There were three key main events on Wednesday. US CPI was cooler than expected, US/China agreed on a deal, while Middle East concerns escalated. The US CPI came in softer than analyst expectations in May, despite the imposition of tariffs in April, showing that consumer prices are still not being greatly affected by US President Trump’s tariffs so far. PPI will be viewed this afternoon to see how producer prices are faring. In response to the report, stocks caught a bid while the Dollar was sold and T-notes rallied. Stocks failed to hold onto gains by the close, with equities closing in the red due to downside in US trade sparked by the increased Middle East tensions, which saw crude prices rally. Several reports indicated some form of evacuation of US personnel from the Iraq embassy, and also an authorised departure of nonessential personnel and family members from Bahrain and Kuwait, sparking fears of a potential upcoming military action on Iran, albeit this is yet to be confirmed. Geopolitical analysts appear to have a mixed view, with some warning it could reflect a major threat (like an Israeli strike on Iran if nuclear talks fail), or others suggest perhaps it is a negotiating tactic ahead of talks on Sunday. Nonetheless, the heightened risk pressured stocks but led to a strong upside in Crude, while Gold and T-notes also moved higher. On US/China, the talks in London concluded and the US maintained its current tariffs on China that were implemented after the meeting in Geneva, while China agreed to export rare earths to the US. However, the deal still needs to be signed off on by both US President Trump and China President Xi. In FX, the dollar was sold on the CPI report while the Euro and Pound outperformed, but Antipodes lagged. Overall, CPI was soft. The headline rose by 0.081%, beneath the 0.2% forecast and down from the prior 0.221%. The Y/Y print rose to 2.4% from 2.3%, but it was beneath the 2.5% forecast. The core prints were also soft, rising 0.13% M/M, down from the 0.237% prior, beneath the 0.3% forecast. The report welcomes the Fed’s fight against inflation and shows that any tariff impact is yet to be felt. However, the Fed’s Beige Book saw that contacts who expect to pass on prices to customers expect to do so over the next three months. Therefore, more data is likely needed to assess the full tariff impact. Nonetheless, the fact that prices are not largely accelerating as tariffs are implemented may help the Fed spot the tariff-related price increases, and it can then assess whether to look through them or not. However, many have argued against doing this, aside from Governor Waller, who argues the tariff-related price increase should be viewed as a one-time event. Attention will turn to the PPI data on Thursday to see how much prices for firms have increased in the wake of tariffs. The PPI will likely be impacted by tariffs first, before CPI. Regarding the implications for the Fed’s preferred gauge of inflation, Core PCE, Pantheon Macroeconomics expect it at 0.2% after the CPI report but notes it may be updated after PPI. In regards to the Fed, there was a brief dovish reaction to money market pricing, which went back to fully pricing in two rate cuts this year. Elsewhere Oil surged, closing higher by 4.5% while Gold ended Wednesday’s session with a gain of 0.75%.
To mark my 3200th 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 545 points yesterday and is now ahead by 2639 points for June, 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 0.27% lower at a price of 6022.
The Dow Jones Industrial Average closed 2 points lower for a 0.001% loss at a price of 42,865.
The NASDAQ 100 closed 0.37% lower at a price of 21,860.
The Stoxx Europe 600 Index closed 0.27% lower.
Yesterday, the MSCI Asia Pacific closed 0.6% higher.
Yesterday, the Nikkei closed 0.55% higher at a price of 38,421.
Currencies
The Bloomberg Dollar Spot Index closed 0.43% lower.
The Euro closed 0.52% higher at $1.1483.
The British Pound closed 0.35% higher at $1.3543.
The Japanese Yen rose 0.16% closing at $144.60.
Bonds
England’s 10-Year Gilt closed 1 basis points lower at 4.55%.
Germany’s 10-Year Bund Yield closed 1 basis points lower at 2.52%
U.S.10 Year Treasury closed 5 basis points lower at 4.42%.
Commodities
West Texas Intermediate crude closed 4.48% higher at $67.89 a barrel.
Gold closed 0.73% higher at $3347.10 an ounce.
This morning on the Economic Front we have U.K. GDP at 7.00 am. This is followed by U.S. PPI and Weekly Jobless Claims at 1.30 pm. Finally, we have a 30-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Selling rallies in the S&P continues to pay dividends. Yesterday the S&P spiked higher to my 6058 sell level on the weaker than expected CPI Report before trading lower to my 6030 T/P level and I am now flat. Helping the bull case was a comment from President Trump announcing a China deal but subject to Xi approval stating the US would get a 10% tariff and China 55%. This makes me skeptical. 55% is a lot and will have ramifications if this is permanent. We will see what the fall out is and whether Xi approves it. Maybe the market came to the same conclusion judging my the late sell-off of the S&P into the Chicago close. As I go to press the S&P is lower again at a price of 6018. The S&P has strong resistance from 6052/6072 where I will again be a seller with the same wider 6091 ‘Closing Stop’. My only interest in buying the S&P is from 5905/5925 with the same 5889 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6031. If I am taken long, I will have a T/P level at 5943. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
The weakness of the Dollar saw the Euro rally to my 1.1490 sell level. I will continue to look to add to this position on any further move higher to 1.1570 with a now higher 1.1635 ‘Closing Stop’. I will now raise my T/P level to 1.1420. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: The pessimism towards the Dollar is intense. Tariff uncertainty, fiscal concerns and a shifting global sentiment are just a few of the reasons cited by investors favouring alternate currencies. The CFTC Futures Contract net short position has increased to 5485 contracts. This is the largest net short stance in nearly 15 years, since August 2011, which was near the start of a four-year Dollar rally. Given this backdrop of negativity, I am happy to be long the Dollar which I am at an average rate of 99.10 with the same 98.45 ‘Closing Stop’. I will leave my T/P level on this position unchanged at 99.90. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
As expected, the Russell rallied to the key 2190/2200 resistance area. Wednesday’s 2192 high print is 27% above the April 7 low which is just insane. I went short at 2190 before exiting this position at my revised 2165 T/P level as emailed to my Platinum Members and I am now flat. Today, I will again be a seller from 2200/2260 with a higher 2305 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2155.
FTSE 100
The FTSE traded in a narrow range on Wednesday and I am still flat. Today, I will continue to be a seller from 8920/8990 with the same 9055 ‘Closing Stop’. If I am taken short, I will have a T/P level at 8870.
Dow Rolling Contract
My Dow plan worked well as finally the Dow rallied to my 43100 sell level before trading lower to my revised 42940 revised T/P level and I am now flat. Ahead of PPI I will again be a seller on any further rally to 43100/43350 with the same 43505 ‘Closing Stop’. The Dow has short-term support below from 41850/42100 where I will continue to be a small buyer with the same 41695 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 42890. If I am taken long, I will have a T/P level at 42330.
Cash NASDAQ 100
My NDX plan worked well as the market rallied to my 22050-sell level before trading lower to my revised 21970 T/P level and I am now flat. Subsequently, the NDX fell a further 150 points into the close. I have never seen a market so dependent on headlines to get a kick. Every headline has been viewed positively despite no proper ‘Tariff Deals’ been agreed so far. Today, I will again be a seller from 22020/22220 with the same 22355 ‘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 21860.
December BUND
Despite U.S. CPI coming in lower than expected the Bund traded sideways before closing unchanged. I am still flat. Today, I will continue to be a buyer on any dip lower to 129.10/129.90 with the same 128.35 ‘Closing Stop’. If I am taken long, I will have a T/P level at 130.55. I still do not want to be short the Bund at this time. If this view changes, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: Gold continues to find support at the 3300 level and I am still flat as the market never came close to Tuesday’s buy range. I will not chase the market higher. Gold has short-term support from 3230/3250 where I will be a small buyer with a 3215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3275.
Silver Rolling Contract
No Change: I am still flat. This morning, Silver is trading slightly lower at a price of 36.30 as the rally in Silver shows no sign of ending. In my opinion it is only a matter of time before Silver trades higher to $51 which is the all-time high from May 2011. Even though Silver is overbought short-term I will continue to be a buyer from 35.00/35.80 with the same 33.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 37.50.
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