending its recent post-RBNZ rally, and was further helped by comments from Conway overnight. Precious metals also firmed. Ahead, earnings continue, US PPI is on the radar, and of course, any US/Iran updates. US CPI was cooler-than-expected in June and will temper some of the hawkish bets recently seen after Governor Waller said that another firm core inflation reading this week would see him consider a near-term rate hike. If it was hot, Waller said he would take it as a signal, not noise, adding that he would need to see several months of softer core inflation before becoming confident that price pressures were moving back towards target. Highlighting some of the winding back of hawkish bets, post-data, for July 4.2bps of hikes are priced in (versus 9.8bps pre-data), and by year-end now 32.7bps (prev. 41.1bps). Looking at the metrics, headline M/M printed -0.4% (exp. -0.1%, prev. 0.5%) with Y/Y at 3.5% (exp. 3.8%, prev. 4.2%). Core M/M came in at 0.0% (exp. 0.3%, prev. 0.2%), with Y/Y at 2.6% (exp. 2.9%, prev. 2.9%). The index for energy fell 5.7% in June after rising 3.9% in May, 3.8% in April, and 10.9% in March. Overall, the print will quell some of the fears of sticky inflation, for now, but as Waller said on Monday, he would need to see several months of lower core inflation to feel inflation is moving in right direction, and if inflation comes down [in the next reading], he will need a couple more that way to see that as a signal. Fed Chair Warsh speaking after the data also said that yesterday’s data does not say mission accomplished, and he does not think that everything is “swell”, while reiterating his commitment to the 2% target. Oxford Economics notes headline inflation has tentatively peaked, but the bigger takeaway from the downside surprise was the benign reading of core prices, and while the Fed is worried about a broadening out of inflationary pressures, and that wasn’t evident in the June CPI details. Ahead, and as Oxford points out, there are three inflationary forces that the Fed is on high alert for: tariffs, AI, and oil passthrough. Tariff effects were not discernible, while AI-related price pressures weren’t as evident as expected. Digging through the details, OxEco notes there was some sign of oil passthrough to certain consumer goods, and this feedthrough process could take longer than expected, given recent events in the Middle East. Looking ahead to PCE, Oxford suggests it won’t be as soft as the CPI, but it will still allow Fed officials to resist pressure to hike in their upcoming meeting and reinforces their baseline forecast for them to leave rates unchanged for 2026. Numerically, their preliminary nowcast of the PCE index sees a 0.2% M/M decline in the headline index and a 0.1% increase in the core index. Pantheon Macroeconomics provisionally estimated the core PCE deflator rose by 0.16% in June, allowing the inflation rate to drop to 3.3%, from 3.4% in May. Elsewhere, Oil closed higher by 1% while Gold reversed some of Monday’s losses by closing higher by 1.5% on Tuesday.
To mark my 3400th 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 1242 points yesterday and is now ahead by 4866
points for July after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, 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 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 previous 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 0.38% higher at a price of 7543.
The Dow Jones Industrial Average closed 9 points higher for a 0.02% gain at a price of 52,508.
The NASDAQ 100 closed 1.10% higher at a price of 29,586.
The Stoxx Europe 600 Index closed 0.17% higher.
Yesterday, the MSCI Asia Pacific closed 0.2% lower.
Yesterday, the Nikkei closed 0.74% higher at 67,743.
Currencies
The Bloomberg Dollar Spot Index closed 0.32% lower.
The Euro closed 0.35% higher at $1.1421.
The British Pound closed 0.18% higher at $1.3380.
The Japanese Yen rose 0.14% closing at $162.20.
Bonds
U.K.’s 10-Year Gilt closed 2 basis points higher at 4.99%.
Germany’s 10-Year Bund Yield closed 1 basis points lower at 3.09%
U.S.10 Year Treasury closed 4 basis points lower at 4.58%.
Commodities
West Texas Intermediate crude closed 1.15% higher at $79.04 a barrel.
Gold closed 1.43% higher at $4059.10 an ounce.
Today on the Economic front we have Euro-Zone Industrial Production at 10.00 am. Next, we have U.S. PPI and the New York Empire State Manufacturing Index at 1.30 pm. This is followed by a speech from Fed Member Williams at 1.45 pm and the latest Bank of Canada Rate Announcement at 2.45 pm. Finally, we have the Beige Book at 7.00 pm.
Cash S&P 500
Stocks finished the day higher, with the S&P 500 up 0.38%. However, yesterday’s move appeared to be driven more by a decline in implied volatility than by anything else. The one-day VIX fell four points to close at 10.5 after rising to nearly 15 on July 13. The increase in volatility reflected uncertainty surrounding Tuesday’s CPI report and Kevin Warsh’s testimony before the House. Once the market moved past the opening and implied volatility in the one-day VIX fell sharply, stocks did very little for the rest of the session, trading mostly sideways after the initial move. At this point, the effect of the decline in implied volatility has largely worn off. With the CPI report coming in cooler than expected on both the headline and core measures, it was not surprising to see Treasury yields fall. The decline was particularly sharp at the front end of the curve, with the two-year yield losing eight basis points to close at around 4.20%. However, Fed Chair Kevin Warsh’s comments during yesterday’s House hearing suggested that he believes inflation remains too high and that more must be done to bring it back to the Fed’s target. His remarks ultimately sounded fairly hawkish, raising questions about whether the market has adequately priced in the possibility of future rate hikes. Even after falling to 4.20% yesterday, the two-year yield is merely sitting at support. Now that it has broken above its previous resistance level, it still has room to move significantly higher—potentially toward the 4.35%-4.40% range. It is also possible that the Fed will need to raise rates again to finish the job that Jay Powell was never able to complete. Even with the weaker-than-expected CPI report, you would never know it from the Japanese yen. The currency strengthened by just 12 basis points on the day, with USD/JPY closing at around 162.25. The yen still appears vulnerable to significant further weakness. So far, very little has been done to persuade investors to change course, and the path of least resistance continues to point toward a weaker yen. USD/JPY has also been hugging its 10-day and 20-day simple moving averages. A breakout above the 162.50 area could send the pair toward 166—a level not seen since the mid-1980’s. Finally, it seemed odd that Nvidia rose roughly 4% yesterday while its five-year credit default swap spread widened to 60.6 basis points. Nvidia’s five-year CDS spread has increased from approximately 42 basis points on June 22 to more than 60 basis points as of July 14. Meanwhile, the stock has climbed from around $192, after bottoming on June 26, to approximately $211 today. Typically, widening CDS spreads are accompanied by falling stock prices. Something therefore appears misaligned in the market. Either Nvidia’s CDS spread will begin tightening again, or whatever is concerning the credit market will eventually weigh on the company’s share price. My guess is that the credit market sees something—or is worried about something—that the equity market, which is not always the sharpest tool in the shed, has yet to recognise. If that is the case, Nvidia’s recent rally is unlikely to last. TBD. My S&P plan worked well as the market rallied to my 7565-sell level before trading lower to my 7528 T/P level and I am now flat. Today, I will again be a seller from 7575/7600 with a higher 7621 ‘Closing Stop’. My only interest in buying the S&P is still on a move lower 7405/7430 with the same tight 7389 ‘Closing Stop’. If I am taken short, I will have a T/P level at 7548. If I am taken long, I will have a T/P level at 7463. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro had a small rally following the weaker than expected CPI Report. As I have had this long 1.1460 Euro position for over two weeks, I emailed my Platinum Members to exit this position for a small loss at 1.1452 and I am now flat. The Euro has support below from 1.1290/1.1360 where I will be a strong buyer with a lower 1.1225 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1420.
Dollar Index
I am still flat. Today, I will again be a buyer from 99.90/101.60 with the same 99.35 tight ‘Closing Stop’. If I am taken long I will again have a T/P level at 101.10.
Russell 2000
The Russell rallied to my sell range for a now 3000 short position. I will now raise my T/P level to 2950. I will continue to look to add to this position at 3060 while leaving my 3105 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
No Change: I am still flat. I will not chase the FTSE Market higher preferring to wait for a sell-off before initiating a new long position. Today, I will continue to be a buyer from 10300/10380 with the same 10215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10460. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat. Today, I will continue to be a small seller on any further rally to 52880/53180 with a lower 53405 ‘Closing Stop’. If I am taken short, I will have a T/P level at 52570. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
I am still flat as the NDX never came close to Tuesday’s buy range. Today, I will raise my buy level to 29000/29200 with a higher 28795 ‘Closing Stop’. The NDX has short-term resistance from 29900/30100 where I will be a small seller with a 39305 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29420. If I am taken short, I will have a T/P level at 29710. If any of these views change, I will be back with a new update for my Platinum Members.
December BUND
No Change: I am still long the Bund from last week at an average price of 125.55. I will now exit level to a small loss at 125.30 and reassess if triggered. I will leave my 124.75 ‘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
My 4010 long Gold position worked well as the market rallied to my 4080 T/P level and I am now flat. Today, I will again be a buyer of Gold on any further dip lower to 3920/4010 with the same 3855 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4070.
Silver Rolling Contract
My latest 57.60 long Silver position worked well as post the US CPI the market rallied to my 59.60 T/P level and I am now flat. Silver has support below from 54.70/57.70 where I will again be a buyer with the same 52.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 59.30.
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