Late last night, UK PM May has been addressing EU27 leaders at a pre-dinner event on the latest Brexit developments/her proposals. Despite no clear air yet, including on the important Irish border question, the Pound has been remarkably stable. Not even comments from Bank of England Deputy Governor Jon Cunliffe that Britain crashing out of the EU could see a big fall in the Pound had any impact. Markets wait to hear whether expectations that there will be further delays, there is after all 164 days before the two year notification period ends next March, before a Withdrawal Agreement acceptable to all sides can be stitched up, if one can be stitched up or other political events unfold. EU chief Brexit negotiator Barnier said that the two sides need ‘’much more time’’ and he urged patience. The very latest seems to be that PM May is weighing up a plan to stay tied to European Union for longer than the proposed 21 months after next March that was expected with a Withdrawal Agreement. We watch, we wait.
To mark my 1700th 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 140 points yesterday and is now ahead by 1076 points for October, having made 1276 points in September, 599 points in August, 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March and 2256 points in February. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Currencies
The Pound has only been a little softer over the past 24 hours ahead of the release of the September CPI, weakness aided by a lower than expected print in headline and core inflation terms. Sterling is down 0.37% from this time yesterday. What has been seen in Sterling has been evident for other majors against the USD, give or take, including the Euro, AUD and NZD in a rather listless past 24 hours.
The USD has been making up some lost ground in the past 24 hours or so. It seems to have been more market related rather than US data (only housing starts were released and they were likely hurricane affected), while the FOMC Minutes last night also have not shifted the dial too much.
The AUD has been very much range bound ahead of this morning’s September Labour Force report, trading back down to low 0.71s on little new. China released their September New Yuan loans, Aggregate Financing and Money Supply report, revealing no clear acceleration in money supply growth, yuan loan volumes in line with expectations, but aggregate financing well above expectations, at 2210b yuan, well above the 1554b expected and the highest since early this year. It is a hint perhaps of some slowing in corporate deleveraging and somewhat easier monetary conditions playing through. We will see tomorrow whether the September month industrial production, retail sales, and fixed assets investment plays to any similar tune.
Economics: FOMC Minutes
Recall these are the Minutes from the Fed’s 25-26 meeting when they hiked rates, dropped ‘’accommodative’’ to describe current monetary policy settings and Chair Powell comments since that rates were a long way from neutral. It is not surprising then that there was plenty of interest in whether the Minutes might disclose some as yet uncovered gems on the real thinking on neutral levels and indeed the outlook for rates generally. (The formal dot points released at the time suggested that neutral was still in the vicinity of 2%-3%.)
What did catch the attention in the Minutes were comments that ‘’a number’’ of Fed officials saw the need to hike above the long run level, whereas ‘’a couple’’ did not favour adopting restrictive policy, a clear bias that on the current trajectory, the Fed will continue on its path of hiking. While there are often points for or against noted on both sides of the argument in the Minutes, they called out the global policy divergence and that this could lift the US Dollar, posing a risk (to growth).
Bonds
This all has to play out on the ground in terms of continued growth and inflation, but on the day, it was reason to be some support for the USD, but also Treasury yields, even though US stocks have been listless, closing close to flat. US 2y Treasury yields rose 2.5bps to 2.8906%, while the 10s rose 3.6bps to 3.1993%. Yields pushed a little higher into the close despite a soggy stock market. Across the Atlantic, there was a wire report that the EU Commission is going to reject the Italian Budget. Whether well sourced or not, Italian 10y BTPs rose 9.5bps to 3.548%; German Bunds were down 3bps to 0.461%.
Commodities
The big mover has been oil, with WTI down 2.6% and Brent off 1.36%, markets heavy despite the still unfolding Saudi/Khashoggi story and any political blow-back, and into the release of weekly crude inventories. About half of the decline happened before the release of weekly crude inventories showing a much larger than expected rise, though the supply-demand balance situation won’t be clarified until the after effects of the Hurricanes are worked through. Iron ore was down, met coal prices rose again (steaming too, though by less), while base metals were mixed. Gold eased.
This morning on the Economic Front we have UK Retail Sales at 9.30 am. This is followed at 1.30 pm by US Weekly Jobless Claims and the Philly Fed Business Outlook. Finally at 3.00 pm we have the Leading Index.
Meanwhile earlier at 2.05 pm the Fed’s Bullard is speaking to the Economic Club in Memphis.
December S&P 500
My short 2816 S&P position worked well yesterday with the market trading lower to my 2808 T/P level in what turned out to be a volatile trading session with the S&P trading to a low of 2783 before rallying to close unchanged. For now the market continues to build value above its 200 Day Moving Average which comes in at 2771 this morning. I am still flat and today I will now raise my buy level to 2775/2785 with a 2765 stop. My only interest in selling the market is on a further rally higher to 2835/2845 with a 2855 stop.
EUR/USD
Late last night the Euro traded lower to my 1.1500 buy level. I am still long with a now higher stop of 1.1445. I will also lower my T/P level on this position to 1.1520 and if any of the above levels are hit I will be back with a new update for my Platinum Members.
December Dollar Index
I am still flat the Dollar and today I will now raise my sell level to 95.80/96.20 with a higher 96.55 stop.
December DAX
Two weeks ago I wrote at length about an impending Head & Shoulders pattern developing in the DAX with a close below 11725. The market did close below this level to hit a low of 11400 last week before rallying over the past few days with the market again closing back above the 11750 area. This is key as if the DAX can hold this now pivotal 11650/11730 support level then maybe the Equity Markets have seen the worse of the sell-off last week. However I am not confident of this scenario as yet and today I will only raise my buy level slightly to 11560/11620 with a 11515 tight stop. A break and close over 11800 will be positive for higher prices.
December FTSE
My FTSE plan worked well with the market trading lower to my 7000 buy level before rallying to my revised 7025 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 6940/6980 with a 6895 stop. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
Just like the S&P above the Dow traded in a wide range yesterday with the market trading lower to my initial 25580 buy level before rallying to my revised 25615 T/P level and I am now flat. Today I will again look to buy the market on any dip lower to 25280/25480 with a 25190 tight stop. Despite the two-way price action I still do not want to be short the Dow at this time.
December NASDAQ
The NASDAQ was the weakest of the three main US Indicies yesterday after being the strongest market on Tuesday. I am still flat the market and today I will now raise my buy level slightly to 7130/7180 with a 7085 stop. Meanwhile I will leave my sell level unchanged from 7420/7470 with the same 7505 tight stop.
December BUND
I do not have an edge in the Bund at this time. I refuse to chase this market higher given its insanely low yield and today my only interest in buying the market is still on a dip lower to 157.65/158.05 with a higher 157.30 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1202/1214 with a 1194 stop.
Silver Rolling Contract
I am still long at 14.65 with a now lower 14.75 T/P level. I will continue to look to add to this position on any further move lower to 14.25 with the same 13.80 stop. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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