U.S. Indices began Friday on the back foot and continued on the NVIDIA (NVDA) weakness seen on Thursday, but swiftly turned around, which was largely supported by a surprisingly dovish Williams. The New York Fed President said, in his view, the Fed can still cut rates in the near term, given current policy is modestly restrictive, indicating that would be his preference in December. The comment helped lift stocks and bonds with a dovish repricing in Fed money markets. At its peak on Friday, a 62% chance of a 25 basis points cut was seen but pared back a couple of bps after the BLS announced the Oct. CPI is cancelled and November CPI will be released after the December FOMC meeting, meaning the Fed will not have access to inflation or labour market data until after the confab. As a reminder, in October, Powell gave a driving in the fog analogy, where it is best to slow down when visibility is not clear. The Dollar was flat, while the Japanese Yen was the clear outperformer and supported by comments overnight from Finance Minister Katayama, while a sharp, unexplained move in the US morning raised intervention suspicions. High-beta FX was also buoyed by the risk sentiment. T-Notes saw strength on the aforementioned dovish Williams but settled off peaks as sentiment improved. Bitcoin still saw selling, but sits around USD 84.5k, at the time of writing, off earlier troughs of USD 80.5k. The crude complex saw notable losses and tracked the initial sour risk tone in the morning, while ongoing peace prospects kept the complex pressured. However, President Trump has issued a Thursday deadline for President Zelensky to accept the plan, while reports noted Ukraine and the EU reject some of the key aspects of the deal, which helped oil settle off lows. The Flash PMI data in the US for November saw manufacturing slip to 51.9 from 52.5, only slightly below the 52.0 forecast, while services rose to 55.0 from 54.8, seeing the composite tick up slightly to 54.8 from 54.6, despite the consensus for a 54.5 print. The report highlights that “A marked uplift in business confidence about prospects in the year ahead adds to the good news. Hopes for further interest rate cuts and the ending of the government shutdown have boosted optimism alongside a broader undercurrent of improved economic optimism and reduced concerns over the political environment.” On prices and the labour market, it noted “The rate of hiring continues to be constrained by worries over costs, in turn linked to tariffs. Both input costs and selling prices rose at increased rates in November, which will be of concern to the inflation hawks.” The Final University of Michigan survey for November saw sentiment revised up to 51.0 from 50.3, and above the expected 50.5. Conditions were revised lower to 51.1 from 52.3, while expectations lifted back into expansionary territory at 51.0 from 49.0. However, consumers remain frustrated about the persistence of high prices and weakening incomes. Surveys of Consumers Director Hsu noted consumers remain frustrated about the persistence of high prices and weakening incomes. In terms of inflation expectations, 1yr and 5yr ahead both ticked lower to 3.4% (prev. 3.6%) and 4.5% (prev. 4.7%), respectively. Hsu said, “Despite these improvements in the future trajectory of inflation, consumers continue to report that their personal finances now are weighed down by the present state of high prices.” Williams the NY Fed President was unexpectedly dovish, as he said, in his view, the Fed can still cut rates in near term given current policy is modestly restrictive – seemingly alluding to a possible December cut. The influential FOMC Vice Chair Williams added that inflation progress has stalled, but it should be on track to 2% in 2027, and tariffs have increased prices but are not expected to lead to persistent inflation. Williams noted economic growth has slowed and the labour market has gradually cooled, stressing it is imperative that the Fed meets its inflation target, but without undue risk to the maximum employment goal. On the labour market, it has been cooling for over two years now, with demand for labour softening and the unemployment rate rising. In some later remarks, the NY Fed President said clear communication can limit market disruption, while noting the US has not been on a sustainable fiscal path for a while. Williams also does not like the notion of a short-run neutral rate. Williams remarked that financial markets set asset prices, and the Fed does not have a view on if they are too high or too low. Collins – the Boston Fed President – said the September jobs report did not change her view, noting the labour market has clearly softened, but the unemployment rate remains relatively low, although it may rise further. Collins said she is more concerned about inflation than the labour market at this point and wants to see clear evidence of labour-market softening and continued inflation progress before supporting further cuts. Described the current policy as mildly to moderately restrictive, which is very appropriate, and helps guide inflation lower as tariffs pass through. She believes the Fed is now much closer to neutral and must carefully balance risks, especially with financial conditions still accommodative. She expects to normalise rates further, but it needs to be done gradually, and she is hesitant to get too far ahead. Furthermore, she said that dialling down has already helped address the shifts in risks. She remains cautious about December, saying it’s a complicated context and the Fed must be forward-looking and weigh which side of the mandate is further from target. Finally, Paulson – the Philadelphia Fed President – said she is approaching the December decision cautiously, and viewed the September labour market report as encouraging overall, though, on the margin, remains more concerned about the labour market than inflation. She believes prior rate cuts have been appropriate, but each one raises the bar for another. She stressed monetary policy must walk a fine line, especially with upside risks to inflation and downside risks to employment. She expects to learn more before December. Paulson described the economy as doing okay, though noted that growth is unusually reliant on higher earners and sensitive to equity valuations. Added that tariff effects have been smaller than feared, with solid demand helping to cap inflation pressures. Elsewhere, Oil closed lower by 1.59% while Gold closed lower by 0.2%.
To mark my 3275th 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 980 points last week and is now ahead by 4172 points for November, 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 0.98% higher at a price of 6602.
The Dow Jones Industrial Average closed 493 points higher for a 1.03% gain at a price of 46,245.
The NASDAQ 100 closed 0.77% higher at a price of 24,239.
The Stoxx Europe 600 Index closed 0.33% lower.
Yesterday, the MSCI Asia Pacific closed 0.9% lower.
Yesterday, the Nikkei closed 2.42% lower at a price of 48,625.
Currencies
The Bloomberg Dollar Spot Index closed 0.04% higher.
The Euro closed 0.44% lower at $1.1512.
The British Pound closed 0.1% lower at $1.3098.
The Japanese Yen fell 0.74% closing at $156.37
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 4.55%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 2.72%
U.S.10 Year Treasury closed 6 basis points lower at 4.07%.
Commodities
West Texas Intermediate crude closed 1.59% lower at $58.06 a barrel.
Gold closed 0.19% lower at $4065.10 an ounce.
This morning on the Economic Front we have the German IFO Survey at 9.00 am. Next, we have U.S. Chicago Fed National Activity Index at 1.30 pm, followed by Capacity Utilisation and Industrial Production at 2.15 pm. Finally, we have the Dallas Fed Manufacturing Business Index at 3.30 pm and a Two-Year Treasury Auction at 6.00 pm.
Cash S&P 500
This coming week will be a holiday-shortened trading week in the U.S., with markets closed on Thursday for Thanksgiving and trading half a day on Friday. Still, there will be plenty of economic data and market activity to keep us busy, including major GDP, PCE, Retail Sales, and PPI reports. Additionally, there will be coupon issuances, along with two Treasury settlement dates this week and another one on Monday after the holiday. Last week was the most volatile week’s trading since the April 5 lows. Thursday’s massive reversal was the largest reversal in the S&P since the April 4 this year and June 2020 prior to that. The Friday rally, which saw the S&P 500 rise by about 1%, appeared to be a classic volatility-crush day. Given that setup, it would not be surprising to see the first half of Monday’s session attempt to rally and recover some of the losses from the final hour and a half of trading on Friday, when the Index fell from around 6,660 to 6,600. It is possible we could see a 1% move higher before midday, potentially retracing back to Friday afternoon’s highs and pushing VIX 1-Day even lower. However, with multiple settlement dates and Treasury auctions this week, caution is warranted—especially in a thin, holiday-shortened trading environment. On top of that, there are developments overseas. Japan has approved a large stimulus package, which could still have ramifications for the Japanese bond market and the FX market. And in the UK, the budget will be revealed on the 26th, which could have major implications for Gilts and the Pound. So, this week is not likely to be a walk in the park for market participants. Investors who believe a bottom may be in place for the S&P 500 could be in for a surprise by Monday or Tuesday of next week—December 1st or 2nd. It was another rough week for risk assets, with the S&P 500 falling again. We had that big intraday reversal on Thursday following NVIDIA’s results, and it has not been any better for Bitcoin, which continues to get hammered—even into Saturday morning. Bitcoin alone is down 23 percent so far this month. Bitcoin peaked on October 8th. Interestingly, its earlier peak was on August 13th—which also corresponds to the date reverse repo balances fell below $50 billion. These relationships suggest that what we are seeing in risk assets is directly tied to liquidity being pulled to fund government debt issuance. T-bills have been largely responsible for draining the reverse repo facility. When T-bill issuance falls, the reverse repo facility rises. When issuance rises, the reverse repo facility drains. This pattern matches historical debt ceiling episodes. The connection to equities becomes clearer when looking at overnight funding markets. DTCC data gives us insight into overnight funding rates and volumes. When Treasury financing volumes decline, excess liquidity appears to flow into equity repo financing. When Treasury volumes rise, liquidity is pulled away from equity repo financing. When equity repo financing volumes rise, equities tend to rise. When they fall, equities decline. Based on the data, equity repo financing could soon begin declining again, especially if Treasury volumes rise as expected. In short, overnight funding stress is weighing heavily on the market. There is no longer enough liquidity to support equity valuations—or even cryptocurrency valuations. The roughly $2 trillion that had been sloshing around since 2021 is now gone. If we continue to see large drawdowns on settlement days, then this liquidity-driven selling may persist for some time, especially given the enormous amount of debt issuance required to finance the deficit. This will continue until valuations align with available liquidity, or until the Fed eventually steps in to inject liquidity—whether through balance sheet stabilisation or gradual balance sheet growth. The next Fed meeting is not until mid-December, and we will have many settlement dates between now and then. The data suggests this is something we need to pay close attention to. Whether broader awareness changes the outcome remains to be seen. But price action in both equities and Bitcoin aligns with the liquidity trend. Bitcoin, down nearly 30 percent from its all-time high, remains purely a liquidity and sentiment gauge. Anything that can fall 20 percent in a month is not a safe haven. I would rather put my money in a bank account than in something that volatile. Bitcoin is simply a risk asset on steroids. If Bitcoin continues falling, risk assets likely continue falling. If volatility persists on settlement days—which we have many of in the next five trading sessions—then this analysis may hold. If the market rallies despite the settlement schedule, then this pattern may fade. We will see. As I go to post Bitcoin is trading at $87K up 3.5% from Friday which points to a stronger open for Equity Futures Markets. My S&P trading was basically a scratch for the week – buying the market at 6687 before getting stopped at 6631, then buying again at 6572 before exiting at 6615 and I am now flat. With the Fear & Greed Index hitting a low at 6 on Thursday before closing at still extreme fear on Friday at 10, I will continue to be a buyer of dips as seasonally this is a strong week. The S&P has support from 6570/6600 where I will be a buyer with no stop. If triggered, I will have a T/P level at 6645.
EUR/USD
I am still flat as the Euro continues to trade in narrow ranges. The Euro has strong support from 1.1380/1.1450. I will now lower my buy level to this area with a lower 1.1285 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1520.
Dollar Index
I am still flat. Today, I will raise my Dollar buy level to 98.40/99.20 with a higher 87.75 ‘Closing Stop’. If I am taken long I will have a T/P level at 99.80.
Russell 2000
Despite the increased volatility in the US Indexes last week, I am still long the market at an average rate of 2365. I will now lower my T/P level to 2405 while leaving my 2295 ‘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
My FTSE plan worked well. The market traded the whole of my buy range for a 9530 average long position before rallying late Friday to my revised 9590 T/P level and I am now flat. Today, I will again be a buyer from 9450/9520 with a lower 9375 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9590. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat the Dow, frustrated that I was stopped last weeks at near all-time highs. I am glad that I stayed flat for the past few days as this market has become tricky to trade. I am so bearish of the Dow given valuations etc but with so my of my technical signals oversold I just cannot be a seller at these levels. The Dow has support below from 45400/45700 where I will be a small buyer with a 45195 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 46050.
Cash NASDAQ 100
Thursday’s reversal in the NDX was the largest intra-day reversal since mid-October 2018. This is some statement when you consider what has happened over the past seven years. My NDX plan worked really well last week generating a total of 1050 points for my Platinum Members and I am now flat. The NDX hit a low on Friday at 24830 before bouncing to close at 24239. Today, I will be a strong buyer from 23900/24100 with no stop and a T/P level at 24450 if triggered. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
No Change: I am still long the Bund at an average rate of 129.50 with the same 129.80 T/P level. Meanwhile, I will leave my 128.35 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: I am still flat. Gold has support below from 3890/3910 where I will be a strong buyer with a 3869 tight ‘Closing Stop’. I learnt my lesson in trying to short Gold last month and for now I will wait to see if my buy range gets triggered this week. If this view changes, I will be back with a new update for my Platinum Members. If I am taken long, I will have a T/P level at 3948.
Silver Rolling Contract
I am still flat. Frustratingly, Silver missed my aggressive 48.50 buy level by 10 points on Friday morning before rallying 140 points off this low into the New York close. I will not chase the market higher as I continue to be a buyer on any further dip lower to 47.50/48.50 with the same 45.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 49.70.
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