U.S. Indexes closed little changed to lower on Wednesday, with the Russell 2000 leading the losses while the NASDAQ 100 also underperformed ahead of big tech earnings after the close. Equities largely traded sideways throughout the session as investors awaited earnings results from Google (GOOGL), IBM (IBM) and Tesla (TSLA). Sector performance was mixed, with Utilities, Energy and Materials outperforming, while Consumer Discretionary, Communication Services and Health Care lagged. Crude prices settled higher as the US-Iran conflict continued to escalate. Both sides dismissed reports that negotiations were underway, while President Trump warned that if Iran fired at another vessel in the Strait of Hormuz, the US would destroy a bridge or power plant in Iran. Tehran responded by threatening energy and power infrastructure across the region should its own key infrastructure come under attack. Treasuries came under pressure as higher oil prices lifted inflation expectations. The Treasury curve bear flattened as money markets continued to increase expectations for further Fed tightening, with around 35 basis points of hikes now priced by year-end. In FX, firmer crude prices supported the Canadian Dollar, while the Dollar Index was little changed overall. The Japanese Yen briefly strengthened after reports suggested the Bank of Japan would be willing to tighten policy more frequently than once every six months, although those gains ultimately faded. Precious metals were firmer despite rising Treasury yields and inflation expectations, likely reflecting continued haven demand amid elevated geopolitical uncertainty. There were also reports that the Trump administration is considering military options in Mali, whose largest export is gold. The increasingly escalatory rhetoric pushed crude prices higher, with WTI climbing back above USD 86/bbl and Brent above USD 93/bbl. Similar to Tuesday, the rise in oil prices fuelled inflation concerns and prompted money markets to increase expectations for further Fed tightening. Around 8.5 basis points of tightening are now priced for next week’s FOMC meeting, implying roughly a 34% probability of a 25bp hike. By year-end, markets price around 35bps of cumulative tightening, fully pricing one rate hike with around a 40% probability of a second. Elsewhere, the USD 13 billion 20-year Treasury auction was soft, with the issue tailing by 0.5bps and dealers left with a larger-than-average allocation. The results suggest the renewed geopolitical tensions may have tempered investor appetite for duration despite the 20-year yield trading at its highest level since May.
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For anyone following my Platinum Service it made 420 points yesterday and is now ahead by 5906 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 0.14% lower at a price of 7498.
The Dow Jones Industrial Average closed 6 points lower for a 0.01% loss at a price of 52,218.
The NASDAQ 100 closed 1.93% higher at a price of 29,155.
The Stoxx Europe 600 Index closed 0.58% higher.
This Morning, the MSCI Asia Pacific closed 0.6% lower.
This Morning, the Nikkei closed 0.43% higher at 66,398.
Currencies
The Bloomberg Dollar Spot Index closed 0.04% lower.
The Euro closed 0.11% higher at $1.1408.
The British Pound closed 0.03% lower at $1.3371.
The Japanese Yen fell 0.01% closing at $163.18.
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 5.05%.
Germany’s 10-Year Bund Yield closed 1 basis points higher at 3.18%
U.S.10 Year Treasury closed 2 basis points higher at 4.64%.
Commodities
West Texas Intermediate crude closed 3.01% higher at $86.87 a barrel.
Gold closed 1.51% higher at $4139.10 an ounce.
Today on the Economic front we have U.K. CBI Industrial Trends at 11.00 am. This is followed by the ECB Rate Announcement at 1.15 pm and the Lagarde Press Conference at 1.45 pm. Meanwhile, at 1.30 pm we have U.S. Weekly Jobless Claims and the Chicago Fed National Activity Index. Next, we have Euro-Zone Consumer Confidence at 3.00 pm. Finally, we have the Kansas City Fed Manufacturing Index at 4.00 pm.
Cash S&P 500
The S&P 500 is remarkably resilient. Despite Oil prices surging this week along with Interest Rates, the S&P is higher for the week as my ‘Nothing Matters’’ theme continues. Rates moved higher again yesterday, with the 2-year Treasury yield rising to 4.3%. It is now approaching a level at which a significant move could be developing, either higher or lower. For now, the 2-year remains in a rising channel, which can serve as either a continuation pattern or, on occasion, a reversal pattern. More recently, however, I have found that these patterns have tended to act as continuation formations. The 2-year still has more to prove and needs to break above resistance around 4.4%. If it can do that, the yield could be on its way significantly higher, potentially toward the 4.75% to 5.0% range. The Dollar continues to form a bull flag pattern, and with the ECB meeting this afternoon, there is an opportunity for the next leg higher to develop. That is especially true if the ECB strikes a more dovish tone than markets expect. Currently, the market is pricing in just one additional ECB rate hike between now and the end of 2026. In the meantime, CDS spreads widened again today across the semiconductor sector, with Nvidia once again leading the move. The ask spread rose to 65 basis points, implying a roughly 5% cumulative default probability over five years. That remains a relatively low level in absolute terms. However, what stands out is the steady increase in the spread, which suggests the credit market is becoming increasingly cautious. At the same time, Nvidia’s stock continued to rise on Wednesday, meaning we remain in an unusual situation where the equity price is advancing even as the company’s CDS spread widens. What does the credit market know that the equity market doesn’t? It’s a fair question. Clearly, credit investors are seeing something that is leading to the persistent widening in CDS spreads, even as equity prices continue to climb. Whether that caution ultimately proves justified remains to be seen, but the growing divergence between the two markets is becoming increasingly difficult to ignore. My idea of selling rallies continues to pay dividends. The S&P hit my 7518-sell level before falling 30 Handles. This move lower saw my 7500 revised T/P level triggered and I am still flat. The S&P has further resistance from 7510/7535 where I will again be a seller with the same higher 7561 ‘Closing Stop’. The S&P will have support at Monday’s 7443 Chicago close. I will leave my buy level unchanged from Wednesday at 7425/7450 with the same 7409 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 7488. If I am taken long, I will have a T/P level at 7474.
EUR/USD
I am still long the Euro from Monday at a price of 1.1410. I will add to this position at 1.1340 while leaving my 1.1275 ‘Closing Stop’ unchanged. I will now lower my T/P level to 1.1455. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The Dollar traded in a narrow 25-point range again on Wednesday and I am still flat. I will not chase the Dollar higher as I continue to be a buyer on any dip lower to 99.70/100.40 with the same 98.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 100.90.
Russell 2000
I am still short the Russell at a price of 2990 with the same 2950 T/P level. I will now 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
The FTSE has now risen over 4% this week on the back of the new Government. This rally in the FTSE has come despite Gilt Yields rising 15 basis points to 5.05% this week. The FTSE has short-term resistance from 10820/10920 where I will be a seller with a 11005 tight ‘Closing Stop’. If I am taken short, I will have a T/P level at 10690. I no longer want to be long the FTSE at this time.
Dow Rolling Contract
After the Dow rallied to my 52500-sell level the market sold off to my revised 52355 T/P level and I am now flat. Today, my only interest in selling the Dow is on a further rally to 52600/52900 with a higher 53205 ‘Closing Stop’. If I am taken short, I will have a T/P level at 52380. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
The NDX finally rallied to my 29170-sell level before trading lower to my revised 29075 T/P level and I am now flat. The NDX has short-term resistance from 29200/29400 where I will again be a seller with a higher 29605 ‘Closing Stop’. If I am taken short, I will have a T/P level at 29010. I still do not want to be buyer of the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
I am still flat as the Bund again fell shy of my buy range. The Bund has short-term support from 123.50/124.20 where I will continue to be an aggressive buyer with the same 122.85 ‘Closing Stop’. If I am taken long, I will have a T/P level at 124.90.
Gold Rolling Contract
I am still flat. Gold has support below from 3890/3980 where I will again be a buyer with a lower 3795 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4050.
Silver Rolling Contract
I am still flat. Today, I will raise my buy level to 55.20/58.20 with the same 52.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 59.80.
Please Note: There will be no Daily Commentary tomorrow. Any of my calls that are not executed today and are subsequently executed on Friday will see me return with updated emails for my Platinum Members.
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