U.S. Indexes closed lower on Wednesday, weighed by a combination of continued weakness in the AI trade and heightened volatility surrounding the FOMC. Overnight, SK Hynix earnings failed to impress despite reporting record profits, adding further pressure to semiconductor names and the NASDAQ 100, which is now down more than 10% from its record highs. Meanwhile, industrial names exposed to the AI theme also underperformed after Caterpillar (CAT) fell 6.9% following a downgrade at Baird, which cited expectations for slowing order and backlog momentum in 2027 and 2028. Volatility picked up around the FOMC announcement and Chair Warsh’s press conference. As expected, the Fed left rates unchanged, although the decision saw a 9-3 vote split, with Logan, Hammack and Kashkari preferring a 25 basis point rate hike. The absence of a hike, versus roughly a one-third probability priced before the meeting, initially sparked a dovish reaction across asset classes. However, the moves in equities, gold and the 10-year Treasury quickly reversed during Warsh’s press conference. Warsh largely reiterated his commitment to restoring price stability, continued to avoid providing forward guidance and downplayed the significance of the June CPI report in the policy decision. The most notable market reaction came in the Treasury market, where the curve underwent a pronounced steepening, led by the long-end. Likely reflecting investors demanding greater term premium amid the continued absence of forward guidance. Following the meeting, money markets pushed back expectations for further tightening, with a 25bp hike no longer fully priced by year-end. Attention now turns to Friday, when markets will hear from Logan, Hammack and Kashkari, providing further insight into the rationale behind their dissents. Geopolitical developments also tilted back towards escalation, helping crude prices recover some of this week’s losses. President Trump vowed to respond forcefully following Iranian strikes on US targets in Jordan, while reports suggested the Houthis were considering imposing fees on commercial vessels transiting the southern Red Sea, although the group’s leader later pushed back on those reports. Separately, the EIA reported a larger-than-expected draw in US crude inventories, with the decline even steeper once the Strategic Petroleum Reserve draw was included. Spot gold and silver ended modestly higher, supported by a weaker Dollar, although gains were pared as longer-dated Treasury yields moved higher after the Fed press conference. attention was firmly on the FOMC. The Fed left rates unchanged, as expected, although the decision saw three dissenters—Logan, Hammack and Kashkari—who all preferred a 25bps rate hike. The statement itself generated a dovish market reaction, with front-end Treasury yields initially falling as participants unwound hawkish positioning built ahead of the meeting, with money markets having priced around a 33% probability of a hike. Attention then shifted to Chair Warsh’s press conference, which ultimately triggered a pronounced steepening of the Treasury curve, lead by the long-end. While front-end yields remained lower on the session, longer-dated maturities sold off sharply, with the 30-year yield briefly rising above 5.20%, its highest level since 2007. Warsh again refrained from offering any forward guidance, instead emphasising that markets should react to incoming data rather than Fed communication. The continued absence of guidance may be encouraging investors to demand additional term premium further out the curve, reflecting greater uncertainty over the future policy path. Attention on Thursday turns to the US GDP and PCE reports, which will provide the next key test of the inflation outlook following the Fed’s decision. However, Warsh stressed today he looks at a range of indicators for reaching 2% inflation. Elsewhere, Oil closed higher by over 6% while Gold ended Wednesday’s volatile trading session with a gain of 0.6%.
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For anyone following my Platinum Service it made 1155 points yesterday and is now ahead by 8031 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
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