U.S. Indices chopped to a cool PPI and mixed messages about Fed Chair Powell’s future. Equities finished the day green with outperformance in the Russell after the prior day’s underperformance, while Nasdaq lagged after Tuesday’s outperformance. Sectors were predominantly green with outperformance in Health Care, Real Estate and Financials, while Energy, Communications and Consumer Discretionary lagged. T-notes chopped but settled higher across the curve, supported by a soft PPI report that helped offset some of the inflationary concerns seen on Tuesday after the CPI report started to show the impact of tariffs. There was a lot of volatility on several reports that US President Trump is looking to fire Fed Chair Powell, seeing the 2s30s curve steepen to 120bps, the widest since April, as prospects of a more dovish Fed chair hit front-end yields, while higher growth prospects associated with a lower yields on the short end and term premium lifted long-end yields. The reports also sparked aggressive selling in equities and the Dollar while Gold caught a bid, along with other havens like the Japanese Yen. However, shortly after US President Trump pushed back on these reports, saying it is highly unlikely he will fire Powell, unless there is fraud involved regarding the Fed building renovations, something that Trump touted as a possibility. This saw a large paring of the aforementioned moves with equities bouncing higher from the lows, while the yield curve narrowed from the earlier peaks but still remained steeper on the session. Elsewhere, earnings saw solid GS and BAC reports, while MS finished flat after initially selling. Meanwhile, European chip giant ASML disappointed on guidance for the next quarter and for 2026. Crude prices saw two-way price action, selling off in the European morning with lows seen after the EIA report. However, crude prices pared to settle flat on supply concerns after a drone attack saw APIKUR announce the majority of its member companies suspended production following strikes on Iraqi oilfields in Kurdistan. Several reports had suggested that US President Trump was set to fire Fed Chair Powell, leaving participants fearful of a lack of Fed independence. It was reported that Trump asked GOP Financial House and Service Committee members whether he should fire the Fed Chair, who apparently did not object to the idea, while a meeting was set to take place between the Republican committee members and Fed Chair Powell last night. However, in the Press Conference of Trump’s meeting with the leader of Bahrain, Trump was questioned on the reports. Trump denied them, saying they are not true, and that they are not going to fire Fed Chair Powell, but they will make a change in eight months. Trump also stated that NEC Director Hassett would be considered for the job. Trump said it is highly unlikely that he will fire Powell, unless there is fraud – noting how it is possible there is fraud. Aside from high interest rates, Powell has also come under scrutiny for the cost of the Fed’s building renovations. As it is illegal to fire a Fed Chair over policy differences, it seems Trump could use the cost of the building renovations as a cause to fire Powell, but as it stands, Trump is not planning on doing so yet. Following the reports and denial, FBN reported that the flip-flopping reflects divisions in the administration over his authority. There had also been reports of a meeting between the GOP House and the Service Committee and Fed Chair Powell, but this was later cancelled after Trump’s press conference. It was reportedly cancelled due to the House vote on the GENIUS Act. Following this, Senate GOP banking Committee member Tillis said firing a Fed chair over economic decisions would undermine US credibility and ending the Fed’s independence would be a huge mistake. House Speaker Johnson, meanwhile, said he believes new Fed leadership would be helpful. The market reaction to the firing reports was one of uncertainty. Equity futures were hit while the Dollar tumbled and gold was bid. The move in T-notes also incorporated Fed policy with the yield curve steepening. The front-end of the curve saw yields fall on prospects of a more dovish Fed policy under a new Fed Chair, while long-end yields rose – likely on the growth prospects of a dovish Fed. It is also likely that there was some term premium being priced in too, with participants demanding a higher yield given heightened uncertainty of an economy, given the questions around Fed independence. Note, these moves largely reversed after the Trump pushback. Headline PPI in June was flat despite expectations for a 0.2% rise, cooling from the upwardly revised 0.3%. Y/Y rose 2.3%, beneath the 2.5% forecast and easing from the 2.7% prior (also upwardly revised from 2.6%). The Core measure was also flat, beneath the 0.2% forecast and upwardly revised 0.4%, with Y/Y at 2.6% easing from the prior 3.0%, beneath the 2.7% forecast. Regarding the components that filter into PCE, the drop in Airline fares to -2.7% from -0.9% was somewhat offset by a 2.2% acceleration in Portfolio Management following May’s 0.9% decline. Healthcare numbers were more mixed, physician care maintained a 0.1% pace. Home health and hospice care rose 0.2%, up from -0.1%. Hospital Outpatient care rose 0.3%, up from the -0.2%. Hospital inpatient care was flat, down from the prior 0.3%. Nursing home care rose 0.1%, down from the prior 0.2% pace. Following the data, Pantheon Macroeconomics lowered its Core PCE forecast to 0.28% from 0.35% following the CPI report. Morgan Stanley lowered it to 0.27% from 0.35%, while Oxford Economics look for a 0.4% Core PCE print in June. After the CPI report on Tuesday started to show the impact of tariffs, it is worth noting the impact of tariffs in PPI will likely be delayed as PPI largely ignores imports and focuses on domestically priced goods, therefore PPI will not capture the tariff effect immediately and the impact would likely show up later indirectly, through higher input costs or shifts in production patterns. Regarding the June report, Oxford Economics write “Goods prices did increase, but the 0.3% gain does not point to widespread increases due to tariffs”. Industrial Production for June rose 0.3%, above the expected 0.1%, and the prior months, revised higher, 0.0%. Manufacturing output lifted 0.1% (exp. 0.0%, prev. 0.3%), while capacity utilisation unexpectedly ticked higher to 77.6% from 77.5%, against the consensus of a 77.4% print. On IP, Oxford Economics notes that while it surprised to the upside, they will not be changing their baseline forecast for now, as they still see industrial activity weakening in H2 2025 as the full effect of tariffs materialises. Policy uncertainty remains elevated, and OxEco adds that the price shock will, on average, be larger for businesses ordering equipment than for consumers, and as such, these headwinds will overcome the resilience the manufacturing sector has shown so far this year. Fed Member Logan said that monetary policy needs to hold tight for a while longer to bring inflation down, and she wants to see low inflation continue longer to be convinced. Before PPI, Logan said June CPI data suggests PCE inflation, which the Fed targets at 2%, will rise. The Dallas Fed President added that softer inflation and a weakening labour market could call for lower rates fairly soon, and if the Fed misjudges and does not cut soon enough, it could cut rates further to get employment back on track. Further on rates, Logan suggested cutting rates too soon risks deeper economic scars and a longer road to price stability, and they will be looking at the data in the summer and into fall before they have a good read. Elsewhere, Oil closed flat while Gold closed higher 0.7% higher.
To mark my 3225th 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 625 points yesterday and is now ahead by 2225 points for July 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 0.32% higher at a price of 6263.
The Dow Jones Industrial Average closed 231 points higher for a 0.53% gain at a price of 44,254.
The NASDAQ 100 closed 0.11% higher at a price of 22,907.
The Stoxx Europe 600 Index closed 0.45% lower.
This Morning, the MSCI Asia Pacific closed 0.4% higher.
This Morning, the Nikkei closed 0.37% higher at a price of 39,811.
Currencies
The Bloomberg Dollar Spot Index closed 0.31% lower.
The Euro closed 0.29% higher at $1.1634.
The British Pound closed 0.21% higher at $1.3413.
The Japanese Yen rose 0.71% closing at $147.83.
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 4.64%.
Germany’s 10-Year Bund Yield closed 2 basis points lower at 2.69%
U.S.10 Year Treasury closed 3 basis points lower at 4.46%.
Commodities
West Texas Intermediate crude closed 0.15% lower at $66.51 a barrel.
Gold closed 0.84% higher at $3351.10 an ounce.
This morning on the Economic front we already had the release of U.K. May Unemployment which printed 4.7% versus 4.6% expected. Next, we have the Euro-Zone CPI at 10.00 am. This is followed by U.S. Weekly Jobless Claims, Retail Sales and the Phill Fed Manufacturing Index at 1.30 pm. At 3.00 pm we have Business Inventories and the NAHB Housing Market Survey. Finally, we have speeches from Fed Members Kugler, Daly and Cook at 3.00 pm, 5.45 pm and 6.30 pm respectively.
Cash S&P 500
Wednesday’s trading session was mostly at non-event with a tight trading range if not for some intraday fireworks with the Trump-Powell saga. Otherwise, the pinning effects of July OPEX are in full force right now, which means we probably remain in this tight range until we get through Friday. More importantly, we get import/export prices this afternoon along with the Jobless Claims data. Import prices are expected to rise by 0.3% m/m from 0.0% in May. I guess if there is going to be tariff inflation, that is where we are likely to see it today. 5-Year CPI swaps traded up again today, closing above 2.6%, their highest level since October 2023. Even 10-year CPI swaps are trading higher and are now 2.54%. These are not short-term inflation expectations rising, these are long-term inflation expectations, and what seems concerning about them is where they are currently. I mean, we are talking about a potential new Fed chair that is going to come and start cutting rates, at a time when long-term inflation expectations are in a position to really run higher. Following the news that President Trump wanted to sack Fed Chair Powell – later denied – saw the S&P fall 60 Handles hitting an afternoon low at 6201 before quickly reversing this low into the close as the buy the dip mantra shows no sign of ending anytime soon. My S&P plan worked well as the market hit my 6260-sell level before selling of to my revised 6242 T/P level and I am now flat. Helping the S&P to recover earlier losses was the continued move higher in NVIDIA to close at yet another new all-time high at a price of $171. The Market cap is now $4.2 trillion, now an historic absurdity. One headline on Tuesday saw NVIDIA add $160 billion market cap on the fly. The S&P has not gone anywhere over the past 10 days. Our strategy of taking gains when they arrive has worked well as this is not the time for having a macro short position as all declines are aggressively bought despite the high Treasury Yields and valuations that are extreme. There is no doubt that 5% on 30 Year Treasuries is a key level and needs to be watched closely. We still have no trade deals despite all the promises from Treasury Secretary Bessent. How long the Markets can ignore this scenario is difficult to gage. The S&P has resistance from 6290/6310 where I will again be a seller with a higher 6325 ‘Closing Stop’. Meanwhile, I will continue to be an aggressive buyer on any dip lower to 6160/6180 with a higher 6145 ‘Closing Stop’. If I am taken short, I will have a T/P level at 6270. If I am taken long, I will have a T/P level at 6205.
EUR/USD
The Euro saw plenty of two-way price action on Wednesday, hitting an intra-day high at 1.1724. This move higher saw my 1.1690 sell level triggered before selling off this morning to my 1.1590 T/P level and I am now flat. Today, I will again be a seller on any further rally to 1.1650/1.1730 with a lower 1.1805 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1580.
Dollar Index
The Dollar traded lower to my 98.00 buy level. I am still long with the same 98.90 T/P level. I will add to this position at 97.30 while leaving my 96.55 ‘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: I have no interest in chasing the Russell higher especially as the market has risen 34% since the April 7 lows. I will continue to be a buyer of the Russell on any dip lower to 2100/2170 with the same 2065 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2220.
FTSE 100
Even a much higher than expected 3.6% CPI print could not knock the FTSE as the market reversed Wednesday morning’s losses to close higher on the day. The late rally saw my 8970-sell level triggered. I am still short with a now higher 8920 T/P level. I will add to this position at 9050 while leaving my 9125 ‘Closing Stop’ unchanged.
Dow Rolling Contract
My Dow plan worked well as the market sold off to my 43800-buy level before rallying to my 44060 T/P level and I am now flat. This morning, the Dow is trading higher at 44230. Ahead of OPEX tomorrow I will now raise my Dow sell level to 44550/44800 with a higher 45005 ‘Closing Stop’. The Dow has short-term support from 43650/43900 where I will again be a strong buyer with the same 43495 ‘Closing Stop’. If I am taken short, I will have a T/P level at 44310. If I am taken long, I will have a T/P level at 44180.
Cash NASDAQ 100
Shortly after I posted yesterday morning the NDX sold off to my 22780 T/P level on my latest 22895 average short position and I am now flat. This morning the NDX is trading higher at 22975 as valuations even become more stretched for the Tech stocks. The NDX has resistance from 23100/23300 where I will again be a seller with a higher 23455 ‘Closing Stop’. Despite traders buying every dip in the NDX I have no interest in buying the NDX at this time believing that the market can break lower at any stage without warning. If this view changes, I will be back with a new update for my Platinum Members. If the NDX hits my sell range I will have a T/P level at 22930.
December BUND
No Change: I am still flat as I continue to be a buyer on any dip lower to 127.90/128.60 with the same 127.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.20. Despite the extremely low yields I still do not want to be short the Bund at this time.
Gold Rolling Contract
No Change: I am still flat and have no interest in chasing the price of Gold higher as I prefer to wait for a move lower before buying. Gold has support below from 3260/3280. I will now raise my buy level to this area with a higher 3245 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3304.
Silver Rolling Contract
I am still long Silver at a price of 38.20. I will add to this position on any further move lower to 37.20 with the same 35.95 ‘Closing Stop’. I will now lower my T/P level to 38.70. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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