U.S. Indices closed lower on Friday with underperformance in the NASDAQ while the Dow outperformed. Sectors, however, were mixed, with Tech and Consumer Discretionary posting the largest losses, while Consumer Staples and Health Care outperformed. The focus on Friday was US data, which saw in-line PCE, albeit the supercore print saw three months of consecutive gains, raising concerns about sticky inflation in the face of tariffs. However, it had little influence on Fed expectations with participants eyeing the August jobs report on Friday. The Chicago PMI data was softer than all analyst expectations, while the trade deficit widened due to a jump in imports. The Final University of Michigan Consumer Sentiment report for August was revised down due to a drop in expectations, while inflation expectations were also revised down. Meanwhile, on the Fed, Governor Cook’s hearing yielded no decision, with both sides asked to provide more documentation this week. Meanwhile, Fed Governor Waller spoke, reiterating his dovish tone, adding he anticipates additional rate cuts over the next 3-6 months, viewing current rates 1.25-1.50% above neutral. On price action, T-notes steepened as Fed independence questions remained, while the dovish Waller saw front-end yields lower. The Dollar was ultimately flat with outperformance in the Antipodes and underperformance in Sterling and the Japanese Yen. Crude prices extended losses into the month-end with desks citing a weaker demand outlook in the US ahead of Labor Day. Gold prices benefited from questions around Fed independence and prospects of a more dovish Fed. Overall, the PCE data were in line. Headline M/M rose 0.2%, cooling from the prior 0.3% pace. The Y/Y rose 2.6%, in line with prior and forecast. The core metric rose 0.3%, matching the prior and expected, with Y/Y rising 2.9%, in line with forecasts but accelerating from the 2.8% prior. Further, the super core measure rose 0.4%, accelerating from the prior 0.2%, seeing the third consecutive month of acceleration, raising stickiness fears of inflation in the face of tariffs. Elsewhere in the report, Personal Income rose by 0.4%, in line with forecasts and picking up from the prior 0.3%, while consumption rose 0.5%, in line with forecasts, also accelerating from the prior of 0.4%. Real spending rose by 0.3%, up from the prior 0.1%. The data did not impact Fed expectations too much. The hot supercore was some cause for concern, but Powell recently said that a reasonable base case is that the inflation effects of tariffs will be short-lived. There is a lot of focus on the labour market, with this week’s NFP likely the next catalyst to shift Fed rate cut expectations. Looking ahead, Pantheon Macroeconomics continue to expect core PCE inflation to peak at 3.3% at the turn of the year, before then easing to about 2.5% by the end of 2026, “That path should allow the FOMC to ease policy substantially over the next year to shore up the labor market; we still expect a 75bp reduction in the funds rate this year, and a further 75bp easing in 2026.” The Advanced Goods Trade balance saw the deficit widen to 103.6 billion from a deficit of 84.85 billion, much wider than the 89.45 billion forecast. Looking within the report, July exports were USD 178.0 billion, USD 0.1 billion less than June exports. Imports of goods for July were USD 281.5 billion, USD 18.6 billion more than June imports. Given that the deficit increase is led by a jump in imports, it could have negative implications for GDP, as imports are a subtraction in the calculation of GDP. The rise in imports was led by a 25.4% increase in industrial supplies and an 11.5% increase in other goods. On the report, OxEco suggest the trade data creates downside risk to Q3 GDP, noting the increase in capital goods imports may reflect ongoing spending by businesses on high-tech goods associated with AI, but it may also be in response to looming sector-specific tariffs. Fed Governor Waller reiterated his dovish views in a more confident manner on Friday, saying he would support a 25bps rate cut at the September meeting, anticipating future cuts over the next 3-6 months. This is an unsurprising development in the governors’ views, given he previously said before the July NFP report (which saw large downward revisions), “while the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased”. Waller does not believe a bigger cut in September is needed, unless the August jobs report showed a substantial weakening, with inflation staying well contained. He called the current policy rate modestly restrictive, and estimates its 1.25-1.50% above neutral (puts Waller in line with the Fed median FFR neutral estimate of 3%, but in the lower end of the 2.5-3.9% range). Similar to Powell, Waller views the downside risks to the labour market as having increased with labour demand weakening. The dovish member called tariffs a tax that does not raise inflation and added that there is no set sequence for rate cuts; they are going to get to neutral, it is just a question of how long it will take. Elsewhere, Oil closed lower by 1% while Gold was firm, ending Friday with a gain of 0.8%.
To mark my 3225th 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 220 points on Friday, 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 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 0.64% lower at a price of 6460.
The Dow Jones Industrial Average closed 92 points lower for a 0.20% loss at a price of 45,544.
The NASDAQ 100 closed 1.22% lower at a price of 23,415.
The Stoxx Europe 600 Index closed 0.64% lower.
This Morning, the MSCI Asia Pacific closed 0.8% lower.
This morning, the Nikkei closed 1.24% lower at a price of 42,188.
Currencies
The Bloomberg Dollar Spot Index closed 0.02% lower.
The Euro closed 0.09% lower at $1.1693.
The British Pound closed 0.04% lower at $1.3505.
The Japanese Yen fell 0.08% closing at $147.03
Bonds
U.K.’s 10-Year Gilt closed 1 basis points lower at 4.72%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 2.71%
U.S.10 Year Treasury closed 2 basis points lower at 4.23%.
Commodities
West Texas Intermediate crude closed 1.02% lower at $63.94 a barrel.
Gold closed 0.8% higher at $3443.10 an ounce.
This morning on the Economic Front we have German, Euro-Zone and U.K. Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. With U.S. Markets closed for Labour Day the only other data of note is Euro-Zone Unemployment which will be released at 10.00 am.
Cash S&P 500
It will be a holiday-shortened trading week, with markets closed in the US today for the Labor Day holiday. It marks the unofficial end of summer, with kids returning to school and traders coming back from the Hamptons. Hopefully, it also signals the end of the summer malaise we have seen over the past few weeks. Although the week is shortened, it will still be busy, with the ISM report on Tuesday, JOLTS on Wednesday, ADP and ISM Services on Thursday, and the BLS jobs report on Friday. In many ways, the jobs report has become a complete joke and cannot be relied on. Last month’s revisions really turned the outlook for monetary policy on its head. However, remember that we saw a similar trend last year, which led the Fed to cut rates by 50 basis points at the September meeting—and then, just like that, the data started improving again. That makes the jobs data not only highly volatile, but it also raises serious questions about the path of rate cuts. What happens if the August jobs report shows a 200,000 gain and July’s NFP print is revised higher to over 150,000? In that case, why should the Fed be cutting at all? On the other hand, what if July is revised down to -50,000 and August comes in at just 10,000 jobs? Then the Fed would be well behind the curve. Until we see the August data, we will just have no idea. The spread between the 3-month Treasury bill and the 3-month/1-year forward is just 53 bps, which suggests only two more rate cuts over the next 12 months, excluding September. The 3-month Treasury bill is currently trading at 4.15%, which already has a September cut priced in. For now, the market is signalling just three cuts in total between now and September 2026. What is interesting, though, is that Fed Funds Futures over the next twelve months are pricing at 3.24%, which implies just over four rate cuts. When comparing the spread between the 3-month Treasury bill 1-year forward and Fed Funds futures, it is clear that expectations for Fed easing have been consistently more aggressive on the Futures side. This suggests the rate-cutting cycle may not be as steep as some parts of the market are expecting. Perhaps this is directly related to the inconsistent labor market data reporting we have been receiving. I would argue that significant fluctuations in data points raise questions about the accuracy of the data and could lead to distortions across markets. While I hate talking about Bitcoin, it is a very good liquidity proxy, and so far it has been weakening right on schedule, falling by around 13%. If the view on reserve is correct, then Bitcoin should continue to decline as liquidity is drained from the system. The same would hold true for the S&P 500 and the NASDAQ 100. We have seen divergent paths in the past, only for the two to come back in line at some point. The difference this time is that there is nothing left to push reserves higher. The reverse repo facility is drained, and QT is still running in the background. Reserves are likely to continue moving lower until the Fed stops QT and restarts asset purchases—which, as of now, is not on the horizon. My S&P plan worked well as the market traded higher to my 6506 sell level before falling 50 Handles on Friday. Unfortunately, I covered this position too early at 6496 and I am still flat. I will continue with my strategy of selling rallies. Today, my sell range will be from 6478/6498 with a lower 6515 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6456.
EUR/USD
The Euro hit my 1.1695 sell level. I am still short with a now higher 1.1640 T/P level. I will continue to look to add to this position on any further move higher to 1.1765 while leaving my 1.1825 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The weakness in the Dollar since Thursday saw the market hit my initial buy range for a now 97.80 long position. I will add to this position at 97.00 while leaving my 96.35 ‘Closing Stop’ unchanged. I will now lower my T/P level to 98.30. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still short from last Tuesday at a price of 2365. I will continue to add to this position on any further move higher to 2425 while leaving my 2330 T/P level unchanged. I will also leave my 2475 ‘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
Weaknesses in Financial Stocks saw the FTSE hit hard over the past 48 hours. While I was not short at least we had no buy level. This morning, the FTSE is trading at a price of 9205 as I go to press. I will now lower my sell level to 9260/9330 with a lower 9405 wider ‘Closing Stop’. If I am taken short, I will have a T/P level at 9200.
Dow Rolling Contract
I am still flat as the Dow. I will not chase the Dow lower as I continue to be a seller on any further rally to 45800/46050 with the same 46305 ‘Closing Stop’. If I am taken short, I will have a T/P level at 45580.
Cash NASDAQ 100
My NDX plan worked well as the market rallied to my 23690 sell level before falling over 300 points. This move lower saw my 23590 revised T/P level triggered and I am now flat. The NDX has short-term resistance from 23520/23680 where I will again be a seller with a lower 23805 ‘Closing Stop’. If I am taken short, I will have a T/P level at 23360. I still do not want to be long the NDX at this time.
December BUND
This morning the Bund hit my buy range for a now 129.15 long position, I will add to this position on any further move lower to 128.45 while leaving my 127.75 ‘Closing Stop’ unchanged. I will now lower my T/P level to 129.70. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold has surged since Thursday’s Daily Commentary was posted, trading at 3487 this morning. This move higher saw the whole of my sell range triggered for a now 3454 average short position. I will leave my 3475 ‘Closing Stop’ unchanged while raising my T/P level to 3441. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver is trading 5% higher than where I marked prices on Thursday morning at a price of 40.52 this morning. I am still flat. I will now raise my buy level to 38.70/39.70 with a higher 37.25 ‘Closing Stop’. If I am taken long, I will have a T/P level at 41.10.
Recent Comments