U.S. Indexes closed higher on Friday with the S&P, NASDAQ 100 and Dow Jones all posting gains; however, the RUSSELL saw further pressure. The regional banking ETF had pared some of the prior day’s losses following woes at ZION and WAL, but regional bank earnings on Friday were strong and helped with the reversal in sentiment. Also supportive of the risk-on trade was commentary on China from US President Trump, who said “no” when asked if he thinks the high tariffs on China will stay, noting they get along well with China and he will be meeting Chinese President Xi in two weeks. Elsewhere, T-notes were sold across the curve while Gold saw notable pressure, falling from a peak of USD 4,378/oz to a low of USD 4,187/oz, before ending the week back above USD 4,200/oz. Oil prices saw choppy trade but ultimately settled little changed. In FX, the both the Canadian Dollar and Antipodes outperformed while the U.S. Dollar saw slight upside. T-notes sold off on the dialled down regional bank woes and China optimism, but in funding markets, SOFR remained above the target for the FFR in the latest data (Thursday), albeit the standard repo facility saw no participation on Friday. Fed Member Musalem highlighted that he could support a path with another cut if more risks to the jobs market emerge and inflation is contained. He sees limited space before cuts would make policy accommodative, noting policy is somewhere between restrictive and neutral. He said it is important for the Fed to be cautious right now, and it is premature to say what comes with FOMC meetings after October. He noted how tariffs will work their way through the economy into mid-2026. He suggested that by H2 2026 the economy will move back towards 2% inflation but needs policy to lean against inflation. On services inflation, he said it has been at a high level and needs more work to get it lower. Musalem added that consumption from all income groups has been strong, but purchasing power is still an issue for many. On the labour market, Musalem said there is not an imminent problem for the labour market, but job market risks have increased, and data suggest the risk of high unemployment is increasing. He reiterated his breakeven rate of 30-80k, but warned it could go below zero, and the unemployment rate may not move. Finally, Fed Member Kashkari said it is too soon to know the effect of tariffs on inflation, and the impact of tariffs is taking longer to be felt than he had guessed. He expects services inflation to trend down, and it is possible that goods inflation could spill over, with most folks noting they are still concerned about inflation. Added that the job market is slowing down, and they are likely betting the economy is slowing more than it really is. Regarding the balance of the mandate, the Minneapolis President said there is more risk of a labour market negative surprise than an uptick in inflation but noted the Fed prioritising labour market over inflation control could lead to bad outcomes for workers. On the shutdown, as expected, he quipped that it is challenging to read signals without core government data, and the longer it lasts, the less confident they are when reading the economy correctly. Elsewhere, Oil closed 0.14% higher while Gold finally saw some profit-taking closing lower by 2%.
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For anyone following my Platinum Service it was made 1170 points on Friday and is now ahead by 4845 points for October after closing September with a gain of 3774 points after 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
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