U.S. Indices closed mixed, as stocks were choppy, bonds rallied, and the Dollar was soft after another weak US jobs report. The headline print missed analyst expectations at 22k, with three of the last four months printing below the breakeven estimate (see more below). The data confirmed the labour market concerns after the July jobs report, alongside rising Initial Claims and falling JOLTS. The data has cemented expectations for a 25bps rate cut in September, and bolstered rate cut bets through year-end. Stocks initially rallied on the report on the prospects of more Fed easing but sold off after the opening bell as fears over the state of the economy took focus. Elsewhere, price action was clearer in T-notes, which rallied across the curve by between 6 and 10bps while the Dollar took a hit as both the prospect of easing monetary policy and economic concerns support this type of price action. The Swiss Franc outperformed in FX while the Canadian Dollar lagged the U.S. Dollar, following a woeful Canadian jobs report, too. Oil prices sold off in response to reports that Saudi Arabia wants OPEC+ to speed up its next oil production increase, but no decision has been made, and it is not clear whether any increase would be agreed on as soon as Sunday or in later months. Gold prices hit fresh highs but failed to breach USD 3,600/oz in the wake of the NFP report. Elsewhere, aside from NFP, on trade Commerce Secretary Lutnick and FT (citing an unpublished memo), said Trump will direct Japan’s USD 550 billion investment in the US. Meanwhile, US President Trump threatened 301 tariffs on the EU over unfair penalties on Google (GOOGL) and Apple (AAPL). Trump also warned that substantial chip tariffs are coming, but signalled Apple (AAPL) and others will be safe during his dinner with tech CEOs at the White House, where Meta (META) told Trump it would invest USD 600 billion in the US through 2028. On USMCA, Trump also reportedly plans to renegotiate the deal. Attention this week turns to the US CPI and PPI reports, BLS preliminary. Benchmark revisions, ECB rate decision and French no-confidence vote. NFP: Overall, a weak report. Headline NFP showed just 22k jobs added in August, well below the 75k forecast and down from the prior 79k. The two-month net revisions were -21k, following the chunky -258k seen in the prior report. The headline number is below the bottom end of some of the FOMC’s estimates of the breakeven rate; Musalem had suggested it is between 30-85k. When accounting for revisions, three of the last four prints have been below that bottom estimate. Meanwhile, the June report was revised to see a -13k print, the first negative print since December 2020. The Unemployment Rate ticked up to 4.3%, in line with analyst expectations, but it was accompanied by an increase in the participation rate, adding to the softness of the labour market. However, it remains two-tenths below the year-end Fed median projection, albeit this will be updated at the September 17th meeting. On this, the soft labour market report has cemented expectations for a 25bps rate cut and will likely persuade some of the more hawkish voting members on the FOMC (Musalem and Schmid) that a rate cut is needed in September, albeit they may want to wait until the inflation data next week before making a final call. 2025 voter, Goolsbee, speaking post-data, said he is still undecided in September, noting he needs to assess the inflation side of the mandate, particularly to make sure the pickup in services inflation was just a blip. Elsewhere in the report, Oxford Economics highlighted that other areas in the report were also weak, with the increase in the number of permanent job losers and the duration of unemployment. With the report largely cementing a September rate cut from the Fed, Wall Street Jornalist Timiraos said that weak hiring makes it easier for policymakers to agree on a 25bps rate cut at their meeting in two weeks, but further muddies the debate over the pace of cuts thereafter. Waller has suggested (pre-NFP) that the pace of rate cuts will be dictated by incoming data. Meanwhile, Oxford Economics expects the Fed to pause in October, before cutting again in December. Money markets are nearly fully pricing in three rate cuts this year, with 70bps of easing priced, which fully prices two rate cuts, with an 80% probability of a third. Gooslbee, the Chicago Fed President kept true to his tone before the August NFP report on the possibility of a rate cut in September, saying he still is undecided, and needs to assess the inflation side of the mandate, making sure that the services inflation uptick is a blip. “Services inflation is not something that would likely come from tariffs”. Goolsbee highlighted that job growth is below the breakeven rate (he has not said what he thinks it is) and that numbers could be artificially lower due to immigration changes. Elsewhere, Gold surged, closing at another new all-time high with a gain of 1.28% while Oil was slammed, ending Friday’s session with a loss of 2.3%.
To mark my 3250th 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 260 points on Friday and is now ahead by 222 points for September after 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 0.32% lower at a price of 6481.
The Dow Jones Industrial Average closed 220 points lower for a 0.48% loss at a price of 45,400.
The NASDAQ 100 closed 0.08% higher at a price of 23,652.
The Stoxx Europe 600 Index closed 0.21% lower.
This Morning, the MSCI Asia Pacific closed 0.6% higher.
This morning, the Nikkei closed 1.40% higher at a price of 43,622.
Currencies
The Bloomberg Dollar Spot Index closed 0.29% lower.
The Euro closed 0.17% higher at $1.1661.
The British Pound closed 0.36% higher at $1.3441.
The Japanese Yen rose 0.24% closing at $147.99
Bonds
U.K.’s 10-Year Gilt closed 15 basis points lower at 4.65%.
Germany’s 10-Year Bund Yield closed 8 basis points lower at 2.66%
U.S.10 Year Treasury closed 15 basis points lower at 4.07%.
Commodities
West Texas Intermediate crude closed 2.27% lower at $62.04 a barrel.
Gold closed 1.28% higher at $3591.10 an ounce.
This morning on the Economic Front we already had the release of German July Industrial Production which rose 1.3% versus +1.0% m/m expected. Next, we have Euro-Zone Sentix Investor Confidence at 9.30 am, followed by U.S. CB Employment Changes at 3.00 pm. Finally, we have Consumer Credit at 8.00 pm.
Cash S&P 500
This week brings the PPI and CPI reports, with PPI released on September 10 and CPI on September 11—a rare reversal, since CPI usually comes out before PPI. Interestingly, or perhaps not, PPI, Core PPI, CPI, and Core CPI are all expected to have risen by 0.3% month-over-month in August. Friday’s jobs report came in weaker than expected, and the initial stock market reaction was a mild volatility reset that pushed the index higher at the start of the day. As soon as the headlines began to scroll across, the VIX fell sharply, releasing the event risk, which lifted the S&P 500 and sent volatility lower. This is nothing new—we see it all the time. Implied volatility levels simply were not high enough to have a bigger impact, so the equity rally was not only small but also very short-lived. But the jobs report also shifted other parts of the market in a more notable way. If the labour market is in question and there is real concern about the unemployment rate rising, we should expect high-yield spreads to widen. What seems clear is that despite equities reaching new all-time highs in both price and valuation, we have not seen High-Yields spreads narrow to new lows. If credit spreads begin to widen—which they arguably should, given the uncertainty from the jobs report—then risk assets should be on notice as financial conditions start to tighten. Another reason financial conditions are tightening is the rise in overnight funding rates alongside the continued drain of the reverse repo facility. Also, with mortgage rates coming down, the spreads between jumbo and conforming loans are starting to widen. Believe it or not mortgage rates are one of the largest contributors to financial conditions. So, the next time people on X start talking about the Dollar and 10-Year rates falling, be sure to unfollow them—because while the Dollar and rates play only a small role, it is the spreads that carry much greater weight overall. If financial conditions are set to tighten due to fading liquidity and widening spreads, then risk assets should take notice. The S&P 500 is essentially a proxy for financial conditions, and this becomes clear when looking at the index’s earnings yield. My S&P plan worked well as the market traded the whole of my sell range for a 6498 average short position before eventually selling off to my 6481 T/P level with a 6444 low print before rallying off this low into the close as the VIX was again crushed which is nothing new on a Friday. Friday’s reversal off its 6532 new all-time high saw an ‘’OUTSIDE CANDLE’’ produced on the Daily Chart. This can be bearish. Given the weakness of Friday’s NFP it makes no sense why traders would want to be a buyer given the labour slowdown on top of the highest valued market ever. Today, I will again be a seller from 6502/6522 with a higher 6537 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6478.
EUR/USD
Although the Dollar retains the dubious accolade of being the worst performing G10 Currency this year after another poor month in August, the EUR/USD has traded sideways over the past couple of months. The currency pair is currently holding below the early July peak close to 1.1829. The market has built up a sizeable long Euro position, mostly on the back of the enthusiasm earlier this year triggered by the loosening of Germany’s debt brake. In recent weeks, upside momentum in the Euro has waned against the backdrop of the market being already positioned long EUR’s and given the still slow rate of growth in Europe’s largest economy. Although lower ECB Rates will support consumer and business confidence in the Euro-Zone, industry is still faced with headwinds in the shape of still relatively high energy costs, long-term concerns over labour shortages in Germany, the new Trump Tariffs and a stronger exchange rate. On the margin, France’s political woes are also a negative factor given the potential impact on confidence in the Euro-Zone’s second largest economy. While enthusiasm for building long Euro positions may be faltering, it is also likely that downside pressure on the US Dollar is running out of steam. It is noticeable that the Euro could not sustain much upward momentum following Friday’s awful NFP Report. Friday’s post payroll report saw the Euro trade the whole of my sell range for a now 1.1740 average short position. I will leave my 1.1825 ‘Closing Stop’ unchanged while raising my T/P level to 1.1670. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
One of the main factors contributing to the Dollar weakness this year was the increase in Dollar hedging by non-USD based asset managers. In 2024, the Dollar was the best performing G10 currency as the greenback rose on the tide of U.S. exceptionalism. Data from the Bank of Japan between 2021 and 2024 shows that the hedging ratio for major Japanese Life Insurers dropped from around 60% to 40% as fund managers took advantage of the upward trend in the value of the Dollar. The opposite has happened so far this year and may be running out of steam. For these reasons I am happy to be a buyer of dips in the Dollar. On Friday, the Dollar hit my buy range for a now 97.70 long position. I will add to this position at 97.00 while leaving my 96.45 ‘Closing Stop’ unchanged. I will leave my 98.50 T/P level unchanged for now. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
Friday’s post NFP surge saw the Russell hit my sell range for a now 2405 short position. I am still short with a now higher 2360 T/P level. I will add to this position at 2465 while leaving my 2505 ‘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
I am still flat the FTSE as surprisingly the market has traded in a narrow range over the past two sessions despite the resignation of the Deputy Prime Minister adding the ongoing political problems in the Labour Party. Today, I will continue to be a buyer on any dip lower to 9050/9130 with the same 8995 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9195. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow never came close to buy range and I am still flat. Post Friday’s NFP release the Dow made a new all-time high at 45770 before falling 370 points off this high into the close. The Dow has resistance from 45730/45980 where I will be a small seller with a 46205 tight ‘Closing Stop’. I will not chase the Dow higher preferring to leave my 44700/44950 buy level unchanged with the same tight 44495 ‘Closing Stop’. If I am taken short, I will have a T/P level at 45490. If I am taken long, I will have a T/P level at 45200.
Cash NASDAQ 100
My NDX plan worked well as the market traded the whole of my sell range for a 23640 average short position before falling 200 points. This move lower saw my revised 23550 T/P level triggered and I am now flat. Today, I will again be a seller on any further rally to 23770/23930 with a higher 24075 ‘Closing Stop’. I still do not want to be long the NDX at this time. If I am taken short, I will have a T/P level at 23590.
December BUND
The Bund never came close to Thursday’s buy range, surging over 100 points on the much weaker than expected U.S. NFP Report. I will now raise my buy level to 128.60/129.40 with a higher 127.85 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.95. I still do not want to be short the Bund at this time.
Gold Rolling Contract
Gold closed at yet another new all-time high on Friday as this relentless move higher shows no sign of ending. Gold is severely overbought and due a correction. However, any sell-off should be met by aggressive buying at the previous high of 3500. Therefore, I will be a small buyer from 3505/3525 with a 3489 tight ‘Closing Stop’. If I am taken long, I will have a T/P level at 3547.
Silver Rolling Contract
I am still flat. I will not chase the price of Silver higher as I continue to be a buyer on any dip lower 39.50/40.40 with the same 38.25 ‘Closing Stop’. If I am taken long, I will have a T/P level at 41.30.
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