U.S. Indexes rallied on Monday, with much of the upside led by Meta (META), resulting in NASDAQ outperformance. Meta’s PT was upgraded at Wells Fargo, with the desk citing a strong start for its Muse AI agent, which in turn supported chip names such as INTC and AMD amid expectations for stronger CPU demand given high Muse usage rates. The majority of sectors were higher, with Communication Services, Technology and Consumer Discretionary outperforming, while Energy, Utilities and Consumer Staples lagged. Crude prices tumbled on Monday amid hopes for diplomatic progress at the UN General Assembly this week, with President Trump noting he is open to meeting Iranian President Pezeshkian. Elsewhere, participants will be watching the outcome of the Trump/Xi meeting for any developments on trade. Treasury Secretary Bessent said the US is looking to bring in more everyday items from China, while energy products on the US side and medical devices on the Chinese side could be suitable for tariff reductions. In FX, the Swiss Franc and U.S. Dollar outperformed, while the Canadian Dollar and Japanese Yen lagged. CAD was weighed on by lower oil prices despite hawkish-leaning comments from Macklem, while JPY remained soft amid the continued fallout from Friday’s Bank of Japan decision despite the subsequent rate check by Japanese authorities. The Dollar gained despite the risk-on tone, potentially finding support from weakness in the Yen and Euro, with the latter pressured following weak German state election results for the incumbent CDU over the weekend. Treasury yields were lower across the curve as oil prices tumbled, while hawkish Fed speak had little impact on T-notes. Both Musalem and Goolsbee warned about demand-driven inflation alongside ongoing supply pressures, with Goolsbee noting that if inflation is predominantly demand-driven, the policy response would need to be more aggressive and front-loaded. Gold and silver prices moved lower as risk assets rallied, while Bitcoin saw notable gains. Chicago Fed President Goolsbee said strong demand may be adding to inflation alongside energy, tariffs and other supply shocks, noting there is “no ambiguity” about what the Fed would do if demand is overheating. He said evidence is needed that supply-driven inflation is fading; otherwise, it is difficult to see a credible path back to 2%, while supply shocks are proving to have a more persistent impact on inflation and must therefore be accounted for when setting monetary policy. Goolsbee stressed that restoring price stability will not be painless and that the Fed must have the courage to fight inflation. Goolsbee said evidence on whether inflation reflects demand overheating or supply shocks remains conflicting, and he is still trying to determine the balance, although inflation data earlier in the year appeared to show supply shocks waning and some inflation now appears to be coming from demand. Goolsbee added that district contacts are relaying concerns that sound like traditional demand overheating. He warned that if inflation is predominantly demand-driven, the rate response will need to be more aggressive and more front-loaded. Meanwhile, if supply-shock inflation proves persistent, the Fed’s only choice would be to reduce aggregate demand. He added that if fiscal policy is contributing to inflation, the Fed must take it into account. On the labour market, Goolsbee said the Fed does not currently have an employment problem, but does have an inflation problem, and wants evidence that inflation is going away. Business contacts report that the labour market is tightening, with alternative measures telling a similar story, while the unemployment rate is “pretty close” to full employment. He added that monthly job growth is not a particularly useful gauge of labour market health given uncertainty around population growth stemming from immigration policies. On policy, Goolsbee said estimates of the neutral rate are not particularly useful for short-run decisions, although if there is convincing evidence that inflation is returning to 2%, there would be no problem with rates coming back down. He remains optimistic that inflation can return to target provided there is no further evidence of demand overheating. On the SEPs, Goolsbee said that without them, markets will still seek to understand officials’ reaction functions. He added that the Fed remains credible and that he does not view any forthcoming hikes as reversing last year’s cuts. Elsewhere, Oil closed lower by 5% and Gold by 0.75%.
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For anyone following my Platinum Service it made lost 260 points yesterday and is now ahead by 5364 points for September after ending the month of August with a gain of 2645 points 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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