Markets chopped to the slew of data releases with contracting US GDP initially hitting equities and bonds, but the move faded to see T-notes settle flat while stocks closed green (ex-Russell). The GDP report was soft and accompanied by rising Core PCE Prices, boosting stagflationary concerns. T-notes tumbled in response, particularly the long-end but Treasuries recovered those losses by settlement. Equity futures also tumbled on the report but pared throughout the session, with buying accelerating into the US cash close on month-end flows. Meanwhile, the ADP employment report was woeful ahead of NFP on Friday, Chicago PMI disappointed ahead of the ISM Manufacturing PMI on Thursday, and the March PCE was mixed overall but with upward revisions. The slew of soft data adds to the weak data seen earlier in the week (falling consumer confidence, falling JOLTS and rising trade deficits), ahead of ISM Manufacturing PMI on Thursday and NFP on Friday. In FX, the Canadian Dollar outperformed on trade talk hopes between Carney and Trump, while the Australian Dollar was buoyed by hotter-than-expected Q1 inflation in Australia. The Dollar was bid on month end after seeing sharp losses in April, while the Pound, Euro and Yen underperformed on the Dollar strength; eyes turn to the BoJ overnight. Crude prices were lower, primarily on reports via Reuters that Saudi Arabia has been telling allies and contacts that the Kingdom can withstand prolonged periods of lower oil prices. On trade, China press reported the US has reached out to China for trade talks, which briefly lifted equities, weighed on bonds and supported crude, but the move was short-lived and ultimately did little to change the overall direction of trade. Elsewhere, earnings are in focus with META, MSFT and QCOM due after-hours, with AAPL and AMZN due on Thursday. The advance GDP print for Q1 saw growth contract by 0.3%, a touch beneath the Bloomberg consensus of -0.2%, although not as sharp as the Atlanta Fed gold adjusted model that was looking for a decline of 1.5%. The decline in growth in Q1 was primarily due to an increase in imports (a subtraction in the GDP calculation) and a decrease in government spending. These were partially offset by increases in investment, consumer spending, and exports. Consumer spending rose 1.8%, slowing from the prior 4.0%. Meanwhile, the Core PCE Prices rose 3.5% y/y, above the 3.3% consensus and 2.6% prior. Overall, slowing growth and rising prices raise stagflationary fears. That said, this data does not yet fully incorporate the impact of tariffs. Albeit, some tariff impact can be seen given that the primary driver for the decline in growth was the surge in imports as firms looked to front-run the US tariffs implemented on April 2nd. Nonetheless, ING suggests the stagflation narrative is likely to continue to dominate the economic debate, putting the Fed in a sticky situation. US employment costs were unchanged at +0.9%, and in line with the expected, while Y/Y was +3.6%, down from a Y/Y gain of 3.8% in Q4 of 2024. Wages printed 0.8% Q/Q (prev. 1.0%) and 3.5% Y/Y, the slowest annual gain since Q2 2021. Wages and salaries for private sector workers were up 3.4% Y/Y, while wages and salaries for state and local government workers were up 4.1% Y/Y. On the headline, Oxford Economics notes that the relatively tame reading is more noteworthy since residual seasonality tends to lend an upward bias in the first quarter of the year. In addition, the consultancy adds that the latest ECI metrics, which they considered to be one of the better measures of wage growth, confirms that after surging following the pandemic, wage growth is well aligned with the Fed’s inflation target of 2%. Overall, OxEco adds the good news is that wage growth is now well aligned with the Fed’s inflation target and not a source of inflationary pressures. The not-so-good news is that inflation will rise this year due to tariffs, and as a result, expect the Fed to delay any rate cuts until late this year. ADP national employment plunged to 62k in April from 147k in March (exp. 115k), printing outside the bottom end of the forecast range, and ahead of the monthly payrolls report on Friday. In terms of median change in annual pay, job stayers ticked marginally lower to 4.5% (prev. 4.6%), while job-changers rose to 6.9% from 6.7% in March. ADP Chief Economist Nella Richardson said, “Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment”. Pending home sales for March rose 6.1%, much above the forecasted rise of 1.0%, and the prior 2.1%. The Northeast experienced M/M losses in transactions, while the Midwest, South, and West saw gains, which were most substantial in the South. According to NAR Chief Economist Lawrence Yun, “Home buyers are acutely sensitive to even minor fluctuations in mortgage rates. While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable build-up of potential home buyers, fuelled by ongoing job growth”. Nonetheless, Pantheon Macroeconomics suggests that a meaningful further recovery seems ruled out by the still very elevated level of mortgage rates. PM notes any boost to housing demand from here from lower long-term rates is likely to come at the expense of a hit to demand from slower economic activity and a weaker labour market.
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 360 points yesterday, 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
Equities
The S&P 500 closed 0.15% higher at a price of 5569.
The Dow Jones Industrial Average closed 141 points higher for a 0.35% gain at a price of 40,669.
The NASDAQ 100 closed 0.13% higher at a price of 19,571.
The Stoxx Europe 600 Index closed 0.46% higher.
This Morning, the MSCI Asia Pacific closed 1.2% higher.
This Morning, the Nikkei closed 1.14% higher at a price of 36,456.
Currencies
The Bloomberg Dollar Spot Index closed 0.16% higher.
The Euro closed 0.22% lower at $1.1360.
The British Pound closed 0.42% lower at 1.3351.
The Japanese Yen fell 0.27% closing at $142.71.
Bonds
Germany’s 10-year yield closed 5 basis points lower at 2.45%.
Britain’s 10-year yield closed 4 basis points lower at 4.44%.
U.S.10 Year Treasury closed 1 basis points lower at 4.16%.
Commodities
West Texas Intermediate crude closed 3.5% lower at $58.21 a barrel.
Gold closed 0.22% lower at $3309.10 an ounce.
This morning on the Economic Front we have no Economic data of note as most of Europe is closed for May Day. At 1.30 pm we have U.S. Weekly Jobless Claims, followed by Manufacturing PMI at 2.45 pm. Finally, we have Construction Spending and ISM Manufacturing PMI at 3.00 pm.
Cash S&P 500
The S&P has now closed higher for seven consecutive trading sessions following a dramatic surge in the last 20 minutes of trading. On the back of stronger than expected earnings from both Microsoft and Meta, the S&P has risen 1% overnight, trading at 5624 as I go to post. This is an incredible 200 Handles higher from where were trading post GDP at 3.00 pm yesterday. The reason for the late rally into the close was a $3 billion order’ to buy on the close’ due to month-end rebalancing. As for the earnings, Meta reported results that came in better than expected and gave revenue guidance that appears to be basically in line with expectations. So it a bit surprising to me see the stock trading higher, especially given how high IV was heading into and how bullishly the stock was positioned. I guess what I am saying is that I would not be surprised to see the gains given back, but at least at present, the shares are trading higher around $575 – up 5% from Wednesday’s close. Microsoft reported strong earnings that were better than expected, with strong growth in Azure, and also provided solid-looking guidance. So, seeing the shares trade higher makes sense. In points terms April was one of the most dramatic months ever for the S&P in history. On April 7, the S&P hit a low at 4805, before closing 750 Handles higher which is incredible when the U.S. has yet to announce any Tariff agreement with any other country while the economy is now falling off a cliff. It is almost impossible to be short for any length of time as the buy the dip mentality is a strong as ever. Yesterday’s sell-off saw the S&P hit my 5549 T/P level on Tuesday’s 5568 short position and I am now flat. To think after my T/P level was hit that the S&P would hit a low at 5430 before trading almost 200 Handles higher this morning is mind boggling to be honest. The McClellan closed 50 points lower at +192 last night but is certain to be a lot higher this evening if today’s ‘’Open Gap’’ holds into the close. The S&P has an ‘’Open Gap’’ from early April at 5670. Today, I will be an aggressive seller on any further rally to 5655/5680 with a 5701 ‘Closing Stop’. The S&P has support below from 5500/5530 where I will be a small buyer with a 5475 ‘Closing Stop’. If I am taken short, I will have a T/P level at 5622. If I am taken long, I will have a T/P level at 5565.
EUR/USD
I am still flat. Overnight the Euro has fallen sharply, trading at 1.1300 as I go to press. The Euro has support below from 1.1150/1.1230 where I will be a buyer with a 1.1085 ‘Closing Stop’. Ahead of the long weekend I will continue to be a seller on any further rally to 1.1420/1.1520 with a lower 1.1605 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1305. If I am taken short, I will have a T/P level at 1.1340.
Dollar Index
Overnight, the Dollar rallied to my 99.70 T/P level on my latest 99.30 long position and I am now flat. Today, I will again be a buyer on any dip lower to 98.70/99.40 with a lower 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.20. I still do not want to be short the Dollar at this time.
Russell 2000
The post GDP sell-off saw the Russell hit my 1925 buy level. I am still long with a now lower 1978 T/P level which is just below Wednesday’s high print. I will continue to look to add to this position on any further move lower to 1860 while leaving my 1795 ‘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
No Change: I am still flat. The FTSE has further resistance from 8550/8620 where I will again be a seller with the same higher 8685 ‘Closing Stop’. If I am taken short I will have a T/P level at 8480. I still do not want to be long the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My latest 40620 short Dow position worked well as the market fell over 800 points off this sale before recouping most of these losses into the close. The Dow is severely overbought, meaning I will only look to buy the Dow on a meaningful pullback. In my opinion the level of complacency is scary as buyers continue to show up every day following the latest sell-off. The Dow has resistance from 41100/41400 where I will again be a seller with a higher 41605 ‘Closing Stop’. If I am taken short, I will have a T/P level at 40520. on this position to 40790
Cash NASDAQ 100
Having hit a low at 19011 post Wednesday’s GDP, the NDX is now trading almost 900 points higher at 19880 this morning as I go to press. This on the back of the dramatic late rally into the close while overnight the rally continued on better earnings from both Meta and Microsoft. This move higher sees the NDX trade above its 50 Day Moving Average (19576). The overnight gap up saw the NDX hit my sell range for a now 19800 short position. I am still short and I will add to this position on any further move higher to 20000 with a higher 20105 ‘Closing Stop’. I will have a T/P level on this position at 19620. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
I am still flat the Bund. With the Bund Market closed today, I will stay flat until I return on Tuesday.
Gold Rolling Contract
Record Chinese liquidations overnight sees Gold trading 1.7% lower this morning. This sell-off saw Gold hit my buy range for a now 3230 long position. I will continue to look to add to this trade at 3200 while leaving my 3178 ‘Closing Stop’ unchanged. I will now lower my T/P level to 3252. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver traded lower to my 32.20 buy level. I am still long with a now lower 32.90 T/P level. I will add to this trade at 31.30 while leaving my 29.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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