U.S. Indexes closed the final session of the week in the green, as did all sectors, with Consumer Discretionary and Materials the outperformers. The key risk event on Friday was the soft US Payrolls Report, as the headline underwhelmed, and the Unemployment rate rose, albeit as did the participation rate. Following the release, there was a notable dovish reaction with upside in US equity futures, US Treasuries, and spot gold, accompanied by downside in the Dollar. However, since the data print the moves have pared into weekend trade, where participants await any Middle East update. In the energy complex, which sparked initial downside, French President Macron confirmed that diesel and crude stocks would be released over 4 months, and G7 leaders confirmed the release of up to 100 million barrels of oil and diesel stocks. The September jobs report was soft, with just 29k jobs added, below the 90k consensus and the prior 133k, which was revised down from 162k. The net revision to July and August payrolls was -60k, suggesting that the labour market was not as strong as initially thought, and favourable seasonal dynamics may have supported the August release. Private payrolls slowed to 46k from 89k, with the prior revised down from 127k. The Unemployment rate also ticked up to 4.2% from 4.1%, alongside an increase in the participation rate to 61.8% from 61.6%. The weak headline payroll growth, rise in unemployment and negative revisions add to concerns around the labour market. However, the labour market has remained relatively robust, and Fed officials have largely characterised it as close to full employment. One report is therefore unlikely to completely change that assessment, particularly given the Fed’s emphasis on trends rather than individual data points. However, when accompanied by the downward revisions, the weakness is more notable. Pantheon Macroeconomics highlights that the three-month average of payroll growth now stands at just 51k, which it suggests is “probably slightly below the break-even pace”. Moreover, officials have been more focused on the inflation side of the dual mandate, meaning the September CPI report on October 14th will be key. Nonetheless, the jobs report likely cements expectations for an October pause, particularly following the softer August core PCE data and calls for patience from Williams and Jefferson, while Bowman favours no further hikes this year. Money Markets now assign just a 16% probability of an October hike, down from 24% on Thursday evening. Looking ahead, Pantheon expects the Fed to hold in October and notes December remains a close call but expects continued weakness in payrolls alongside slower services inflation to give the FOMC sufficient grounds to look through an anticipated rise in core goods inflation and keep policy unchanged. Fed Member Logan said policy rate needs to increase an additional 50 basis points or more, and that without higher rates, inflation will not get to the 2% goal. She added that policy is not sufficiently restrictive and needs to become modestly tighter, and that economic growth is gaining momentum, while the labour market remains well balanced. The hawk added that, at a minimum, several further rate hikes would reverse last autumn’s cuts and reiterated the Fed’s message that price stability must be restored. Added it remains uncertain how high the policy rate must go to bring inflation back towards 2%. Higher yields may partly reflect increased term premiums, which could lessen the need for additional policy tightening. Rising long-term yields suggest investors expect interest rates to remain higher and will continue monitoring bond-yield developments and evaluate their implications. Elsewhere, Oil closed higher by 1.75 while Gold reversed earlier gains to close Friday’s volatile session with a loss of 1%.
To mark my 3450th 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 960 points on Friday and is now ahead by 960 points for October after ending September with a nice gain of 7767 points, after ending the month of August with a gain of 2645 points after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, 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 previous 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 0.73% higher at a price of 7722.
The Dow Jones Industrial Average closed 250 points higher for a 0.49% gain at a price of 51,176.
The NASDAQ 100 closed 1.0% higher at a price of 30,807.
The Stoxx Europe 600 Index closed 0.75% higher.
This morning, the MSCI Asia Pacific closed 0.6% higher.
This morning, the Nikkei closed 3.31% higher at 68,960.
Currencies
The Bloomberg Dollar Spot Index closed 0.18% lower.
The Euro closed 0.12% higher at $1.1255.
The British Pound closed 0.37% higher at $1.3237.
The Japanese Yen rose 0.17% closing at $157.80.
Bonds
U.K.’s 10-Year Gilt closed 6 basis points lower at 5.37%.
Germany’s 10-Year Bund Yield closed 11 basis points lower at 3.47%
U.S.10 Year Treasury closed 4 basis points higher at 5.28%.
Commodities
West Texas Intermediate crude closed 1.76% lower at $91.11 a barrel.
Gold closed 0.91% lower at $4139.10 an ounce.
This morning on the Economic front we have German, Euro-Zone and U.K. Services PMI at 8.55 am, 9.00 am and 9.30 am respectively. Next, we have Euro-Zone Sentix Investor Confidence and PPI at 10.00 am. This is followed by U.S. Service PMI at 2.45 pm and ISM Non-Manufacturing PMI at 3.00 pm. Finally, we have a 10-year JGB Auction at 11.30 pm.
Cash S&P 500
Despite the twin Oil and Treasury Market shocks, the U.S. economic numbers have not just held up well, but there is this general perception that the pace of activity is accelerating. But the second Quarter upward GDP revision is in the rearview mirror, and our bottom-up sector arithmetic shows Q3 slowing back to just a +1.1% annual rate. That still may not be weak enough to push a hawkish Warsh-led Fed off its tightening path, mind you, since headline inflation is the sole focus, and that is being primarily influenced by an energy-fueled global supply shock. The stock market, meanwhile, is forward-looking, and not only is nearly 70% of the S&P 500 now in official correction mode, but as the chart illustrates, so are the areas that are most closely linked to the economic outlook — collectively down to a six-month low. The only question for the central bank and bonds is when, and the extent to which, the looming slowdown in demand begins to take the edge off all these incipient inflation concerns. The labor market slack is building. September Payrolls came in light, with downward revisions and virtually no wage growth. The inflation news was good: the PCE data were completely benign. Meanwhile, the latest wave of figures could result in a downside surprise to Q3 GDP growth. On the bond front, so far, basis trades seem to be responding to the bond sell-off rather than driving it. Everyone is calling Friday’s jobs report weak because the establishment survey showed just 29,000 jobs. The household survey tells a very different story, with employment rising by 406,000 in September after roughly 600,000 in August, nearly a million people finding work in two months. The Unemployment rate ticked up only because people came off the sidelines and rejoined the labor force. The bond market seems to agree. After an initial drop, the 10-year reversed sharply and finished the week about 11 basis points higher. That move is not about inflation fears. Real yields and the term premium are doing the work, and on several measures, there is still plenty of room for rates to climb. Meanwhile, the Dollar is quietly strengthening against nearly everything except the Japanese Yen, and high-yield credit spreads are starting to widen. My S&P plan worked well as the idea of buying dips continue to generate lots of points. On Thursday, the S&P traded the whole of my buy range for a 7661 average long position before rallying to my revised 7683 T/P level. Subsequently, I emailed my Platinum Members to buy the S&P which we did at a price of 7629 before rallying to my 7650 T/P level and I am now flat. Today, I will again be a buyer of the S&P from 7670/7695 with a 7649 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7722.
EUR/USD
The Euro got hit hard on Thursday leading to the 14-Day RSI closing at an extremely oversold reading of 19. I cannot remember the last time that the Euro was this much oversold. As a result, I emailed my Platinum Members after my second buy level at 1.1305 was triggered to cancel any stop in the Euro. I am now long at an average rate of 1.1345 with no stop. My T/P level remains unchanged at 1.1400. If any of the above levels are hit, I will be back with a new update for my Platinum Members
Dollar Index
The Dollar got hit hard on Thursday. This move lower saw my 102.00 second sell level triggered for a now 101.70 average short position. I will leave my 102.75 ‘Closing Stop’ unchanged while raising my T/P level to 101.20. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Russell 2000
The Russell finally sold off to my second buy level at 2780 for a now 2815 average long position. I will now lower my T/P level to 2860. Meanwhile, I will leave my 2725 ‘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
Wrong! The FTSE continued to sell-off following Thursday’s DC being posted. This move lower saw my 10610 average long position stopped at 10495 and I am now flat. The FTSE closed the week at a three-month low. Despite the weakness in the FTSE I still do not want to be short the market. The FTSE has short-term support from 10340/10420 where I will again be a buyer with a lower 10245 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10490. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well after the market hit my 51780-buy level the Dow rallied to my revised 51000 T/P level and I am now flat. The Dow made a high above 51500 on Friday before falling 300 points off this high into the close. Today, I will again be a buyer from 50650/50950 with a higher 50495 ‘Closing Stop’. If I am taken long, I will have a T/P level at 51270.
Cash NASDAQ 100
The NDX has had a volatile past two trading sessions. After the NDX traded the whole of Thursday’s buy range for a 30495 average long position the market rallied to my revised 30650 T/P level and I am now flat. The NDX hit a post NFP high on Friday at 31017 – for a new all-time high before falling 200 points into the close. It is incredible to think that whole the NDX made a new high on Friday, 80% of NASDAQ stocks are down more than 10% from their recent highs. Thankfully we have had now sell level in the NDX over the past few weeks. Today, I will again be a buyer from 30450/30650 with the same wider 30195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 30880. I still do not want to be short the NDX at this time.
December BUND
Lower Treasury Yields on Thursday and Friday saw the Bund rally to my 120.60 T/P level on my 120.40 average long position and I am now flat. The Bund has support below from 119.60/120.30 where I will again be a buyer with a lower 118.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 121.05.
Gold Rolling Contract
I was lucky on Friday as following the weaker than expected NFP Report Gold spiked to my 4210 T/P level on my latest 4185 average long position and I am now flat. Subsequently Gold fell $100 from its 4227 afternoon high into the New York close. Gold has short-term support from 4030/4110 where I will again be a buyer with a lower 3965 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4180. If any of these views change, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
No Change: I am still long Silver at an average rate of 63.30. I will now lower my T/P level to 64.00 with the same 59.95 ‘Closing Stop’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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