U.S. Equity Markets rallied to new closing highs on Wednesday after the Fed reaffirmed its three rate cuts in 2024 projection, despite higher longer-term dots, and as Powell played down the hot January and February inflation data. The rate-sensitive sectors outperformed, with the small-caps Russell 2000 leading the SPX and NDX. Treasuries bull-steepened after the FOMC and Dot Plot, with the higher longer-run dots weighing more out the curve. Fed pricing has seen 2024 total cut pricing ramp up to 80bps from 75bps before the Fed, with the first fully priced cut remaining in July while the implied probability of a June cut has risen to 80% from 70%. The Dollar was sold post-Fed, and the Japanese Yen pared a lot of the earlier weakness after a Nikkei sources article released at the time warned of more hikes to come, noting the next hike is seen in July or October, according to the Bank of Japen source. However, the Yen still closed weaker on the session. The Pound was an underperformer earlier in the session on the weak UK CPI figures ahead of this afternoon’s Bank of England announcement, but reversed losses after the Fed. Oil prices took a tumble, in lack of an obvious catalyst, as benchmarks retreated from their multi-month peaks gradually through the session. The Fed left Interest Rates unchanged at 5.25-5.50% as expected, with the Statement seeing no major changes, maintaining its guidance, “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” The focus was on the Dot Plot where the 2024 median rate forecast, despite some expectations for a rise, was left unchanged at 4.6% (implying three 25bp rate cuts this year), and there are now nine members who have pencilled in 4.6% versus six in the December release, with the range of forecasts also narrowing. At the same time, the 2025, 2026, and long run (“neutral”) dots were all nudged higher to 3.9%, 3.1%, and 2.6%, respectively, from 3.6%, 2.9%, and 2.5%, although the market’s immediate focus was on the 2024 dot. The GDP median was hiked to 2.1% from 1.4% for 2024, with the 2025 and 2026 medians both nudged higher to 2% from 1.8% and 1.9%, respectively. The unemployment median was nudged lower to 4.0% from 4.1% for 2024, with the 2025 median unchanged at 4.0% and the 2026 down to 4.0% from 4.1%. Core PCE was hiked to 2.6% for 2024 from 2.4%, with the 2025 and 2026 medians unchanged at 2.2% and 2.0%, respectively. The Wall Street Journalist, Timiraos highlights, “Fewer FOMC officials see upside risks to their unemployment forecasts compared with December but more of them see upside risks to their inflation forecasts”. Fed Chairman Powell’s press conference and Q&A were received dovishly by markets with the Fed Chair largely sticking to the script whilst refraining from taking too much alarm from the above-expected January and February inflation data. In his Statement, Powell reiterated that the policy rate is likely at its peak and it will likely be appropriate to dial back rates at some time this year, whilst saying he was prepared to keep rates higher for longer if needed (there was no mention of hiking again if needed as some hawks have alluded to). After Powell said in Congress before the February inflation data that the Fed is “not far” from nearing the confidence to begin rate cuts, he said in his statement that he does not expect to reduce rates until the Fed has greater confidence that inflation is sustainably moving back to target, whilst he still framed inflation as having made notable progress. He also warned in his statement that an unexpected weakness in the labour market could warrant a response too. Powell also announced that participants discussed the balance sheet at this meeting, saying the general sense is to slow the pace of the runoff fairly soon. Elsewhere, Oil closed 1.95% lower while a late rally saw Gold end Wednesday with a gain of 1.2%.
To mark my 2950th 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 185 points yesterday and is now ahead by 2116 points for March. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 points, after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. 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 0.89% higher at a price of 5224.
The Dow Jones Industrial Average closed 401points higher for a 1.03% gain at a price of 39,512.
The NASDAQ 100 closed 1.15% higher at a price of 18,240.
The Stoxx Europe 600 Index closed 0.05% lower.
Yesterday, the MSCI Asia Pacific closed 0.7% lower.
Last Tuesday, the Nikkei closed 0.66% higher at a price of 40,003.
Currencies
The Bloomberg Dollar Spot Index closed 0.41% lower.
The Euro closed 0.5% higher at $1.0920.
The British Pound closed 0.4% higher at 1.2781.
The Japanese Yen fell 0.3% closing at $151.35.
Bonds
Germany’s 10-year yield closed 2 basis points lower at 2.43%.
Britain’s 10-year yield closed 4 basis points lower at 4.13%.
U.S.10 Year Treasury closed 1 basis points lower at 4.29%.
Commodities
West Texas Intermediate crude closed 1.95% lower at $81.84 a barrel.
Gold closed 1.2% higher at $2185.10 an ounce.
This morning on the Economic Front we have U.K. Public Sector Net Borrowing Requirement at 7.00 am, followed by German Manufacturing PMI at 8.30 am. Next, we have the Euro-Zone Economic Bulletin and Manufacturing PMI at 9.00 am. At 9.30 am we have U.K. Manufacturing PMI followed by the Bank of England Rate Announcement at 12.00 pm. This is followed by U.S. Weekly Jobless Claims and the Philly Fed Manufacturing Index at 12.30 pm. Next, we have Manufacturing PMI at 1.45 pm and Existing Home Sales at 2.00 pm. Finally, we have a speech from Fed Member Barr at 4.00 pm.
Cash S&P 500
The S&P surged yesterday, closing at a new all-time high at 5224. Overnight we have rallied further, trading at 5239 as I go to press. With the S&P rally now extended to over five months, I have reached my point of analytical end times where it is extremely hard to justify a long position. How the Fed can look to cut Interest Rates three times between now and the end of the year with inflation currently at 3.8% is mind boggling to me. For where I sit the Fed and especially Powell have lost all credibility as far as I am concerned. Yesterday’s spike high into the close sees the S&P close outside the top of its Daily Bollinger Band. History tells us buying the market under these conditions does not end well. The S&P has now risen for 100 trading days without a 2% correction. There are only three such streaks since the 1990s. The first two were associated with 1995 correction and the 2008 Bear Market. The other one, in 2017, ended more peacefully. Following yesterdays’ spike higher, many investors are betting the current one will too. Initially my S&P plan worked well as after the market hit my 5201 sell level the S&P traded lower to my 5185 revised T/P level. Subsequently, I emailed my Platinum Members to sell the S&P again and I am now short at an average rate of 5217. I will leave my 5235 ‘’Closing Stop’’ unchanged on this position while raising my T/P level to 5206. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro rallied in the last 30 minutes of trading, closing at 1.0920 in New York. This latest move up saw my revised 1.0895 T/P level triggered my 1.0875 long position and I am now flat. Today, I will again be a buyer on any dip lower to 1.0810/1.0880 with the same 1.0745 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
Dollar Index
The dovish Fed saw the Dollar reverse some of Tuesday’s gains. Just before I went to press, the Dollar traded lower to my 103.30 T/P level on my latest 103.65 average short position and I am now flat. Today, I will again be a seller from 103.70/104.40 with a higher and wider 105.05 ”Closing Stop”.
Cash DAX
Just before the New York close the DAX spiked higher to my 18165-sell level. I am still short with a now higher 18080 T/P level. I will add to this position at 18245 while leaving my tight 18305 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash FTSE
Unfortunately, the FTSE again just missed my initial 7680 buy level before having a small rally into the close. Given how much the FTSE has underperformed, I am still happy to be a buyer of the market on dips. This view will hold as long as long as the market does not close below 7570. Today, I will move my buy level higher to 7650/7720 with a higher 7585 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
After the Dow hit my 39300 sell level we saw a nice 120 points drop. Unfortunately, I did not cover this initial drop before adding to this position at my second sell level at 39530 for a now 39415 average short position. Wednesday’s late rally saw the Dow close at a new-all-time high. I will leave my 39705 ‘’Closing Stop’’ unchanged while raising my T/P level to 39315. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
I am still flat the NDX as the market never came close to yesterday’s buy level before a late rally saw the NDX lead Wednesday’s gains, closing higher by 1.59%. However, the NDX is still trading below its all-time high of 18415 which counts as a negative divergence as long as the NDX continues to trade below this now key pivot point. I still have no interest in being short the market. The NDX has short-term support from 18080/18230 with a higher and tight 17985 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 18340.
March BUND
No Change: Despite the aggressive move in equity markets post the FOMC, Bond Markets traded in a narrow range. I am still long the Bund at 131.94. I will now lower my T/P level to 132.30. I will continue to look to add to this position at 131.20 while leaving my 130.55 ‘’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
Gold surged yesterday following the dovish Fed, trading over $2200 as I go to press. I am reluctant to chase the price of Gold higher. However, we do have support from 2150/2166 where I will be a small buyer with a higher 2139 ‘’Closing Stop’’.
Silver Rolling Contract
Frustrating, Silver missed yesterday’s buy range by 12 points before rallying to sit at 25.60 as I go to press. I will now raise my Silver buy level to 24.50/25.30 with a 23.65 ‘’Closing Stop’’. If triggered, I will have a T/P level at 26.40.
Recent Comments