US Indices were eventually mixed on Wednesday, while sectors saw downside bias as Real Estate and Health lagged, as the latter extended on Tuesday’s pronounced losses. Energy and Tech sat atop of the pile, with the former buoyed by gains in the crude complex amid punchy President Trump remarks on Iran, while Tech saw strength ahead of Mag-7 earnings after-hours. The key risk event during the session was the FOMC and accompanying Chair Powell press conference, which largely went as expected and saw little market move. The Fed held rates between 3.5-3.75%, as expected, albeit within two dissenters (Waller, Miran), who voted for a 25bps reduction. The Bank of Canada Monetary announcement was also largely a non-event, with little move on the Canadian Dollar. In FX, the Dollar pared some of its recent weakness, with the Euro, Swiss Franc and Japanese Yen all seeing notable losses. The Yen noticed a strong bout of selling after US Treasury Secretary Bessent said “we are absolutely not intervening in USD/JPY currently” and “US does not speculate on interventions; Has always had a strong US Dollar policy.” Back to the energy space, which rose after Trump said that a massive Armada is heading to Iran, time is running out to make a deal, and the next attack will be far worse. For fixed income markets, long-end yields ticked higher as the Fed’s decision to hold rates does little to shift markets. Lastly, recapping some of the earnings today, ASML (ASML, -2.2%) topped quarterly expectations, alongside a strong order metric and guidance, though the initial move higher pared as some cited profit taking. Meanwhile, Seagate (STX, +19.1%) left sentiment still very bullish on memory names after a stellar earnings report driven by robust AI-driven demand for data storage (MU +6.1%, WD +10.7%). The Fed left rates unchanged at 3.50-3.75%, as expected, in a 10-2 vote split, with Governors Miran and Waller calling for a 25bps reduction (Miran had previously voted for a 50bps cut in December, although in recent remarks said the need to dissent with a 50bps cut has become somewhat less). The January statement revised the economic assessment by replacing “economic activity has been expanding at a moderate pace” with “expanding at a solid pace”, “job gains have slowed this year” with “job gains have remained low”, and “the unemployment rate has edged up” with it having “shown some signs of stabilisation”; “inflation has moved up since earlier in the year and remains somewhat elevated” is simplified to “inflation remains somewhat elevated”. In its risk characterisation, December’s addition that the Committee “judges that downside risks to employment rose in recent months” is removed, leaving only that it is attentive to risks to both sides of the mandate. Balance-sheet guidance states that “reserve balances have declined to ample levels and [the Committee] will initiate purchases of shorter-term Treasury securities”, is omitted entirely. The voting members include a new voting composition, and dissents: December’s dissent split between one member favouring a 0.50ppts cut (Miran) and two preferring no change, is replaced in January by two dissenters preferring a 0.25ppts cut (Miran, Waller). The language of the statement tilts a little more positive on the economy and jobs, and broadly unchanged on inflation. Heading into the announcement, traders were attentive for any remarks about the future policy path; however, the statement does not offer any immediate clues. Markets were little changed in wake of the announcement. Traders looked to Chair Powell’s post-meeting press conference for guidance on the future path of interest rates, but he offered little new information. Powell acknowledged an improvement in incoming economic data and reiterated that policy decisions will continue to be made on a meeting-by-meeting basis, guided by the data and the balance of risks. He said there was broad Committee support for holding rates, with no participant viewing a hike as their base case. Policy was described as well-positioned, with rates within a plausible neutral range, but towards the higher end. Powell noted that the December SEP showed most policymakers still expect further normalisation ahead. On the economy, Powell said activity is expanding at a solid pace and that growth remains on a firm footing, having shown notable resilience despite significant trade policy changes. He said incoming data since the last meeting has clearly improved the outlook, leaving the Committee more optimistic than at the time of the December SEP. However, he cautioned that Quarterly GDP figures can be volatile and argued that labour market data provides a more reliable signal. The earlier divergence between strong growth and a weakening labour market may have reflected productivity gains and now appears to be resolving as labour conditions stabilise. Distortions from the government shutdown are no longer material and should unwind this quarter. Powell warned, however, that the US fiscal path is unsustainable and will need to be addressed. Inflation has evolved broadly as expected but remains somewhat elevated. Powell said there was no progress on core PCE inflation last year, with the overshoot largely driven by goods prices, tariffs and one-off factors rather than demand. Goods and tariff-related inflation are expected to peak around mid-year, with many effects already passed through. He added that the tariff effect on goods pricing peaking over this year, and if the Fed sees that, that would tell the Fed it can loosen policy. He said December core PCE inflation was likely around 3.0% and headline around 2.9%. Short-term market-based inflation expectations have fully retraced since “Liberation Day”, while longer-term measures suggest confidence that inflation will return to 2%. Powell said the labour market has weakened alongside solid growth, but recent data suggests stabilisation following a period of cooling. Job gains remain subdued, and while risks to employment have diminished, they have not disappeared, making it difficult to judge whether the dual mandate is fully in balance. Consumer spending remains resilient but uneven across income groups, with a disconnect between weak survey data and stronger realised spending. Asked about the US Dollar and Gold prices, Powell said the Fed does not comment on the currency and does not take signals from Gold. He strongly defended central bank independence, warning that any loss of credibility would be difficult to reverse. He said the Fed remains fully committed to its independence, adding jokingly that future Chairs should avoid domestic politics. More seriously, he described the case involving Governor Cook as potentially among the most important in the Fed’s legal history. Powell declined to comment on whether he intends to remain a Governor after his term as Chair ends. Elsewhere, Gold closed higher by 3.76% while Oil ended Wednesday’s session with a 1.7% gain.
To mark my 3325th 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 413 points yesterday and is now ahead by 4757 points for January 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 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 0.01% lower at a price of 6978.
The Dow Jones Industrial Average closed 12 points higher for a 0.02% gain at a price of 49,015.
The NASDAQ 100 closed 0.32% higher at a price of 26,022.
The Stoxx Europe 600 Index closed 0.75% lower.
This Morning, the MSCI Asia Pacific closed 0.3% higher.
This Morning, the Nikkei closed 0.03% higher at a price of 53,375.
Currencies
The Bloomberg Dollar Spot Index closed 0.17% higher.
The Euro closed 0.75% lower at $1.1945.
The British Pound closed 0.19% lower at $1.3799.
The Japanese Yen fell 0.68% closing at $153.34
Bonds
U.K.’s 10-Year Gilt closed 2 basis points higher at 4.55%.
Germany’s 10-Year Bund Yield closed 2 basis points lower at 2.86%
U.S.10 Year Treasury closed 2 basis points higher at 4.25%.
Commodities
West Texas Intermediate crude closed 1.70% higher at $62.40 a barrel.
Gold closed 3.78% higher at $5372.10 an ounce.
This morning on the Economic Front we Have Euro-Zone Money Supply at 9.00 am and Consumer Confidence at 10.00 am. Next, we have U.S. Weekly Jobless Claims and the Trade Balance at 1.30 pm. This is followed by Durable Goods Orders, Wholesale Inventories and Factory Orders at 3.00 pm. Finally, we have a Seven-Year Treasury Auction at 6.00 pm.
Cash S&P 500
The S&P 500 finished Wednesday flat ahead of a following uneventful Fed meeting that revealed little new beyond the view that the economy remains in reasonable shape. It also appears that, at least while Jay Powell remains Chair, there are unlikely to be many — if any — rate cuts under his tenure at this stage, at least based on the tone of the press conference. The earnings results after the close seem to be a mixed bag, with Microsoft falling by around 6.5% and Meta rising by around 7.5%. From an options perspective, the setup for these stocks was bearish, as both had elevated IVs and significant call delta positioning at higher levels. After results and IV declines, those higher calls can lose premium, resulting in hedges being unwound. For Meta, the level that had to be cleared was $700, and at least for now the stock managed to clear that level. Revenue guidance was much stronger than expected, and on the surface, so the market is giving them a pass even though CAPEX came in higher than expected. It will be interesting to see whether the stock can stay over $700 once the market opens this afternoon. For Microsoft, that level was $500, and it could not clear it despite delivering better-than-expected results; however, Azure growth disappointed. For Tesla, the stock appeared more mixed going into results, but it was clear that $450 was the level that had to be cleared. As of now, it is testing that level and failing. Anyway, what happens after hours can vary, and I always think it is best to see how things play out during regular trading. How the CDS trade today will also be very telling, perhaps even more revealing, of the true nature of the reports. In the meantime, it would seem that where rates go in the near term will have much more to do with oil than anything else. Oil did break out and moved past its 200-day moving average. I think that, over the near term, this sets up a potential rally to $65. Whether one looks at the 2-year or 10-year rate, the relationship with oil since the end of 2022 has been incredibly strong. So, if oil continues to rise, I would think rates push higher, too. Perhaps oil has been the final missing piece to the higher rate story. To reduce risk ahead of the FOMC Statement I used yesterday’s afternoon’s retracement to exit my 6967 average short position for a small loss at 6970. Subsequently, I emailed my Platinum Members to sell the S&P at a price of 7000 which has now been triggered. I will have a T/P level on this position at 6980. I will add to this trade at 7025 while my ‘Closing Stop’ will be at 7040. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro reversed some of Tuesday’s gains yesterday. To reduce risk ahead of the FOMC, I exited my 1.1990 average short position at my revised 1.1964 T/P level and I am now flat. Today, I will again be a seller from 1.2040/1.2120 with a now higher 1.2205 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1960.
Dollar Index
Unfortunately, the Dollar just missed Wednesday’s 96.90 T/P level with a 96.80 high print. I am still long at an average rate of 96.30 with the same 95.35 ‘Closing Stop’. I will now lower my T/P level to 96.75 and reassess. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat as the Russell never came close to Wednesday’s sell range. I will now lower my sell level to 2690/2760 with a lower 2815 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2650.
FTSE 100
I am still short the FTSE from early yesterday morning at 10180 with a now higher 10140 T/P level. I will continue to look to add to this position at 10260 while leaving my 10335 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
I am still long the Dow at a price of 48980 with the same 49250 T/P level. I will add to this position on any further move lower to 48750 while leaving my tight 48595 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wednesday’s session witnessed plenty of two-way price action. Ahead of the FOME Statement the NDX traded lower to my revised 26025 T/P level on my 26150 average short position am I am now flat. Overnight the NDX hit a low at 25960 before rallying to sit at 26120 as I go to press. With valuations and sentiment at extreme levels I will continue to be a seller of rallies. The NDX has short-term resistance from 26230/26430 where I will again be a seller with a higher 26555 ‘Closing Stop’. If I am taken short, I will have a T/P level at 26070. If this view changes I will be back with a new update for my Platinum Members.
December BUND
It took a while but finally the Bund rallied to my revised 128.02 T/P level on my latest 127.50 long position and I am now flat. Today, I will again be a buyer from 126.70/127.50 with the same 126.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 128.05.
Gold Rolling Contract
No Change: I am going to stay flat until normal conditions return. If this view changes I will be back with a new update for my Platinum Members.
Silver Rolling Contract
My latest 115.50 short Silver position worked well as the market sold off to my 113.10 T/P level and I am now flat. Subsequently Silver rallied and is trading at a price of 117 this morning. I am going to stay flat Silver given the fact that my next Daily Commentary will not be until Tuesday. If this view changes, I will be back with a new update for my Platinum Members.
Please Note: With Ireland closed for a bank holiday on Monday my next Daily Commentary will be published on Tuesday morning. Any of my calls that are not triggered today and are subsequently executed on Friday/Monday will see me return with updated emails for my Platinum Members.
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