Friday’s US Payrolls Report exceeded expectations only in respect of the headline Non-Farm Payrolls print (250k against 200k expected) with the Unemployment rate unchanged at 3.7% as expected thanks to a 0.2% rise in the about participation rate, while average hourly earnings printed at 0.2% as expected but which lifted the annual rate to 3.1% (3.14% unrounded) and the first time above 3% since 2009. The data prompted a partial reversal of Thursday’s USD fall back (after new local cycle highs seen on Wednesday) and lifted UST yield by between 5.9bps (2s) and 8.2bps (10s). US stocks had opened higher Friday, but the rise in bond yields weighed as the session progressed, the IT sector leading the falls with the computer hardware sub-sector the weakest, thanks to a 6.6% drop in Apple, whose shares had of course fallen in after-hours trade on Thursday. This was after its Q3 results and where the market did not like the lack of unit-volume growth for the iPhone and the announcement that henceforth Apple wouldn’t be breaking down its unit sales volume numbers by product.
To mark my 1700th 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 172 points on Friday and is now ahead by 238 points for November, having made 2094 points in October,1276 points in September, 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March and 2256 points in February. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 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
All the main US Indices finished lower, NASDAQ faring worse down 1%. On the week, the end/beginning of month turn-round sees US Indices up by between 2.4% (Dow) and 2.7% (NASDAQ) with Asia stocks the standout winners (Nikkei +5%, Shanghai +3%) thanks to the glimmer of hope for diffusion of trade tensions following President Trump’s late-week tweets regarding his conversation with China’s President Xi, and then news reports Friday that President Trump has instructed officials to draft terms for a potential trade deal. Later in the NY session, White House economic advisor Larry Kudlow tried to cool expectations for a Trump-Xi agreement, telling CNBC ‘’we are not on the cusp of a deal’’.
Currencies
All G10 currencies lost ground against the USD post-US payrolls, JPY leading the way down, with a 0.4% loss and intra-day high of 113.32. Some of the mid-week surge in Sterling on Brexit-related optimism was lost on a combination of USD strength and the failure of EU officials to offer any public support for the UK’s government’s apparent outbreak of optimism about proximity to a deal, including on financial services.
This has changed again this morning, after the UK Sunday Times reported on its front page that Theresa May’s secret plan to secure a Brexit deal and win the backing of parliament can be revealed today. Senior sources say the prime minister has secured private concessions from Brussels that will allow her to keep the whole of Britain in a customs union, avoiding a hard border in Northern Ireland. They expect this to placate remainder Tories and win over some Labour MPs.
The story claims that the deal entails open ended UK inclusion in the Customs Union, pending an agreement to a ‘’Canada-plus’’ style Free Trade Agreement. The latter means UK would be free to negotiate FTA’s with other countries (a key demand of ‘’Brexiteer’’) while at the same time the open-ended Customs Union arrangement might satisfy ‘’Remainers’’ (including some in the Labour party) as well as, crucially, the DUP MPs who prop up the government in so far as obviates the end to re-impose some form of Irish border.
GBP/USD closed in NY on Friday at $1.2970 and is currently quoted at $1.3045, following the Times story.
Bonds:
‘’Bear steepening’’ in the US Treasury market characterised both the day and the week, moves that commenced with the mid-week turn-round in US stocks and where moves in both stocks (up) and bonds (down) may have been exaggerated by rebalancing flows from managed funds. In terms of cross-market spreads, the main feature of last week is a compression of over 20bps in the 10-year Italy-Germany bond spread, in itself a supportive influence under the Euro.
Commodities:
Base metals continued to feed positively of the hopes, however slender, for diffusion of Sino-US trade tension, also helped by a softer USD Friday, while oil remains pressured as US sanction against Iran oil exports take effect from today, but where up to eight countries are seen to have secured exemption for the time being. Also, Russia tells the FT is intends to help Iran sidestep sanction, presumably by white labelling Iran oil as its own. On the week, copper’s 2.4% gains has just kept the LMEX index in positive territory with all other base metals lower, while the standout feature is the sharp (6%+) falls in oil:
Economic Data
US October non-farm payrolls 250k (200kE, 118kP revised from 134k)
2-month net revisions zero
US Average Hourly earnings 0.2% (0.2%E, 0.3%P); yr/yr 3.1% (3.1%E, 2.8%P)
US unemployment rate 3.7% (3.7%E, 3.7%P)
US participation rates 62.9% (62.7%E, 62.7%P)
US underemployment rate 7.4% from 7.5%
US September trade balance -$54.0b (-53.6b E, 53.3b P)
US September Factory Goods Orders 0.7% (0.5%E, 2.6%P revised from 2.3%)
This morning on the Economic Front we have UK Services PMI at 9.30 am and this is followed by US Services PMI at 2.45 pm. Finally at 3.00 pm we have ISM Non-Manufacturing Index.
December S&P 500
Again we witnessed a trading session of incredible volatility with both my 2760 sell level and then my 2704 buy level both getting filled given you potentially a nice gain in points terms for the day. After the S&P hit my 2760 sell level I covered this position ahead of the NFP release at a price of 2756 before the S&P subsequently got hit hard to my 2704 buy level. As all three of my US Indices hit their buy range I covered this position at my revised 2709 T/P level and I am now flat. Crucially the S&P rallied into the close with the market for now holding the key 2690/2710 support range as we wait for the Mid-Term Elections tomorrow. Today I will again look to buy the S&P on any dip lower to 2685/2697 with a 2678 tight stop. I do not want to be short the market at this time.
EUR/USD
I am still flat the Euro and today I will leave my buy level unchanged from 1.1295/1.1335 with the same 1.1255 stop.
December Dollar Index
No change as I am still a seller on any rally higher to 96.70/97.10 with a 97.45 stop.
December DAX
Despite the major sell-off in the US Indices on Friday afternoon the DAX again managed to close over its key 11400 support level. I am still flat and today I will now raise my buy level slightly to 11310/11380 with a higher 11255 stop. I still do not want to be short the DAX at this time.
December FTSE
Frustratingly the FTSE just missed my 7040 buy level with a 7045 low print before having a strong rally into the New York close and I am still flat. With Sterling firming this morning I am not going to chase the FTSE market higher and today I will lower my buy level slightly to 6970/7020 with a 6930 stop.
Dow Rolling Contract
Incredibly the Dow fell nearly 700 points from its pre-NFP high print of 25720 in afternoon trading with the market trading lower to my 25100 buy level. As I wanted to get November off to a positive start I covered this long position at my revised 25160 T/P level and I am now flat. Importantly the Dow again managed to close over its 200 Day Moving Average and is one reason why I am reluctant to go short any of the US Indices following the most volatile month (October) in points terms ever. Today I will again look to buy the Dow on any dip lower to 24800/25020 with a 24695 stop.
December NASDAQ
Finally the NASDAQ traded lower to my 6920 buy level before rallying to my 6942 revised T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 6820/6890 with a 6775 tight stop.
December BUND
The Bund got hit hard on Friday as it following the US Treasury market lower. The break and close below 160 could be significant. Today I will now lower my sell level to 160.10/160.50 with a 160.85 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1213/1221 with a 1204 stop.
Silver Rolling Contract
Silver just missed my 14.60 buy level before rallying and then having a small sell-off into the close. I am still flat and today I will leave my buy level unchanged from 14.20/14.60 with the same 13.80 stop.
Recent Comments