The overall reaction to the FOMC rate decision and press conference was hawkish. The Fed hiked rates by 25 basis points as expected in a unanimous decision, while the median projection saw another hike by year-end before rates remain on hold throughout 2027. The statement reiterated the Fed’s commitment to price stability, a message echoed by Chair Warsh in the press conference against the backdrop of a labour market at or near full employment and strong economic growth. Indices largely finished lower, although the NASDAQ 100 was little changed, while the Dow lagged and the RSP fell 0.8%. Sectors were predominantly lower, with Energy, Financials and Materials lagging, while Tech, Health Care and Utilities outperformed, albeit with minimal gains. Energy stocks tracked crude prices lower, with the complex pressured by more constructive geopolitical commentary. Iranian Foreign Minister Araghchi said the MoU with the US remains in effect and that Iran wants a return to a peaceful solution, adding, “We are not interested in continuing the conflict, and we look forward to returning to a diplomatic solution.” Meanwhile, reports suggested US officials met with the Yemeni Houthis in Oman over the weekend, adding further pressure to crude a Houthis were committed to the 2025 ceasefire, and would not attack US and Israeli ships in the Bab al-Mandab. Elsewhere, source reports suggested half of Saudi Arabia’s key East-West oil pipeline will resume operations within days. The Treasury curve flattened following the FOMC rate decision, updated SEP and Warsh’s press conference, with the 10-year yield reclaiming 5.00% while the 2-year rose to around 4.74%, remaining at levels not seen since 2007. The hawkish Fed supported the Dollar at the expense of its G10 peers, with EUR/USD falling below 1.15 and USD/JPY rising above 156.00. Gold and Silver were also sold, while Bitcoin saw marginal gains, although the strength follows the notable weakness on Tuesday after the Senate failed to pass the CLARITY Act. Elsewhere, US Retail Sales were stronger than expected, while Import and Export prices were above expectations. UK CPI and Services inflation were in line with expectations, doing little to shift the dial ahead of the Bank of England rate decision on Thursday. Friday also sees the Bank of Japan rate decision, where the bank is expected to hike by 25 basis points. The Fed hiked rates by 25bps as expected, taking the target range for the federal funds rate to 3.75-4.00%, with the decision unanimous. The Statement saw only minor changes, with the Fed saying the rate hike would help return inflation to target in a more timely manner, while reiterating its commitment to price stability. The Fed maintained that inflation remains elevated, although it dropped the previous language attributing this in part to supply shocks. On activity, the Fed maintained that the economy is expanding at a solid pace, while adding that domestic spending has remained resilient despite uncertainty stemming in part from geopolitical developments. It maintained that productivity growth is strong, while describing capital investment as “robust”, versus “strong” previously. Labour market language was broadly unchanged, with the Fed reiterating that job gains have kept pace with growth in the workforce and the unemployment rate has changed little. Regarding the dot plot, Warsh did not submit forecasts again, with 18 participants submitting projections. The dots were hawkish, with the median seeing another 25bp hike in 2026. Twelve participants pencilled in one further hike this year, four saw two additional hikes, while just two saw no further hikes. The median remains at 4.125% through end-2027, implying one further hike this year followed by rates remaining on hold throughout 2027, before easing to 3.875% in 2028 and 3.625% in 2029. The longer-run rate was lifted to 3.2% from 3.1%. Growth forecasts were raised by 0.1ppts in both 2026 and 2027, while 2028 and the longer-run projections were maintained. Unemployment projections were lowered to 4.1% across 2026-28, while the longer-run rate was maintained at 4.2%. Both headline and core PCE inflation projections were raised for 2026 and 2028, while the 2027 projections were maintained. The overall message from the press conference was a familiar one from Warsh, with price stability remaining the primary focus against the backdrop of a strong economy and a labour market at or near full employment. Warsh said he does not believe the Fed will need to damage the labour market to achieve its inflation objective, reiterating that ensuring price stability is necessary to support durable economic growth. Warsh continued to avoid forward guidance, reiterating that the Fed is “committed to a discipline, not a decision.” With the labour market more or less at full employment and the economy strong, he said the Fed’s primary focus is on price stability. Warsh repeatedly pointed to Wednesday’s action as evidence that policymakers are serious about returning inflation to target. He also reiterated he does not focus on one particular data point, as he looks at the trends. Asked whether policy is restrictive, Warsh reiterated that he finds it difficult to characterise financial conditions as restrictive, although he acknowledged that the Fed had removed some accommodation with Wednesday’s rate hike. When asked whether markets had led the Fed into hiking rates, Warsh stressed that the move was “our decision.” He also acknowledged that the Fed cannot control individual prices, such as energy, but said it is the central bank’s responsibility to prevent second- or third-round effects from developing. Warsh also acknowledged the recent rise in bond yields, attributing it to three broad factors: the strength of the US economy, increased demand for capital amid robust CapEx, and geopolitical developments. Overall, the press conference carried a hawkish tone, with Warsh continuing to emphasise the price-stability side of the Fed’s mandate while speaking positively about the strength of the US economy and labour market. Notably, he did not characterise Wednesday’s hike as a risk-management move, nor did he repeat language from the previous press conference suggesting that tighter financial conditions were doing some of the Fed’s work. Instead, Warsh repeatedly framed the hike as evidence of the Fed’s determination to return inflation to target. Elsewhere both Oil and Gold closed lower by 3.5% and 1% respectively.
To mark my 3450th 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 935 points yesterday and is now ahead by 5120 points for September after ending the month of August with a gain of 2645 points after closing July with a gain of 8031 points, 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 0.45% lower at a price of 7551.
The Dow Jones Industrial Average closed 631 points lower for a 1.21% loss at a price of 51,461.
The NASDAQ 100 closed 0.02% higher at a price of 28,945.
The Stoxx Europe 600 Index closed 0.28% lower.
This Morning, the MSCI Asia Pacific closed 0.2% lower.
This Morning, the Nikkei closed 0.33% higher at 64,136.
Currencies
The Bloomberg Dollar Spot Index closed 0.69% higher.
The Euro closed 0.71% lower at $1.1461.
The British Pound closed 0.76% lower at $1.3375.
The Japanese Yen fell 0.82% closing at $156.39.
Bonds
U.K.’s 10-Year Gilt closed 3 basis points lower at 5.30%.
Germany’s 10-Year Bund Yield closed 1 basis points lower at 3.53%
U.S.10 Year Treasury closed 2 basis points higher at 5.02%.
Commodities
West Texas Intermediate crude closed 3.57% lower at $102.01 a barrel.
Gold closed 0.81% lower at $4258.10 an ounce.
This morning on the Economic Front we have Euro-Zone CPI at 10.00 am followed by the Bank of England Rate Announcement at 12.00 pm. Next, we have U.S. Weekly Jobless Claims, Housing Starts and the Philly Fed Manufacturing Index at 1.30 pm. Finally, we have Pending Home Sales at 3.00 pm and a Ten-Year TIPS Auction at 6.00 pm.
Cash S&P 500
The Federal Reserve finally raised Interest Rates by 25 basis points for the first time in three years with a 12-0 vote (unanimous). Now the Fed Funds rate sits between 3.75%-4.00%. The Bond Market has been signalling this rate hike for a couple of months. The market responded with a swift sell-off after the decision and Chair Warsh’s very brief press conference. It was a dull and uneventful speech by Warsh. The reason given for the hike was the ‘’Strong Economy’’, such as Retail Sales and a strong labour market. This gives further conviction for my forecast of much higher inflation and interest rates ahead. Hiking interest rates will now exacerbate price pressures. The post-Fed press conference was a joke. These are the people controlling our financial destiny. It is scary. Warsh is careful not to stick his neck out with forecasts. That way he can never be wrong. With the Fed’s balance sheet continuing to rise the only way the Fed can ease price pressures will be to restrict the availability of money. The widely watched 10-Year Treasury Yield close above 5% on Wednesday for the first time since July 2007 while the Two-Year Yield is above 4.73%, it highest level since June 2024. While long-term US bond yields have gone to new multi-year highs, something similar is happening in other countries. According to Citigroup, the Bank of England is expected to hike interest rates as many as four times within the next year after their economy delivered surprising growth in July. We now have a global inflation problem because of the growing shortages of fuels, fertilizer, foods etc. It very possible that US Bond Yields will increase to double-digit area over the next year. With the Fear & Greed Index closing at a near oversold 27 last night as emailed to my Platinum Members this is not the time to be short equity markets. This plan worked well with the S&P now trading 100 Handles higher off the post-FOMC low of 7506 this morning. After the S&P traded the whole of my buy range for a 7560 average long position the market rallied to my revised 7590 T/P level and I am now flat. As I mentioned yesterday as long as the S&P does not break and close below 7500 I will continue to be a buyer of dips. Today, my buy range will be from 7560/7585 with a higher 7539 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7622. I still do not want to be short the S&P at this time. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro sold off to my second buy level at 1.1460 for a now 1.1500 average long position. I will leave my 1.1385 ‘Closing Stop’ unchanged while lowering my T/P level to 1.1560. 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 flat as the Dollar soared on Wednesday, never coming close to my buy range. I will now raise my buy level to 99.00/99.70 with a higher 98.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.30.
Russell 2000
The Russell sold off to my buy range for a now 2850 long position. I will continue to look to add to this position at 2800 while leaving my 2745 ‘Closing Stop’ unchanged. I will now lower my T/P level to 2900. 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. I will now raise my buy level to 10600/10680 with a higher 10495 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10750.
Dow Rolling Contract
Wrong! We were up some nice points yesterday morning which I should have taken. Instead, I was stopped out of my 52020 average long position at 51795 and I am now flat. The Dow is oversold and is bouncing this morning. Today, I will be a small buyer from 51300/51600 with a 51095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 51920.
Cash NASDAQ 100
My NDX plan worked well. After the NDX hit my 28880-buy level the market rallied to my revised 29090 revised T/P level overnight and I am now flat. I do not know how long the buy the dip will continue given the rise in Bond Yields. The NDX has strong support below from 28820/29020 where I will be a strong buyer with the same 28595 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29240. 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 an average rate of 121.00. I will leave my 119.85 ‘Closing Stop’ unchanged while also leaving my T/P level unchanged at 121.30. Thankfully the Bund is opening higher this morning. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
My Gold plan worked. After Gold hit my 4250-buy level the market rallied to my revised 4315 T/P level this morning and I am now flat. Today, I will again be a buyer from 4200/4280 with the same 4095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4338. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
The post Fed sell-off in Precious Metals saw Silver hit my 63.00 buy level. I will add to this position at 60.00 while leaving my 58.95 ‘Closing Stop’ unchanged. I will now lower my T/P level to 65.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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