U.S. Indices ended higher on Tuesday following a session that saw plenty of two-way price action. The markets were ultimately boosted by a soft US CPI report quelling some recent US economic fears, although US growth concerns and tariff uncertainty continue to loom heavily in the background. Highlighting the slight reversal in risk sentiment yesterday, was the mega-cap sectors, Technology, Communication Services, and Consumer Discretionary, with NVDA (+6.4%) and TSLA (+7.6%) seeing heavy gains. Back to data, US CPI was cooler than expected across the board, although the headline was largely weighed on by a 4% plunge in airline fares, but it won’t feed through to the PCE. In reaction, markets saw a broad-based dovish reaction (Treasuries upside, Dollar downside), but both Treasuries and the Dollar pared initial moves as focus swiftly went back to global trade, rather than CPI metrics as it was released a day after blanket tariffs imposed by the US. In FX, the Canadian Dollar outperformed in wake of the Bank of Canada, whereby the bank lowered rates by 25bps, as widely expected, with Governor Macklem noting the BoC will be “proceeding carefully” when it comes to the policy path. Meanwhile, the Japanese Yen lagged amid yield differentials. In the energy space, crude saw gains as it was buoyed by a turnaround in recent risk sentiment as cooler-than-expected US CPI supported as well as bullish inventory data, although the aforementioned macro woes remain ever-present. U.S. CPI for February was cooler than expected across the board. Headline CPI M/M rose 0.2% or 0.216% unrounded (exp. 0.3%, prev. 0.5%), while Y/Y printed 2.8% (exp. 2.9%, prev. 3.0%). Core M/M came in at 0.2% or 0.227% unrounded, vs. the expected 0.3% and prior 0.4%. Core Y/Y printed 3.1% (exp. 3.2%, prev. 3.3%). The headline was largely weighed on by a 4.0% plunge in airline fares, which Pantheon Macroeconomics note subtracted 0.05pp, but also noted it will not feed through to the PCE report. On airline fares, PM notes they recently decoupled from underlying costs amid strong demand late last year, which unwound in February and PM doubts fares will rebound in March. The recent fall in consumers’ confidence points to more cautious spending as well as a lot of airlines (JBU, AAL, LUV, UAL, DAL) cut guidance this week. Overall, PM still believes that core CPI inflation will be broadly unchanged from February’s 3.1% rate at the end of this year, as the boost from tariffs will be broadly offset by a further decline in services inflation. As such, should enable the Fed to focus on supporting the ailing economy, easing by about 75bps over 2025. Ahead of PCE, Pantheon Macroeconomics provisionally forecasts that the core PCE deflator rose by 0.32% in February. Note, PPI which has a slew of inputs into PCE is due on Thursday. Overall, the US CPI report provided a brief bit of solace for traders amid the glum macro picture at the moment, but the focus quickly switched back to more important issues, such as US growth concerns and tariff uncertainty. The Bank of Cnada cut rates by 25bps in line with expectations, taking the target for the overnight rate to 2.75%, while Governor Macklem stated they will proceed carefully with any further changes to their policy rate, given the need to assess both upward pressures of inflation from higher costs and the downward pressures from weaker demand. The statement largely focused on tariffs. It said that heightened trade tensions and tariffs imposed by the US will likely slow the pace of economic activity and increase inflationary pressures in Canada, noting short-term inflation expectations have risen. It also noted how monetary policy cannot offset the impact of a trade war, but it must ensure that higher prices do not lead to ongoing inflation. The Bank acknowledged that recent surveys suggest a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments. However, it also noted the negative impact of slowing domestic demand has been partially offset by a surge in exports in advance of tariffs being imposed. The BoC warned Q1 ’25 growth will slow and there are warning signs that heightened trade tensions could disrupt the recovery in the labour market. It noted how wage growth has shown signs of moderation and they are closely watching inflation expectations. Overall, the BoC is in wait-and-see mode to see how the trade war plays out and how it will affect the Canadian economy with both upside and downside risks to inflation as a result of tariffs. In the Q&A, Governor Macklem also acknowledged the estimate of the neutral rate is largely centered around 2.75%, implying the BoC is now at the neutral level. Looking ahead, the next rate cut is not fully priced until June (was at July pre-BoC), with 43bps of easing priced throughout year-end, which fully prices one further rate cut, with a 72% probability of another (vs being fully priced pre-BoC). Elsewhere both Oil and Gold rose on Wednesday by 0.8% and 0.7% respectively.
To mark my 3150th 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 1220 points yesterday and is now down by 311 points for March after 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 0.49% higher at a price of 5599.
The Dow Jones Industrial Average closed 82 points lower for a 0.2% loss at a price of 41,350.
The NASDAQ 100 closed 1.13% higher at a price of 19,596.
The Stoxx Europe 600 Index closed 0.81% higher.
Yesterday, the MSCI Asia Pacific closed 0.4% higher.
Yesterday, the Nikkei closed 0.2% higher at a price of 36,891.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.15% lower at $1.0886.
The British Pound closed 0.1% higher at 1.2961.
The Japanese Yen fell 0.2% closing at $148.34.
Bonds
Germany’s 10-year yield closed 5 basis points lower at 2.88%.
Britain’s 10-year yield closed 5 basis points higher at 4.68%.
U.S.10 Year Treasury closed 2 basis points higher at 4.30%.
Commodities
West Texas Intermediate crude closed 0.8% higher at $67.57 a barrel.
Gold closed 0.7% higher at $2932.10 an ounce.
This morning on the Economic Front we have Euro-Zone Industrial Production at 10.00 am. Next, we have U.S. Weekly Jobless Claims and PPI at 12.30 pm. Finally, we have a 30 Treasury Auction at 5.00 pm.
Cash S&P 500
My latest 5583 average long S&P position worked well on Wednesday as the market spiked to my 5940 T/P level with a post CPI spike of 5968. Subsequently, I emailed my Platinum Members to buy the S&P again which I did at an average rate of 5592. Given how oversold the market is trading, I will continue to have no stop on this position. I will have a T/P level at 5629 as I look to fully recover Monday’s extreme point loss. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
I am still short the Euro at an average rate of 1.0905 average with the same 1.1005 ‘’Closing Stop’’. I will now raise my T/P level on this position to 1.0850. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: I am still long at an average rate of 103.75 with a now lower 104.30 T/P level. I will leave my 102.85 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
No Change: The Russell Index is now down 20% since the August highs. On Tuesday, in contrast to the other main American Indexes, the Russell closed higher. Whether this is meaningful, only time will tell. I am still long the Russell at an average rate of 2060 with the same 1985 tight ‘’Closing Stop’’. I will now lower my T/P level to 2095. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash FTSE
I am still flat the FTSE as the market again traded in a narrow range over the past 24 hours. The FTSE has support below from 8420/8490 where I will again be a buyer with a lower 8345 ‘’Closing Stop’’. If triggered, I will have a T/P level at 8570.
Dow Rolling Contract
My Dow plan worked well as post the CPI print the Dow rallied to my 41850 T/P level on my latest 41600 average long position and I am still flat. This morning, the Dow is trading lower at 41300. We have short-term support from 40800/41050 where I will be a strong buyer with a lower 40595 ‘’Closing Stop’’. If triggered, I will have a T/P level at 41420.
Cash NASDAQ 100
My NDX plan worked well as the market spiked to my 19650 T/P level on my latest 19250 average long position post Wednesday’s CPI print. Subsequently, I emailed my Platinum Members to buy the NDX again which I did at an average rate of 19440. I am still long with no stop. I will have a T/P level on this position at 19660. If any of the above prices are hit, I will be back with a new update for my Platinum Members.
December BUND
I am still long the Bund at an average rate of 127.70. With the Bund trading higher at 128.10 this morning, I will now lower my T/P level on this position to 128.35. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold has rallied hard off last week’s low and I am still flat. Today, I will raise my buy level to 2870/2886 with a higher 2855 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2903.
Silver Rolling Contract
I am still flat. I will now raise my buy level to 31.50/32.40 with a higher 30.25 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 33.10.
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