The Bank of England (BOE) raised its key interest rate by half a percentage point to 5%, the highest level in 15 years. This decision was made with the aim of curbing inflation, which is currently the highest among the Group of Seven wealthy countries. Out of the nine policymakers, seven voted in Favor of the aggressive rate hike. This action by the BOE stands out as more significant compared to the recent smaller rate increases implemented by other central banks such as the European Central Bank, the Bank of Canada, and the Reserve Bank of Australia. In contrast, the U.S. Federal Reserve chose to keep its key rate unchanged in their most recent meeting. Federal Reserve Chair Jerome Powell told lawmakers during his testimony before the House Financial Services Committee on Wednesday that policymakers anticipate the need to raise interest rates in order to address U.S. economic growth and mitigate inflationary pressures, despite keeping rates unchanged at their recent meeting. Powell stated that the speed at which rates were raised in the past year is no longer a significant factor. He suggested that it might be appropriate to continue raising rates in the coming months, but at a more gradual pace. According to a report by the National Association of Realtors and Realtor.com, the U.S. housing market is facing a significant shortage of available properties, particularly in the affordable price range. The report shows that there is a deficit of approximately 320,000 home listings within the affordable range of buyers who make up to $75,000 annually. These “middle income” buyers can only afford around 23% of the current listings nationwide, a sharp decline from about half of the listings five years ago. Federal Reserve Bank of Atlanta President Raphael Bostic expressed his support for maintaining the current interest-rate target level for the remainder of 2023. He claimed that it would be wise to exercise patience and allow inflation to fully feel the effects of prior policy tightening. Bostic emphasised that it takes time for monetary policy changes to significantly influence economic activity but remained optimistic that the tightening measures will become increasingly effective in the coming months, leading to progress in achieving the desired outcomes. European Markets closed lower for the fourth consecutive session as the Swiss National Bank and Norwegian Central joined the BOE in hiking rates by 25 Basis Points and 50 BP respectively. The European Central Bank (ECB) is intensifying its examination of liquidity risks following the recent troubles faced by Credit Suisse and various regional banks in the United States. The ECB is requesting banks to provide information on their anticipated survival period during a funding crisis. The survival period metric is now considered to be extremely important to the central bank because it assesses a bank’s ability to continue operations using existing cash, collateral, and without access to additional funding and believes that it can be a greater predictor of future bank vulnerabilities. European Central Bank Executive Board member Isabel Schnabel highlighted that inflationary pressures are being propelled by higher corporate profits and increased wages for workers. However, Schnabel cautioned that careful monitoring is still necessary to ensure that these price pressures do not persist and continue to rise. Speaking at a panel in Berlin, Schnabel emphasised the need to observe whether firms will absorb the wage increases within their profit margins or if they will pass them on to consumers, asserting that this critical step will determine the trajectory of inflation going forward. In Asia, the Nikkei saw some profit-taking closing lower by 1.45% this morning. Elsewhere, higher inventories saw Oil close lower by 1.40% while Gold continues to find strong selling, falling 1.20%.
To mark my 2800th 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 322 points yesterday and is now ahead by 2123 points for June. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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 0.37% higher at a price of 4382.
The Dow Jones Industrial Average closed 4 points lower for a 0.01% loss at a price of 33,946.
The NASDAQ 100 closed 1.18% higher at a price of 15,042.
The Stoxx Europe 600 Index closed 0.54% lower.
This morning, the MSCI Asia Pacific closed 0.5% lower.
This morning, the Nikkei closed 1.45% lower at a price of 32,781.
Currencies
The Bloomberg Dollar Spot Index closed 0.34% higher.
The Euro closed 0.2% lower at $1.0957.
The British Pound closed 0.1% higher at 1.2736.
The Japanese Yen fell 0.6% closing at $142.93.
Bonds
Germany’s 10-year yield closed 7 basis points higher at 2.50%.
Britain’s 10-year yield closed 3 basis points lower at 4.37%.
U.S.10 Year Treasury closed 2 basis points higher at 3.80%.
Commodities
West Texas Intermediate crude closed 1.40% lower at $69.52 a barrel.
Gold closed 1.2% lower at $1914.10 an ounce.
This morning on the Economic Front we already had the release of U.K. Retail Sales which rose 0.3% versus -0.2% expected. The only other data of note is German, Euro-Zone, U.K. and U.S. Global Services PMI which will released at 8.30 am, 9.00 am, 9.30 and 2.45 pm respectively. Meanwhile it is a busy day of Fed Speakers: Bullard at 10.15 am, Bostic at 1.00 pm and finally Mester at 6.40 pm.
Cash S&P 500
The S&P snapped a three-day losing streak helped by a further crush in the VIX which fell to a new three year-low at 12.91. The crushed VIX is in complete contrast to Fed Chair Powell trying to portray a hawkish message. On the one hand he is saying that the U.S. is the strongest economy but then he is the only Central Banker who did not raise Interest Rates in June. The ECB, SNB and BIOE all raised rates with weaker economies. The Fed did not as Powell continues to send mixed messages. History tells us that you cannot beat inflation with a strong economy. You beat it with a weak economy. Overnight, Futures Markets are lower. Bank stocks closed lower by 2.5% yesterday which is another red flag for me. Yesterday, my S&P plan worked well with the S&P hitting my 4350-buy level before rallying to my revised 4365 T/P level and I am now flat. With Apple shares rising a further 1.65% yesterday to yet another all-time high it is difficult to be short. Today, I will again be a buyer from 4332/4347 with a lower 4319 ‘’Closing Stop’’. Ahead of the weekend I do not want to be short the S&P.
EUR/USD
The Euro hit a high above 1.10 before meeting strong selling. This morning the Euro is opening weak. I will now lower my buy level to 1.0810/1.0890 with a lower 1.0755 ‘’Closing Stop’’. Despite the 100-point fall I still do not want to be short the Euro.
June Dollar Index
Even though the Dollar rallied yesterday I will not chase the market higher leaving my 101.00/101.70 buy level unchanged with the same 100.45 ‘’Closing Stop’’.
Cash DAX
My DAX plan worked well as the market hit my 15880-buy level before rallying back above 16,000. I covered my position too early at 15954 and I am still flat. Today, I will again be a buyer on any dip lower to 15720/15820 with a lower 15645 ‘’Closing Stop’’. I will not chase the market lower leaving my 16250/16350 unchanged with the same 16455 ‘’Closing Stop’’.
Cash FTSE
Yesterday’s surprise 50 BP rate hike by the Bank of England saw my 7495-buy level triggered. The FTSE is incredibly resilient as this surprise move should have seen the FTSE fall at least 2%. I will add to this position at 7435 with a now lower 7375 ‘’Closing Stop’’. I will now lower my T/P level to 7540. If any of the above levels are triggered, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Overnight the Dow hit my 33790-buy level before rallying 80 points in the past ten minutes. I am worried by the weakness in Bank stocks. As a result, I exited this long position at 33833 and I am now flat. The Dow has support below from 33550/33700 where I will again be a buyer with a lower 33295 ‘’Closing Stop’’.
Cash NASDAQ 100
Unfortunately, the NDX missed my initial 14730 buy level with a 14790 low print before rallying over 200 points and I am still flat. Ahead of the weekend I will not change my calls. The NDX has support from 14580/14730 where I will be an aggressive buyer with a 14495 tight ‘’Closing Stop’’. I will now raise my sell level to 15110/15260 with the same 15355 ‘’Closing Stop’’.
September BUND
Buying dips in the Bund continues to pay dividends. Following the surprise 0.50% rate hike by the Bank of England, the Bund hit my 132.60 buy level before rallying to my 133.15 T/P level and I am now flat. Today, I will again be a buyer from 131.60/132.20 with the same 130.95 ‘’Closing Stop’’.
Gold Rolling Contract
Gold continues to trade heavy as every rally is met by strong selling. Yesterday, Gold fell 1.20%, hitting my 1913 buy level. I am still long with a now lower 1922 T/P level. I will add to this position at 1898 while leaving my 1889 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change. I am still long at an average rate of 23.63 with the same 24.40 T/P level. I will continue to have no stop on this position. If this changes I will be back with anew update for my Platinum Members.
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