U.S. Indexes closed little changed on Wednesday ahead of NVDA earnings after the close. Sectors were mixed, with Industrials, Tech, and Utilities leading gains, while Healthcare and Communications saw the most weakness. In comms, slight weakness in Alphabet was enough to offset the gains in Meta following the latters’ settlement in the US case on social media harm to children, which helps clear some of the uncertainty overhang (to pay a max of $16.68bln). The Dollar and US yields rose on the day in response to above consensus PCE report; the core readings matched expectations, though the headline came in slightly above at 0.2% M/M (exp. 0.1%) and 3.7% Y/Y (exp. 3.6%). Despite the rise in US 2-year yields, money market bets on Fed policy were little changed for the September meeting, still pricing a 60% chance of a hold. Meanwhile, US GDP was unrevised at 1.5% in Q2 on the second estimate, with increases seen in consumer spending, exports, and investment; durable goods beat in July, supporting the theme of solid investment. Oil prices settled slightly lower, but well off European lows. The initial weakness was a continuation of downside in response to a RIA report on Tuesday that a ceasefire between the US and Iran has been agreed upon, and it includes free navigation in the Strait of Hormuz and will be announced in the coming days. Since the report, no other news outlet has reported anything similar. Helping crude to rebound was a Bloomberg report that Russian President Putin is planning an escalation vs Ukraine as talks hit a dead end. The EIA report may have also contributed to the reversal, with the SPR 3.7 million draw more than offsetting the slight commercial crude stock build. Additionally, modest upside was seen in response to reports that a senior Iranian Official said that an agreement with Oman on the Strait of Hormuz has not yet been finalised. Separately, IRGC said Iran and Oman agreed on the share of Hormuz revenues; however, US interference is delaying implementation. As mentioned, US yields were firmer with the curve bear-flattening as the short end underperformed. The US 5 year note auction was met with improved demand since the last auction, with dealers’ proportion of the bid shrinking; however, the 0.2bps tail displays the challenges the maturity faces. Amid the rise in yields and the USD, precious metals were weighed on, with spot gold trimming MTD gains, now sitting at ~ USD 4,600. Core PCE rose 0.2% M/M in July, in line with analyst expectations, while headline PCE rose 0.2%, above the 0.1% forecast. Core PCE rose 3.3% Y/Y, matching both the prior pace and analyst forecasts, while headline PCE rose 3.7% Y/Y, unchanged from the prior but above the 3.6% forecast. With the headline measures hotter than expected, the initial reaction was hawkish as the FOMC continues to face stubbornly elevated inflation. However, the data did not materially alter the policy outlook, with recent softness in the labour market allowing the Fed to remain patient rather than rushing into rate hikes. There is still more data due before the September FOMC to further shape expectations for the meeting, with markets currently assigning around a 62% probability of a hold. Elsewhere within the report, Personal Spending rose 0.2%, above the 0.1% forecast but slowing from the prior 0.3%, while Personal Income rose 0.4%, above both the 0.2% forecast and prior, pointing to continued resilience among consumers. On prices, Pantheon Macroeconomics noted that the core deflator was a whisker away from rounding to 0.3%, although the underlying details were relatively encouraging. The consultancy highlighted that around 11bps of the monthly core increase came from portfolio management prices, a volatile component which it expects will largely be revised away following upcoming methodological changes. Pantheon expects further relatively reassuring monthly inflation prints to convince the FOMC to keep policy unchanged through the remainder of the year. GDP growth was unrevised at 1.5% for Q2, in line with expectations. The increase was supported by increases in consumer spending, exports, and investment that were partly offset by a decrease in government spending. The upward revision to consumer spending reflected an upward revision to services that was led by healthcare, which was partly offset by a downward revision to goods that was led by recreational goods and vehicles. The price index rose 6.4% Q/Q, above the expected 6.3%; core PCE prices rose 3.6% in Q2, above the 3.4% consensus, whilst sales rose 2.2% as expected. Real final sales to private domestic purchasers increased 4.2%, revised up from 3.9%. The price index for gross domestic purchases rose 5.8%, revised up from 5.7%. Oxford Economics notes that solid consumer spending will keep the Fed focused on inflation, with Q2 headline and core PCE revised slightly higher. The firm expects Core PCE to end 2026 at 3.2% before easing to 2.3% by Dec. 2027 as fading tariff effects, services disinflation and lower energy prices drive further disinflation. Nvidia’s earnings saw revenue and EPS moderately beat expectations but the shares fell 3.5% following the release. Elsewhere, Oil closed flat while Gold was soft ending Wednesday’s session with a loss 1.3%.
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For anyone following my Platinum Service it was flat yesterday and is still and is still ahead by 2400 points for August after closing July with a gain of 8031 points, 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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