U.S. Indexes closed mixed on Wednesday, with the NASDAQ 100 reversing early gains to ultimately underperform. ASML’s earnings initially lifted Nasdaq Futures after the company delivered strong Quarterly results. However, the stock reversed course during the US session after management guided EUV lithography machine sales slightly below consensus expectations, weighing on both ASML and the broader semiconductor sector. Elsewhere, the softer-than-expected PPI report supported the broader market by reinforcing the inflation picture shifting benignly following Tuesday’s CPI release. Sector performance was mixed, with Communication Services and Consumer Discretionary leading the gains, while Energy and Utilities underperformed. Crude prices were volatile but ultimately settled higher as geopolitical tensions remained elevated. The US and Iran continued exchanging strikes, while President Trump warned that Iran’s bridges and power plants would be the next targets should Tehran refuse to return to the negotiating table, adding that energy infrastructure would only be targeted as a last resort. Meanwhile, Iranian Parliamentary Speaker and chief negotiator Ghalibaf stated that Iran was prepared to use both diplomacy and military means to secure the country’s national interests, perhaps signalling a willingness to resume negotiations. However the Wall Street Journal reported that Trump is leaning towards expanding US military operation in Iran, albeit the decision is not final. Elsewhere on the geopolitical front, CBS reported that senior Pentagon officials are quietly examining another potential flashpoint closer to home: Cuba. According to the report, military planners have recently reviewed a range of options, including an Army-led air assault involving thousands of troops from the 101st Airborne Division. However, CBS stressed that the briefings should not be interpreted as an indication that either President Trump or the Pentagon has decided to proceed with any military operation. The softer PPI report added to Tuesday’s Treasury rally, with markets continuing to pare expectations for near-term Fed rate hikes, resulting in a bull steepening of the Treasury curve. In FX, the Dollar underperformed following the softer inflation data, while Sterling outperformed after reports suggested Andy Burnham is leaning towards appointing Shabana Mahmood as Chancellor, who is generally viewed as being more fiscally conservative. Attention now turns to Thursday’s US Retail Sales Report, alongside any further developments surrounding the US-Iran conflict. The June PPI report was softer than expected, reinforcing the benign inflation message from Tuesday’s CPI release. Headline PPI declined 0.3% M/M (exp. +0.3%), reversing May’s 1.1% increase and falling below the lowest analyst estimate of -0.2%. This left annual PPI at 5.5% Y/Y, beneath both the 6.2% consensus and the prior 6.5% reading. Core PPI rose 0.2% M/M, below the 0.4% consensus and the prior month’s pace, leaving the annual core rate at 4.7% Y/Y, below expectations of 5.2% and down from 4.9% previously. Meanwhile, super core PPI (excluding food, energy and trade services) increased just 0.1% M/M, slowing from 0.8% in May, while the annual rate was unchanged at 5.1%. Within the report, the PPI components that feed into the PCE inflation measure were generally encouraging. Portfolio management prices slowed sharply to 0.51% from 4.80%, although air transportation services accelerated to 1.88% from -0.33%. Healthcare-related components were mixed but, on balance, leaned softer. The report provides further evidence that inflation pressures eased in June and supports the view that a near-term Fed rate hike may not be necessary. However, policymakers are likely to remain cautious. Chair Warsh reiterated on Tuesday that the Fed is not out of the woods yet, while Governor Waller said earlier this week that he would need to see several more benign inflation prints before concluding that inflation is sustainably moving back towards target. Oxford Economics noted that lower energy prices were a key driver of the decline in headline PPI and expects another energy-led fall in July. On core prices, the consultancy highlighted that strong AI-related demand continues to support producer prices for technology goods, particularly amid shortages of DRAM memory chips, suggesting inflation in that sector is likely to remain elevated. Following the latest CPI and PPI data, Oxford Economics continues to forecast headline PCE inflation at 3.7% Y/Y, marking a further slowdown from 4.1% in May. The New York Empire Fed Manufacturing Index rose to 15.6 from 5.7, above the expected 8.7. Looking at the breakdown, new orders and shipments jumped to +22.2 (prev. +3.5) and +24.2 (prev. +8.6), respectively, with inventories rising to +4.0 from 0. Prices paid and received encouragingly declined to 52.3 (prev. 61.0) and 27.6 (prev. 31.4), respectively, with employment lifting to +11.4 from 9.6. Unfilled orders increased, delivery times continued to lengthen, and supply availability continued to worsen. Ahead, six-month business conditions dipped to 27.9 from 30.1, with the prices metrics also falling. NY Fed Economic Research Advisor Deltz said, “New York State manufacturing activity increased substantially in July, with new orders and shipments picking up sharply. Employment grew for a sixth consecutive month. Price increases remained elevated, and supply availability continued to worsen. ” Fed Member Williams said with inflation running high, the Fed must restore it to the 2% goal on a sustained basis; the current stance of policy is well positioned to do that. He described inflation as unquestionably too high at about 4% but expects overall inflation to decline to around 3.25% by year-end, continue toward the 2% goal in 2027 and land on target in 2028. He adds that medium- and longer-term inflation expectations remain well anchored. Switching to the labour market, he says it’s showing signs of resilience and stability. He expects the unemployment rate to edge down gradually to 4% in 2028. Meanwhile, Williams expects real GDP growth to be around 2.0%-2.25% this year and over the next two years. In the Q&A section, he noted today’s CPI print was consistent with what he is hoping to see over the coming months; Risks to energy price inflation are somewhat less. Williams sounded against changing the 2% target, ‘Absolutely’ no consideration to changing 2% target. On policy, he does not have a clear direction about which way interest rates are going or when. On a longer-term basis, he expects rates to eventually move down with inflation. Lastly, he said the balance sheet is roughly in range of ample reserves, while broader consumer credit is growing consistently with the economy. Elsewhere, Oil closed higher by a further 1% while Gold was flat.
To mark my 3400th 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 220 points yesterday and is now ahead by 5086 points for July after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, 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 previous 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 0.38% higher at a price of 7572.
The Dow Jones Industrial Average closed 150 points higher for a 0.29% gain at a price of 52,658.
The NASDAQ 100 closed 0.28% lower at a price of 29,502.
The Stoxx Europe 600 Index closed 0.09% higher.
Yesterday, the MSCI Asia Pacific closed 0.2% higher.
Yesterday, the Nikkei closed 1.49% higher at 68,751.
Currencies
The Bloomberg Dollar Spot Index closed 0.39% lower.
The Euro closed 0.38% higher at $1.1462.
The British Pound closed 1.05% higher at $1.3530.
The Japanese Yen fell 0.03% closing at $162.25.
Bonds
U.K.’s 10-Year Gilt closed 6 basis points lower at 4.93%.
Germany’s 10-Year Bund Yield closed 2 basis points higher at 3.11%
U.S.10 Year Treasury closed 3 basis points lower at 4.55%.
Commodities
West Texas Intermediate crude closed 1.07% higher at $80.27 a barrel.
Gold closed 0.08% lower at $4053.10 an ounce.
Today on the Economic front we have U.K. GDP and Industrial/Manufacturing Production at 7.00 am. Next, we have Euro-Zone Trade Balance at 10.00 am followed by U.S. Retail Sales, Philly Fed Manufacturing Index and Weekly Jobless Claims at 1.30 pm. Finally, we have speeches from Fed Members Logan, Schmid and Jefferson at 5.30 pm, 6.25 pm and 7.00 pm respectively.
Cash S&P 500
To no surprise, the June PPI reading also came in below expectations. The problem with both the CPI and PPI reports is that gasoline prices are rising, so the June CPI and PPI readings may not matter much if that trend continues. With RBOB gasoline back around $3.30, I believe inflation is likely to turn higher again in July. Still, Interest Rates fell, and the Dollar weakened, as markets tend to respond. One month of data will not determine whether there has been a material shift in policy-rate expectations. In his Senate testimony, Kevin Warsh sounded no less hawkish than he has in the past and remained consistent in expressing his views. I do not see how inflation can be brought down without maintaining a restrictive monetary policy. Cutting rates certainly would not accomplish that at this point. Oil, on the other hand, has found support at the gap created in early March. It has moved above its 20-day moving average and broken its RSI downtrend. Oil prices could therefore move higher from current levels, break through resistance at $80, and begin moving toward the $87 region. If oil moves higher, interest rates and the Dollar may follow. The three have historically exhibited a strong relationship, with higher oil prices adding to inflationary pressures and, in turn, supporting tighter monetary policy. In the meantime, the 5-year real yield rose to 2% yesterday, marking the first time in quite a while it has reached that level. Looking closely, Gold and Silver peaked around the same time the 5-year real yield bottomed. The further real yields rise, the more likely it is that both metals will fall. My S&P plan worked well yesterday as the plan of selling rallies worked again. The S&P hit my 7580 sell level before trading lower to my revised 7558 T/P level with a low at 7527 and I am now flat. Today, I will be a seller of the S&P from 7602/7627 with a higher 7651 ‘Closing Stop’. I will now raise my buy level to 7470/7495 with a higher 7449 ‘Closing Stop’. If I am taken short, I will have a T/P level at 7574. If I am taken long, I will have a T/P level at 7528. If any of these views change, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat. Today, I will raise my Euro buy level to 1.1340/1.1410 with a higher 1.1275 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1475.
Dollar Index
Wednesday’s sell-off in the Dollar saw the market hit my 100.50 buy level. I will add to this position on any further move lower to 99.80 with a now lower 98.25 ‘Closing Stop’. I will now lower my T/P to 101.00.
Russell 2000
I am still short the Russell at 3000 with a now higher 2960 T/P level. I will continue to look to add to this position at 3060 while leaving my 3105 ‘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. I will not chase the FTSE Market higher preferring to wait for a sell-off before initiating a new long position. Today, I will continue to be a buyer from 10300/10380 with the same 10215 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10460. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat. Today, I will continue to be a small seller on any further rally to 52960/53260 with a higher 53505 ‘Closing Stop’. If I am taken short, I will have a T/P level at 52670. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
No Change: Today, I will continue to be a buyer from 29000/29200 with the same 28795 ‘Closing Stop’. The NDX has short-term resistance from 29900/30100 where I will be a small seller with a 39305 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29420. If I am taken short, I will have a T/P level at 29710. If any of these views change, I will be back with a new update for my Platinum Members.
December BUND
No Change: I am still long the Bund from last week at an average price of 125.55. I will now exit level to a small loss at 125.30 and reassess if triggered. I will leave my 124.75 ‘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
I am still flat as Gold just fell shy of Wednesday’s buy range. Today, I will continue to be a buyer on any further dip lower to 3900/4000 with a lower 3835 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4060.
Silver Rolling Contract
Silver reversed most of Tuesday’s gains. This move lower saw the market hit my buy range for a now 57.50 long position. I will add to this position at 54.50 while leaving my 52.95 ‘Closing Stop’ unchanged. I will now lower my T/P level to 59.00. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: There will be no Daily Commentary tomorrow. Any of my calls that are not executed today and are subsequently triggered on Friday will see me return with updated emails for my Platinum Members.
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