U.S. Indices were choppy on Friday, with early upside faded amid mixed sectoral performance. Utilities, Consumer Discretionary and Real Estate outperformed, while Energy, Healthcare and Communication lagged. The focus on Friday was largely on commentary from Fed Governor Waller, who reiterated his call for a 25-basis point rate cut in July (more below). Meanwhile, US data saw strong housing data while the University of Michigan Consumer Survey also impressed, coinciding with easing inflation expectations. The dovish commentary from Waller, coupled with easing inflation expectations and tough trade updates on the EU, T-Notes were bid across the curve, although the Dollar was flat with NZD and AUD outperforming. Energy prices were hit on Reuters source reports that Greek tanker operators shipping approved Russian oil exports are expected to continue doing so despite a new wave of tougher sanctions by the EU that will further tighten restrictions, sources said. Gold prices were green but silver was flat, crypto was mixed with Bitcoin lower and Ethereum up amid Trump signing the GENIUS Act into legislation as expected. There were also reports that Trump would open up 401k plans to alternative investments, including digital assets and metals. Fed Governor Waller continues to call for a 25-basis point rate cut in July, citing rising risks to the economy as justification for easing. He added that if underlying inflation stays contained and growth remains tepid, further cuts may be warranted. Waller argued the Fed should not wait for the labour market to deteriorate before acting, warning that delaying cuts risks requiring more aggressive moves later. He noted mounting evidence of labour market weakness, pointing to the JOLTS report, Quits rate, and Beige Book, none of which show a “super healthy” jobs picture. When asked if he would dissent at the July meeting to support a cut, Waller declined to commit, saying he would consider all arguments at the meeting. He added that while it is not critical to act immediately, there is no strong reason to delay either. On inflation, Waller reiterated that tariffs tend to have a one-off effect that the Fed can generally look through. He said a July rate cut could give the Fed room to pause in coming meetings, and noted that, excluding tariffs, inflation is nearing the 2% target. While tariffs will likely push inflation higher in the near term, he expects the effect to fade next year. He added that market-based inflation expectations remain well anchored. Waller estimated that a sustained 10% tariff could lift inflation by 0.75% to 1% this year but said upside risks to inflation remain limited. At the same time, he warned of growth risks, with GDP tracking around 1%. He also emphasised that monetary policy should be moving closer to a neutral setting, which he estimates to be around 3%, though he acknowledged significant uncertainty around the long-run neutral rate. Finally, on speculation that he could be the next Fed Chair, Waller said no one from the Trump administration has approached him about the role. Housing starts rose by 4.6% in June to 1.321 million, above the 1.3 million forecast and 1.263 million print in June (revised up from 1.256 million). Building Permits rose by 0.2% to 1.397 million, also above expectations of 1.39 million and the prior 1.394 million. Pantheon Macroeconomics highlight that starts remain below last year’s average of 1.371 million, and look set to continue the trend lower in H2 this year. Looking into the data, the consultancy points out that the recent weakness is entirely due to single-family starts, which fell to 883k in June, the lowest level since last July. Multi-family starts rose to 438k from 337k. The desk also notes that total permits are a better guide to the trend in housebuilding than starts and are consistent with a slight fall in total starts in July. Pantheon writes “Demand remains undermined by high mortgage rates and the tariff hit to consumers’ confidence. Furthermore, a glut of unsold properties is compounding the pressure to pause new construction projects”. The University of Michigan Preliminary Survey for July impressed, with conditions, expectations, and sentiment all surpassing expectations. The headline rose to 61.8 from 60.7 (exp. 61.5), while conditions and expectations lifted to 66.5 (exp. 63.9, prev. 64.8) and 58.6 (exp. 55.0, prev. 58.1), respectively, with the 1yr ahead inflation expectations falling to 4.4% from 5.0%, and the 5yr dropping to 3.6% from 4.0%. Ahead, Oxford Economics notes, “Nevertheless, sentiment remains depressed compared to pre-election levels, and recent announcements for new tariffs on August 1 could undermine any recovery in sentiment.” Elsewhere, Oil closed flat while Gold was firm, ending Friday’s session with a gain of higher by 0.6%.
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 390 points on Friday and is now ahead by 2615 points for July 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 0.01% lower at a price of 6296.
The Dow Jones Industrial Average closed 142 points lower for a 0.32% loss at a price of 44,342.
The NASDAQ 100 closed 0.05% lower at a price of 23,065.
The Stoxx Europe 600 Index closed 0.01% lower.
This Morning, the MSCI Asia Pacific closed 0.6% higher.
This Morning, the Nikkei closed 0.21% lower at a price of 39,819.
Currencies
The Bloomberg Dollar Spot Index closed 0.27% lower.
The Euro closed 0.25% higher at $1.1624.
The British Pound closed 0.15% higher at $1.3415.
The Japanese Yen fell 0.51% closing at $148.83.
Bonds
U.K.’s 10-Year Gilt closed 4 basis points higher at 4.68%.
Germany’s 10-Year Bund Yield closed 1 basis points lower at 2.68%
U.S.10 Year Treasury closed 4 basis points lower at 4.42%.
Commodities
West Texas Intermediate crude closed 0.29% lower at $67.34 a barrel.
Gold closed 0.59% higher at $3349.10 an ounce.
The only data of note on either size of the Atlantic is U.S. Leading Index which will be released at 3.00 pm.
Cash S&P 500
Inflation expectations are rising sharply as CPI swaps across the 1-, 2-, and 5-year curves break out from multi-year bases, signaling potential for a renewed inflation wave. Coupled with surging commodity prices and historically tight credit spreads, this shift poses a significant risk to equities and other risk assets, suggesting markets are ill-prepared for higher inflation and interest rates. Meanwhile, in Japan Rates on 10-, 30-, and 40-year JGBs surged notably this past week, and the election results could provide the market with additional motivation to push yields even higher. The 10-year JGB briefly touched 1.6% last week, surpassing its previous peak from March. You can add rising rates in Japan to the growing list of reasons why long-end rates in the US are likely to move higher. If Japanese yields rise further following the election results, either US Treasury rates will increase in tandem, or the spread between Treasuries and JGBs will narrow, bringing the Japanese Yen carry trade back into the spotlight. Currently, the spread between the US 10-year Treasury and the JGB is around 2.9%, just above the critical support level near 2.85%, which has played a key role over the past few years. The USDJPY has recently diverged somewhat from the 10-year yield spread, likely reflecting market anxiety about Japan’s deteriorating fiscal situation. This concern has intensified amid rising rates, elevated inflation, new tariffs, and now election results that could trigger increased government spending. This dynamic will add further pressure to the long end of the US yield curve, especially following last week’s breakout of 5-year CPI swaps from a two-year trading range. If this trend continues, it will become increasingly difficult for US rates not to rise, as the market would clearly be signalling expectations for higher inflation ahead. With the 14 Day RSI again closing at an overbought reading of 70 on Friday I will continue to be a seller of the S&P on rallies. There is no chance in my opinion that the Fed can justify a rate cut currently despite the political pressure to do so. Most of the charts that I follow depict unprecedented extremes in optimism, which is a flashing-red warning. Yet subtle signs of internal weakness also portend a reversal to the downside. Despite record-breaking prices and leverage, the number of stocks participating in the advance is weaking substantially. The McClellan Oscillator closed at -48 on Friday evening. This should not be happening when we have the Fear & Greed Index showing a print of ‘Extreme Greed’ while the S&P is at all-time highs. Friday saw the S&P make another marginal new high while negative divergences remain. This move higher saw the whole of my revised sell level triggered for a 6306 average short position (as emailed to my Platinum Members) before the market sold off to my 6288 T/P level and I am now flat. Today, I will again be a seller from 6315/6335 with a higher 6351 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6291.
EUR/USD
The Euro rallied to Thursday’s sell range for a now 1.1670 short position. I will add to this position on any further move higher to 1.1750 while leaving my 1.1805 ‘Closing Stop’ unchanged. I will now raise my T/P level to 1.1610. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
My latest 98.00 long Dollar position worked well as the market rallied to my 98.90 T/P level and I am now flat. Today, I will again be a strong buyer on any dip lower to 97.40/98.10 with a higher 96.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 98.90.
Russell 2000
No Change: I have no interest in chasing the Russell higher especially as the market has risen 34% since the April 7 lows. I will continue to be a buyer of the Russell on any dip lower to 2100/2170 with the same 2065 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2220.
FTSE 100
I am still short the FTSE from last Wednesday at a price of 8970. The FTSE traded in a narrow range over the past few days. Today, I will look to add to this position at 9050 while leaving my 9125 ‘Closing Stop’ unchanged. I will now raise my T/P level to 8920. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
After the Dow hit my 44550-sell level on Thursday I had too many open positions. As a result, I covered this short position at 44510 and I am still flat. The Dow has short-term resistance from 44700/44950 where I will again be a seller with a higher 45105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 44470. The Dow has short-term support from 43650/43900 where I will continue to be a strong buyer with the same 43495 ‘Closing Stop’. If I am taken long, I will have a T/P level at 44180.
Cash NASDAQ 100
My NDX plan worked well as the market rallied to my 23100-sell level before selling off to my revised 23020 T/P level and I am now flat. Today, I will again be a seller from 23160/23350 with the same 23455 ‘Closing Stop’. Despite traders buying every dip in the NDX I have no interest in buying the NDX at this time believing that the market can break lower at any stage without warning. If this view changes, I will be back with a new update for my Platinum Members. If the NDX hits my sell range I will have a T/P level at 22980.
December BUND
I am still flat as the Bund never came close to Thursday’s buy range trading at a price of 130.02 this morning. I will now raise my buy level to 128.60/129.40 with a higher 127.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 130.05. Despite the extremely low yields I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat. Gold continues to attract buying at the 3300-support level. Today, I will raise my buy level to 3295/3315 with a higher 3279 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3334.
Silver Rolling Contract
I am still long Silver at a price of 38.20. I will add to this position on any further move lower to 37.20 with the same 35.95 ‘Closing Stop’. I will now lower my T/P level to 38.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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