Both U.S. Indices and Treasuries ended Wednesday with gains, while the Dollar was sold after a surprisingly dovish FOMC and Powell press conference (summary below). Briefly recapping, the Fed cut rates by 25bps to 3.5-3.75%, as expected, but in a dovish 9-3 vote split – Goolsbee and Schmid voted to leave rates unchanged, while Miran wanted a larger 50 basis points reduction. Heading into the meeting, as many as 4 hawkish dissenters were touted. In the following press conference, Powell largely put more emphasis on the labour side of the mandate vs inflation, but he did acknowledge that rates are in a plausible range of neutral. Looking to January, he noted the Fed has not made a decision yet, they will wait and see how the data comes in, stressing there is a lot of data due to come. As a reminder, next week, we will see the October and November NFP, the November Unemployment rate, and the November CPI. On account of the aforementioned broad Dollar weakness, all G10 FX peers profited, with the Canadian Dollar ultimately firmer following the Bank of Canada’s decision to hold rates at 2.25% in an expected decision, reiterating that the current rate is about the right level to keep inflation close to 2% as long as the economy and inflation evolve in line with projections. Oil saw slight gains but had seen initial weakness in the wake of Kazakhstan announcing it is to raise oil exports via alternative routes to the CPC routes. However, upside ensued on reports, that were later confirmed, that the US seized an oil tanker off the coast of Venezuela. Precious metals moved higher in response to the dovish Fed. Elsewhere, sectors were almost exclusively in the green, aside from Utilities, with Industrials the outperformer and buoyed by a stellar GE Vernova update. Fed cuts rates, and vote split triggered a dovish market reaction. The FOMC cut rates by 25bps to 3.50–3.75% as expected, with a 9–3 vote split; Miran sought a 50bps cut, while Goolsbee and Schmid preferred no change. It reiterated data dependence, signalling that further adjustments will hinge on the evolving outlook, labour market conditions, inflation dynamics, expectations, and global and financial developments. Policy guidance was tweaked, changing the phrase “in considering additional adjustments” to “in considering the extent and timing of additional adjustments.” In its updated SEP, the Fed Funds projections are essentially unchanged, signalling steady expectations for a gradual return toward the longer-run rate. However, the 2025 dot plot composition shows six members projecting end-2025 rates at 3.75–4.00%, indicating that four non-voters would have voted to keep rates on hold at today’s meeting if they had voting rights. The Fed noted slower job gains and a slight rise in unemployment through September, with the December statement updating October’s labour-market phrasing by replacing “the unemployment rate has edged up but remained low through August” with “the unemployment rate has edged up through September.” Unemployment forecasts are only marginally firmer in the out-years, suggesting a slightly more resilient labour market. Inflation has increased since earlier in the year and remains somewhat elevated, while core PCE expectations have eased modestly, pointing to a marginally softer inflation path and slightly more confidence in disinflation over the forecast horizon. Economic activity is described as expanding at a moderate pace, with uncertainty around the outlook still high and downside risks to employment having risen recently. The Fed said reserve balances have declined to ample levels and will use shorter-term Treasury purchases when needed to maintain sufficient reserves. October’s balance-sheet guidance, “the Committee decided to conclude the reduction of its aggregate securities holdings on December 1,” is removed; instead, December adds: “the Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves.” Overall, it was a net dovish press conference from Powell, particularly compared to the tone of the October press conference. Powell appeared more concerned about the labour market side of the mandate than inflation. Powell stressed several times that there are downside risks to employment; while saying it is a reasonable base case that the tariff effects on inflation will be one-time. He was optimistic on growth too, noting the baseline outlook would be solid growth next year as fiscal policy will be supportive, consumer continues to spend, and AI spending continues. When asked about why they cut today after a hawkish October press conference, he said there has been a gradual cooling in the labour market, and they think there is -20k payrolls per month, while inflation has come in a touch lower. He also suggested the overcount of payrolls is around 60k per month, while labour supply has come down sharply. He said it does not feel like a hot economy, and evidence is growing that services inflation has come down, and goods inflation is entirely due to tariffs. Some hawkishness was seen as Powell said they are well-positioned to determine adjustments to the policy rate, noting that rates are now in a plausible range of neutral, later describing policy rates as in the high end of neutral. He was quizzed about the guidance, noting that the “extent and timing” phrase points out that they will carefully evaluate incoming data. He also said the Fed is well-positioned to wait and see how the economy evolves, but they will see a great deal of data before January, so they have not made up their mind yet. He also said that with rates in a plausible range of neutral, the base case is still not for rate hikes. Elsewhere, both Oil and Gold closed higher by 0.5% and 0.6% respectively.
To mark my 3300th 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 415 points yesterday and is now ahead by 1477 points for December 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 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 0.67% higher at a price of 6886.
The Dow Jones Industrial Average closed 497 points higher for a 1.05% gain at a price of 48,057.
The NASDAQ 100 closed 0.42% higher at a price of 25,776.
The Stoxx Europe 600 Index closed 0.07% higher.
This morning, the MSCI Asia Pacific closed 0.7% lower.
This morning, the Nikkei closed 0.90% lower at a price of 50,148.
Currencies
The Bloomberg Dollar Spot Index closed 0.57% lower.
The Euro closed 0.58% higher at $1.1695.
The British Pound closed 0.58% higher at $1.3380.
The Japanese Yen rose 0.59% closing at $155.92
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 4.51%.
Germany’s 10-Year Bund Yield closed 1 basis points lower at 2.85%
U.S.10 Year Treasury closed 4 basis points lower at 4.15%.
Commodities
West Texas Intermediate crude closed 0.41% higher at $58.49 a barrel.
Gold closed 0.57% higher at $4232.10 an ounce.
This morning on the Economic Front we have no data of note from either the U.K. or the Euro-Zone. At 1.30 pm we have Weekly Jobless Claims and the Trade Balance. Next, we have Wholesale Inventories at 3.00 pm. Finally, we have a 30-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Wednesday’s FOMC decision to cut rates by 25 basis points, along with the introduction of reserve management operations, was widely expected, and consistent with what I had been highlighting ahead of the meeting. It seemed clear that the Fed needed to prevent reserves from falling further, as the decline had been putting pressure on the overnight funding market, which we have been discussing here for months. Instead of freezing assets, they are trying to stabilise reserves, which is the more pressing issue. Perhaps things were worse behind the scenes than on the surface. The Fed clearly felt it had to act, announcing roughly $40 billion in T-bill purchases this month. In reality, this mostly offsets the week-to-week fluctuations we typically see on the balance sheet and may help lift reserves slightly. But the move feels a bit late, and the way they are implementing it almost comes across as a half-baked approach. The $40 billion does not appear to be a static amount. It sounds as though we will be learning the specific figures on the ninth of each month, at least until April, when the operation is expected to end. It is probably not a coincidence that the operation concludes around the same time Jay Powell is set to step down as Fed chair. It may even have been structured intentionally so that a new chair can come in and implement whatever policies they believe are appropriate. In a way, it seems Powell is trying to avoid letting the situation continue deteriorating under his tenure and is positioning himself to step aside before anything unfolds that could make the current environment worse. However, the real proof will come when we see how the overnight funding market actually behaves on a day-to-day basis—where SOFR trades and where volumes settle—and that will ultimately determine whether this operation is truly successful. In my view, $40 billion is unlikely to be enough to offset year-end funding pressures, and it will probably not be sufficient in January to meaningfully lower the rate pressures we have been seeing in a short period of time. But again, the results will speak for themselves as we monitor these dynamics day to day. Luckily, this comes at the perfect time for the $80 billion in Treasury settlements on Monday, 15 December. Overnight, Oracle is getting smashed, down 10%, after its cloud revenue missed estimates and the company noted that CAPEX was rising to $50 billion from $35 billion. I guess that means today we will be on CDS watch for the AI names once again. My S&P plan worked well as after the market hit my 6878-sell level the market traded lower to my 6853 revised T/P level before rallying to 6901. Subsequently the S&P got hit hard overnight. The S&P hit a low at 6812 and is now trading at 6835 as I go to post. The S&P is still trading 50 Handles lower from last night’s 6886 Chicago close. I have no idea whether traders will try to close the gap but if they do I will be a seller from 6880/6900 with no stop and a T/P level at 6852 T/P level if triggered. Meanwhile, I will continue to be a buyer on any further dip lower to 6760/6780 with a lower 6739 ‘Closing Stop’. If I am taken long, I will have a T/P level at 6808.
EUR/USD
The Euro rallied to my 1.1700 sell level post the FOMC Statement. I am still short with a now higher 1.1635 T/P level. I will add to this position at 1.1770 with a now higher 1.1835 ‘Closing Stop’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still long the Dollar from last week at a price of 99.20. I will continue to look to add to this position at 98.40 while leaving my 97.95 tight ‘Closing Stop’ unchanged. I am still bullish the Dollar despite the weakness this week. Once we have a confirmed top in U.S. Equity Markets then the Dollar should have a strong rally. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell closed at a new all-time high yesterday. This move higher saw my second sell level at 2565 triggered for a now 2535 average short position. I will leave my 2605 ‘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 continues to trade heavy albeit in extremely narrow ranges. Today, I will continue to be a buyer on any dip lower to 9500/9570 with the same 9430 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9630. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
After the Dow finally rallied to my sell range for a 48170 short position we had a small sell-off into the close. This move lower saw my revised 48075 T/P level triggered and I am now flat. The Dow has short-term resistance from 48200/48500 where I will again be a seller with a higher 48705 ‘Closing Stop’. If I am taken short, I will have a T/P level at 47960. If this view changes I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well as the market rallied to my 25810-sell level before selling off to my revised 25740 T/P level and I am now flat. With so many positions hitting at the same time it was prudent to bank some gains and be flat overnight. Unfortunately, this was the wrong call given the fall-out from Oracle with the market trading lower at 28480 as I go to post. The NDX has short-term support from 25100/25300 where I will be a buyer with a 24085 tight ‘Closing Stop’. The NDX has resistance from 25720/25920 where I will be a small seller with a 26155 ‘Closing Stop’. If I am taken long, I will have a T/P level at 25470. If I am taken short, I will have a T/P level at 25560. If this view changes I will be back with a new update for my Platinum Members.
December BUND
I am still long the Bund at 127.30 with the same 127.90 T/P level. I will add to this trade at 126.60 while leaving my 125.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Despite the surge in Silver to new all-time highs, Gold is struggling for much upside momentum. This should not be a surprise give the extent of the rally so far in 2025. Gold has short-term support from 4060/4090. Today, I will continue to be a buyer on any dip to this area with the same 4035 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4114.
Silver Rolling Contract
There is no end to the upside move in Silver. The Daily Chart is a vertical move higher. The Daily Sentiment Indicator for Silver is now well above 90. History tells us that a meaningful correction for Silver is now due. This morning Silver is trading at 62.05. I know I said I would not try and short Silver, but this move is extreme and for that reason I will be a small seller from 63.00/64.50 with a 65.75 ‘Closing Stop’. If I am taken short, I will have a T/P level at 59.90.
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