U.S. Indices pared from record highs seen during US trade on Friday as US President Trump terminated trade discussions with Canada over their Digital Services Tax on US tech. This announcement saw stocks trim earlier gains but still finished the Friday session in the green. Sectors were mixed, with Consumer Discretionary outperforming while Energy lagged. Upside in discretionary was led by Nike (NKE) after earnings and revenue guidance topped expectations, and signalled a plan to reduce exposure to China amid the trade tensions. Crude prices settled flat/up, but well off the earlier peaks on reports that OPEC+ are set to consider another 411k BPD in August, matching the production increase announced for July. Elsewhere, T-notes were choppy but ultimately bear steepened amid US data, the aforementioned trade update and OPEC+ sources, while attention turns to the Senate, who look set to vote on Trump’s bill on Saturday. On US data, headline PCE numbers were in line, but the core metrics were slightly hotter than expected, bolstering the “wait-and-see” approach the majority of the Fed are taking, other than Governors Waller and Bowman. Fed’s Kashkari spoke, he still sees two cuts this year, with the first possibly seen in September, but they could pause after the first cut if tariff effects appear later. The Final University of Michigan Consumer Sentiment saw little revisions to sentiment, while the 1 Year and 5 Year inflation expectations were revised down a touch. In FX, the Canadian Dollar was a clear laggard given the Trump trade talk termination, while the Dollar was flat with weakness also seen in the Australian Dollar, with marginal outperformance in the Euro. Attention this week lies on Canada’s response to Trump, Trump’s tariff figure to be announced on Canada, US NFP and ISM PMIs ahead of Independence Day. Core PCE rose by 0.2%, above the 0.1% forecast and accelerating from the prior 0.1%. Note, unrounded Core PCE rose by 0.1788% vs the prior 0.1159%. The Y/Y print rose to 2.7%, above the 2.6% forecast, while the prior was revised up to 2.6% from 2.5%. The headline numbers were in line, rising 0.1% M/M, matching the prior pace, with the Y/Y rising 2.3% Y/Y, accelerating from the upwardly revised 2.2% (initially 2.1%). The hotter-than-expected Core PCE print is worth watching as it is the Fed’s preferred gauge of inflation, and it clearly is remaining sticky above the Fed’s 2% target around these levels. There are concerns ahead that the impacts of tariffs will start to boost price pressures. Fed Chair Powell said they would expect to see meaningful tariff inflation effects in June, July, and August; If they not see that, that would lead to cutting earlier. Some on the Fed, namely Governor Waller and Bowman, have suggested cutting rates as early as July. However, this view is not shared among others on the FOMC (at least from those whom we have heard from). However, given sticky inflation above the Fed’s target, and no sign of a deteriorating labour market yet, the Fed will likely continue to argue for a wait-and-see approach, versus the dovish argument for acting now as tariffs are set to result in a one-time price increase and thus should be looked through. Meanwhile, Wall Street Journalist Timriaos highlights how goods prices are no longer helping and have started to contribute to inflation, as measured on a 12-month basis. Elsewhere in the report, Personal Income fell 0.4%, beneath the expected 0.3% rise, with prior revised down to 0.7% from 0.8%. Consumption (adj.) fell by 0.1%, beneath the +0.1% forecast. Real consumption fell by 0.3%, down from the prior 0.1% gain. The Final UoM for June saw sentiment little changed, moving slightly higher to 60.7 from 60.5, versus the consensus for an unchanged print. Expectations tilted slightly lower to 58.1 from 58.4, while conditions lifted to 64.8 from 63.7. Inflation expectations ticked lower across both time horizons, with the 1 Year printing 5.0% (prev. 5.1%) and the 5 Year 4.0% (prev. 4.1%). Within the report, it notes consumer views are still broadly consistent with an economic slowdown and an increase in inflation to come. Consumers continue to be concerned about the potential impact of tariffs, but at this time they do not appear to be connecting developments in the Middle East with the economy. Fed Member Kashkari continues to expect two rate cuts in 2025, with possible first cut in September, and if the Fed cuts in September and tariff effect shows up later, the Fed could pause rate cuts. The Minneapolis President added official data so far reveals only modest impact of tariffs on prices, activity and labour market, and more time is needed to determine if effects of trade war are delayed, or if it will be smaller than thought. Kashkari added that emphasis must be on actual inflation and real economic data without committing to an easier policy path in case tariff effects are delayed. Overall, and while Kashkari has already spoken this week, he continued to toe a very similar line to Chair Powell and the wider majority of Committee members, continuing to leave Waller and Bowman as the dovish outliers, who have been touting a July reduction. Elsewhere, Oil ended Friday with a small 0.43% gain while Gold was soft, ending the week with a loss of 1.5%.
To mark my 3200th 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 610 points on Friday and is now ahead by 3800 points for June, 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 0.52% higher at a price of 6173.
The Dow Jones Industrial Average closed 432 points higher for a 1.01% gain at a price of 43,819.
The NASDAQ 100 closed 0.39% higher at a price of 22,534.
The Stoxx Europe 600 Index closed 1.14% higher.
This Morning, the MSCI Asia Pacific closed 0.8% higher.
This Morning, the Nikkei closed 0.65% higher at a price of 40,410.
Currencies
The Bloomberg Dollar Spot Index closed 0.11% higher.
The Euro closed 0.4% higher at $1.1718.
The British Pound closed 0.25% higher at $1.3711.
The Japanese Yen rose 0.4% closing at $144.64.
Bonds
U.K.’s 10-Year Gilt closed 2 basis points higher at 4.51%.
Germany’s 10-Year Bund Yield closed 3 basis points higher at 2.59%
U.S.10 Year Treasury closed 2 basis points higher at 4.27%.
Commodities
West Texas Intermediate crude closed 1.13% higher at $65.10 a barrel.
Gold closed 0.25% higher at $3332.10 an ounce.
Today on the Economic Front we already had the release of U.K. final GDP which rose 0.7% as expected. Also released was the German Retail Sales which collapsed falling 1.6% versus +0.5% expected. Next, we have Euro-Zone Money Supply at 9.00 am and U.K. Net Lending to Individuals at 9.30 am. This is followed by German CPI at 1.00 pm and the Chicago Fed PMI at 2.45 pm, Finally, we have the Dallas Fed Manufacturing Business Index at 3.30 pm and a speech from Fed Member Goolsbee at 1.00 pm.
Cash S&P 500
The upcoming week will be short but busy, packed with economic data and potential surprises while America will be closed on Friday for the July 4th Holiday. The JPM collar, expiring on Monday, initially seemed like a magnet pulling the market lower, but ultimately failed—though it might still have an impact. Markets are strange animals: just when everything seems perfectly aligned for a particular outcome, they have a way of knocking you down, which is exactly what happened to me last week. SOFR climbed to 4.4% by Friday morning and could move even higher by Wednesday. Meanwhile, the repo facility expanded to $285 billion and might increase further on Monday. Yet, despite liquidity draining from the market and rising overnight rates, it has not mattered as my ‘’Nothing Matters’’ theme continues as S&P ended Friday at a new all-time high. The strength of Nvidia’s rally overcame everything, perhaps due to the Russell rebalance, though I am not sure. Regardless, Nvidia is now officially overbought, with an RSI above 76 and trading above its upper Bollinger Band for three consecutive days. At the very least, this suggests Nvidia may trade sideways, and at best, pull back toward its 20-day moving average. It is not easy to imagine it becoming even more overextended from here. If Nvidia stops leading, things will become more complicated for the S&P 500. So, it is no surprise that the S&P 500 itself is now overbought, with an RSI above 70 and two consecutive days trading above its upper Bollinger Band. In some ways, it seems unbelievable to me that implied volatility is this low, given the heavy economic calendar this week, especially considering Friday’s White House commentary on Powell and trade. Monday’s IV stands at just 9.1%, and the only thing remotely normal in the term structure is the modest bump to 11.9% for July 3, coinciding with the jobs report. I would be shocked if July 3 IV remains at 11.9% by the close on July 2; realistically, it should rise closer to 20%. This reveals a lot about what is currently driving the market higher—volatility suppression. Whether it is from pure Vol Funds or volatility dispersion trades ahead of earnings season, both strategies have a limited lifespan. Typically, implied volatility (IV) for individual stocks begins rising a few weeks ahead of earnings and collapses after results are reported. The dispersion trade involves owning the IV of individual stocks while shorting the IV of the S&P 500. Currently, individual stock IVs are rising as expected, while SPX IV continues to decline. This dynamic likely explains much of the volatility suppression we have seen and why mega-cap stocks have surged. However, this is not a typical quiet period devoid of news—quite the opposite. We are set for a heavy flow of economic data this week. Additionally, I am willing to bet that talk around trade deals will intensify, especially given that the S&P 500 hitting all-time highs likely emboldens President Trump. This scenario probably explains why we saw VVIX rise on Friday: volatility feels far too low, given these factors. On Thursday, I was stopped out of my 6065 average short position at 6115. Subsequently, I emailed my Platinum Members to go short the S&P again which I did at 6153 before the market sold off to my 6135 T/P level. Friday’s surge into the close has me short again at an average rate of 6164 with a 6191 ‘Closing Stop’. It is incredible that with all the geopolitical noise and no trade deals that the S&P has rallied almost 300 handles since its 5909 low last Monday morning. I will have a T/P level on this position at 6138. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro traded higher to my 1.1730 sell level. I am still short with the same 1.1630 T/P level. I will continue to look to add to this position at 1.1810 while leaving my 1.1865 ‘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
Sentiment towards the Dollar remains poor as the Dollar keeps dropping to new lows every day it seems and is down over 10% on the year which is the worst start to a half-year for the Dollar in over 40 years. I can still point to a vast positive divergence as the Dollar is hitting some key technical support at the 97.00/97.50 area. It is an impressive looking wedge but it means nothing until there is evidence of an actual break of the descending trend line. Clearly the Dollar is not buying the constant deal promises that never seem to happen unlike the Equity Markets. The dance between the tax cut bill and trade deals and now overly linked by the Trump Administration in narrative is running the wire here. Frankly I do not think they can afford uncertainty much longer because both the economy and companies cannot survive much long without leading to a recession. The Dollar hit my second buy level at 97.00 for a now 97.40 average long position. I will now lower my T/P level to 98.30 while leaving my 96.35 ‘Closing Stop’ unchanged. 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 flat. I will now raise my buy level slightly to 2060/2140 with a higher 1995 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2190.
FTSE 100
After the FTSE hit my 8790 sell level I covered this position at my revised 8770 T/P level as I have enough short exposure at this time. I am still flat. This morning the FTSE is trading at a price of 8800. The FTSE has short-term resistance from 8830/8900 where I will again be a seller with a higher 8965 ‘Closing Stop’. If I am taken short, I will have a T/P level at 8770.
Dow Rolling Contract
Wrong! The last few days have seen plenty of two-way price action in the Dow before a late rally in the last 30 minutes of trading saw the Dow stop me out of my latest 43490 short position at 43705 and I am now flat. The rally has continued overnight with the Dow testing 44100 as I go to post. Given how severely overbought the American Indexes are at this time I am going to stay flat the Dow until I get a better edge. Traditionally this is one of the strongest weeks of the year. I cannot be a buyer here and I have learnt my lesson from last week not to be short. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wrong! The NASDAQ has now traded above its upper Bollinger Band for four consecutive days and also has an RSI above 70, placing it firmly in overbought territory. I was stopped out of my 22060 average short position at a higher price of 22405 on Thursday and I am still fat. This morning the NDX is on course to trade above its Daily Bollinger Band for a fifth consecutive trading session, at a price of 22680. Today, I will be a seller from 22690/22840 with a higher 23005 ‘Closing Stop’. If I am taken short, I will have a T/P level at 22510.
December BUND
The Bund finally hit my buy range for a now 130.20 long position. I will add to this trade on any further move lower to 129.40 while leaving my 128.75 ‘Closing Stop’ unchanged. I will now lower my T/P level to 130.80. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Finally, Gold broke through support on Friday and now faces the threat of a potential triple-top formation. To confirm this triple-top, Gold would need to break below neckline support at $3,170. If that happens, it could fall back to roughly $2,890. This initial sell-off saw Gold hit my 3257 buy level before rallying to my revised 3272 T/P level and I am now flat. Gold has support from 3170/3190 where I will be an aggressive buyer with a lower 3155 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3225.
Silver Rolling Contract
No Change: Silver has support below from 33.80/34.80. As I do not want to chase the market higher this is the only level that I will be comfortable in buying Silver. We have had a nice run in this market over the past three years so from here patience will now be the key. If I am taken long, I will have a T/P level at 35.60.
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