Both Equity Markets and the U.S. Dollar started Monday’s session in the red with Trump announcing tariffs on the non-US film industry, which hit names like NFLX, DIS, and AMZN. However, it was later clarified that no final decision has been made, and Trump will be meeting with executives in the industry to discuss it. Both equities and the Dollar began to pare the earlier weakness in the wake of the ISM Services PMI report, which beat all analyst expectations on the headline, although Prices Paid surged. The report alleviated some of the economic growth fears after a downbeat Q1, although uncertainty does remain ahead. Equity prices closed red but were off the pre-data lows. Longer-dated T-Notes were hit on the report with the curve steepening while attention turns to the FOMC on Wednesday. Meanwhile, there was a plethora of corporate issuance (AAPL, CMCSA, PLD, GM) alongside the 3-year note auction, which saw an improvement from the post-Liberation Day offering. Crude prices were hit but settled off lows with the downside seen in the wake of OPEC+ accelerating production hikes. In FX, the Dollar was ultimately flat while havens and antipodes outperformed. On trade (aside from the aforementioned movie updates), US President Trump said he will not be speaking with Chinese President Xi this week, but the US is meeting with many countries, including China, on trade deals. He also said he is willing to lower tariffs on China at some point, but he would need to keep at least some tariffs in place to convince businesses to move production to the US. The President also replied “could be” when asked if any trade deals are coming this week. Regarding Japan, Kyodo reported the US has refused Japan’s full exemption from not only a 10% “reciprocal” tariff but a country-specific tariff in recent negotiations, according to sources. The headline Services PMI rose to 51.6 in April from 50.8 in March, above the 50.2 forecast, signalling expansion within the US services sector. Business activity, however, did decline to 53.7 from 55.9 but new orders rose to 52.3 from 50.4. Employment improved to 49.0 from 46.2 but remained sub 50 – the line that separates expansion and contraction. Prices Paid also saw a chunky rise to 65.1 from 60.9. Overall, the data was welcomed as it helped quell some recent fears about an economic slowdown after the -0.3% contraction seen in Q1 in the economy overall. The better-than-expected print and rising prices paid components bolster the case for the Fed to stay on hold for longer as it shows the economy can currently withstand current policies while with a still “modestly restrictive” monetary policy stance while the Fed aims to get inflation back to target. However, although a welcomed report – it is still too early to digest the full impact of Trump’s tariff and immigration policies, and uncertainty remains ahead. The report highlights that a services PMI of 51.6 corresponds to a one-percentage-point increase in real GDP on an annualised basis. On Friday we had the release of Non-Farm Payrolls. The April US jobs report saw 177k jobs added in the month, above the 130k forecast and down from the prior 185k (which was revised down from 228k). The unemployment rate was steady at 4.2%, in line with expectations and beneath the year-end median FOMC projection of 4.4%. Overall, it was a strong report and will allow the Fed to continue being patient, despite some concerns from Governor Waller that if they wait to see an impact in the hard data from new administration policies, the Fed runs the risk of acting too late. However, the hard data continues to signal the economy is withstanding the recent volatility and uncertainty. Looking ahead to June, WSJ’s Timiraos says “For now, it means the Fed doesn’t have to say anything on June at next week’s meeting “; adds “The April jobs report makes a June rate cut less likely … as there will only be one more employment report before then”. Both Barclays and Goldman Sachs pushed back their Fed rate cut calls to July from June in the wake of the report. Elsewhere in the NFP dataset, government payrolls rose by 10k, down from the prior 15k, while those employed by the federal government declined by 9k in April. Earnings were soft, with M/M rising 0.2% (exp. 0.3%, prev. 0.3%), while Y/Y rose by 3.8%, beneath the 3.9% forecast, maintaining the 3.8% pace in March. Although the Fed has stated the labour market is not a source of inflation, the softer wage data will be seen as a positive. Elsewhere, oil closed 2% lower while Gold surged, ending Monday with a near 3% rise.
To mark my 3175th 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 1183 points on the first trading session of May 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 1900 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
Recent Comments