U.S. Indexes rallied to fresh record highs while oil prices plunged after Iran announced it would reopen the Strait of Hormuz to all commercial traffic. Brent fell below USD 90/bbl, easing supply concerns and driving a broad risk-on move across markets. Despite the positive headline, uncertainty remains around the durability of the development. Shipping firms are cautious resume activity, while mixed messaging from Iranian officials — including apparent surprise from the IRGC — and conflicting reports between the US and Iran continue to cloud the durability of the agreement. While President Trump has struck an optimistic tone, suggesting significant progress in negotiations, Iranian officials have pushed back on key elements, highlighting ongoing disagreement. The decline in oil fed through into rates, with T-notes rallying across the curve as easing inflation pressures supported expectations for rate cuts to resume. In FX, the Dollar weakened initially before paring losses amid lingering uncertainty, while Gold was bid alongside the move lower in yields. Fed commentary remained focused on inflation risks. Governor Waller indicated a preference to hold rates in a scenario of higher inflation and weaker growth, while Daly emphasised that the outlook depends on the persistence of elevated energy prices and the conflict. Overall, markets are pricing in a partial unwind of geopolitical risk premia, although ongoing uncertainty around negotiations and enforcement continues to limit conviction. Equity-specific updates saw Meta gain following reports that it’s to lay off ~10% of its total workforce in May. Netflix (NFLX) fell 9.8% after its Q2 EPS and FY26 revenue outlooks underwhelmed; co-founder Hastings to leave the board. Fed Member Waller said that if war produces high inflation and a weak labour market, it could argue for keeping rates steady. The longer the war remains unresolved, the greater the risks to inflation and jobs, he said. He said high inflation and a weak labour market could pose a challenge for the Fed. Waller expects March headline PCE likely reached 3.5% Y/Y, with the surge in energy prices potentially having a lasting effect on inflation. He said markets appeared to have underestimated the risk of a prolonged conflict. After a series of shocks, it becomes harder to look through the inflation spike. On labour, he said the labour market breakeven rate was now likely around zero and that a period of negative job growth might not signal a recession. Some of the low-hire, low-fire labour market reflects firms dealing with tariffs, and shifts in the labour market make it difficult to analyse. Separately, he does not so far see systemic risks stemming from private credit, adding that private credit is not a large part of financial markets. Meanwhile, Fed Member Daly said her outlook depends on how long oil prices remain high and how long the conflict lasts. She said the shock was likely to have a bigger effect on inflation than on growth, and that it was too early to know whether it would prove short-lived or persistent. If it ends soon, the Fed would return to the interest-rate path it was on before, but if it persists, inflationary pressures would last longer. In that case, rates would need to rise if inflation took off, but if it ends, the Fed could cut rates quickly. She also said policymakers could leave rates where they are. She said rates were slightly restrictive, just above the 3% neutral level. She is watching to see whether higher oil prices spill over into other goods and services prices, but said policymakers were currently in a wait-and-see mode and described the current position as “a nice place to be”. On the labour market, she said zero job growth might be the new steady state. On productivity, she said growth can help with disinflation, while it is hard to link higher productivity growth to the real neutral rate, though it is something to watch on both sides. Finally, she said commercial real estate was no longer on her list of worries. Elsewhere, Oil closed lower by 10% while Gold ended Friday’s volatile trading session with a 1.5% gain.
To mark my 3350th 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 lost 425 points on Friday and is now ahead by 881 points for April 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 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 1.20% higher at a price of 7126.
The Dow Jones Industrial Average closed 868 points higher for a 1.79% gain at a price of 49,447.
The NASDAQ 100 closed 1.29% higher at a price of 26,672
The Stoxx Europe 600 Index closed 1.56% higher.
Last Friday, the MSCI Asia Pacific closed 0.5% higher.
Last Friday, the Nikkei closed 1.75% lower at a price of 58,475.
Currencies
The Bloomberg Dollar Spot Index closed 0.14% lower.
The Euro closed 0.05% lower at $1.1775.
The British Pound closed 0.23% lower at $1.3529.
The Japanese Yen rose 0.45% closing at $158.47.
Bonds
U.K.’s 10-Year Gilt closed 7 basis points lower at 4.69%.
Germany’s 10-Year Bund Yield closed 8 basis points lower at 2.96%
U.S.10 Year Treasury closed 3 basis points lower at 4.25%.
Commodities
West Texas Intermediate crude closed 10.63% lower at $84.73 a barrel.
Gold closed 1.41% higher at $4857.10 an ounce.
This morning on the Economic Front we have German PPI at 7.00 am, followed by Euro-Zone Construction Output at 10.00 am. At 1.30 pm we have Canadian CPI. We have no U.S. data of note due today. Finally, we have a speech from ECB President Lagarde at 5.40 pm.
Cash S&P 500
Stocks finished higher on Friday, with the S&P rising another 1.2%, as optimism surrounding the war in the Middle East helped drive trading, alongside options expiration flows. However, weekend headlines suggest that some of that optimism may be based more on hope than on reality, as Iran pushed back against President Trump’s claims about reopening the Strait of Hormuz. From where I sit, it remains unclear what is actually happening. IG weekend oil prices are trading higher by around 4%, suggesting oil could open higher by a similar amount if those gains hold. The same is true for the US Tech 100 (a proxy for the NASDAQ 100), which is trading lower by roughly 0.7%, implying Futures may open lower by a similar margin. Beyond the expected opening levels, there is little additional signal to extract from this information. The S&P 500 is now technically overbought, with price trading above the upper Bollinger Band and the RSI above 73. Of course, the rally could extend further, but the odds at this point would favor either a pullback or a period of sideways consolidation. Additionally, following its sharp move higher the S&P has formed a broadening wedge pattern. These are not easy patterns to interpret. A breakout to the upside is certainly possible—and may even be favored given the prevailing bullish trend—but more than anything, it reflects a growing sense of indecision in the market. I have always struggled with these types of patterns. So, at this point, I think it is worth watching these for a failed breakout attempt or throw over. If you can consolidate for a few days above the upper trend line, or if that trend line becomes support, it strengthens the case for a breakout to the upside targeting around 8,000 on the S&P. While breaking down, it would push us to fresh lows. Meanwhile, implied volatility in the TLT moved back to its lowest levels since the pandemic again this past week—somewhat surprising given what is taking place globally. Additionally, realised volatility has been steadily trending higher, so while the market has been pricing lower implied volatility going forward, realised volatility has yet to show signs of rolling over. Realised volatility at 11.5% implies roughly a 72-basis-point daily move in TLT, but with 9-day realised volatility at just 7.5%, it is possible that 1-month realised volatility begins to decline, which would validate the move lower in VXTLT. However, it would only take around a 50-basis-point daily move in TLT for volatility to shift back to a rising trend. The sharp decline in bond market volatility certainly helps explain part of the explosive move in equities. However, with bond market volatility already near its lows, it is fair to ask how much further it can fall—and what the odds are that it begins to rise from here. At this point, the probability of higher bond market implied volatility appears elevated. Meanwhile, Markets are back to business as usual — or so they think. The NASDAQ 100 just ripped off its longest winning streak in five years, the S&P 500 has pushed past its pre-war highs, and a shoe company rebranding as an AI compute firm saw its stock surge +580%, while the underlying data tell a very different story: the Fed’s Beige Book quietly stripped out the word “optimistic” from the outlook for the first time since October, the NAHB Housing Market Index cratered to a seven-month low, and our proprietary Beige Book sentiment gauges dropped to levels not seen since last October. Inflation readings keep coming in tamer than feared — but the bond market refuses to take the hint. The market is pricing in a return to normal while ignoring the rolling contagion about to hit from the unprecedented disruption to global energy supplies. The S&P 500’s price-to-sales ratio at 3.5x — nearly three standard deviations above its long-run norm of 1.9x — is not a level to chase in my opinion. As emailed to my Platinum Members I am still short the S&P from last Wednesday at an average price of 7019 with no stop for now. The last five Sunday openings have seen the S&P sell off for a few minutes and then rally aggressively. Having opened at a price of 6728 last Sunday night, the S&P ended the week with a 430 Handle rally which is just insane given the economic and geo-political backdrop. As we are having a strong year, I am comfortable with my short position. If the market rallies overnight, I will come back with an update where I will look to add to my existing short position.
EUR/USD
The Euro rallied to my next sell level at 1.1840 for a now 1.1800 average short position. I will leave my 1.1905 ‘Closing Stop’ unchanged while raising my T/P level to 1.1740. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar sold off to my second buy level at 97.95 for anow 98.30 average long position. I will leave my 97.25 ‘Closing Stop’ unchanged while lowering my T/P level to 98.80. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell rallied to my second sell level at 2750 for a now 2725 average short position. To reduce risk I will now raise my T/P level to 2700 while leaving my 2795 ‘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
Late in Friday’s session the FTSE hit my sell range for a now 10680 short position. I will look to add to this position at 10760 while leaving my 10865 ‘Closing Stop’ unchanged. I will now raise my T/P level to 10610. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Wrong! The Dow traded the whole of Thursday’s sell range for a 48980 average short position before stopping me out of this trade at 49405 and I am now flat. I do not have an edge in the Dow at these levels and I am going to stay flat today. If the market rallies from here I will look to set up a short position. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX has now closed higher for 11 consecutive trading sessions, generating a 14-Day Reading of 75. This latest move higher saw the whole of my sell range triggered for anow 26480 average short position. To reduce risk, I have now raised my T/P level to 26350. I will have no stop on this position. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
Frustratingly the Bund missed my 125.50 buy level by 8 points before rallying 100 points and I am still flat. The Bund has short-term resistance from 127.20/128.00 where I will be a small seller with a 128.65 ‘Closing Stop’. If I am taken short, I will have a T/P level at 126.60.
Gold Rolling Contract
No Change: Unfortunately, I have no edge in Gold at this time. Gold had its weakest month (March) since 2008 despite a late rally at the end of the Month that has continued into April. I still do not trust the rally in Gold. My only interest in buying Gold is on a dip lower to 4280/4380 with the same 4195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4470. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I have been flat Silver for the past four weeks. Silver has short-term support from 73.00/76.00 where I will be a small buyer with a 70.95 wider ‘Closing Stop’. If I am taken long, I will have a T/P level at 79.30. I still do not want to be short Silver at this time.
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