U.S. Indexes ended mixed on Wednesday, with the tech-heavy Nasdaq 100 the sole gainer, while the small-cap Russell 2000 lagged amid a deluge of earnings, US data, Middle East rhetoric and the latest FOMC meeting. The Fed held rates, as expected, with Miran the only dovish dissenter, opting for a 25bps rate cut. Three regional Fed Presidents, Hammack, Logan and Kashkari, dissented over maintaining the easing bias in the statement. Overall, the statement was hawkish, with a key shift in policy language on inflation as the line that it “remains somewhat elevated” was replaced with “elevated”. The Fed explicitly attributed this to the recent surge in global energy prices, a hawkish tilt suggesting the Committee views the oil shock as more than purely transitory. In Chair Powell’s press conference, he was pressed heavily on Fed independence and governance and said he would stay on as Governor until the Dept of Justice probe had ended. Earlier, US data showed a strong Durable Goods print, the advance goods trade deficit widened more than expected, and Housing data was mixed. Sectors were broadly lower, with energy the clear gainer, buoyed by notable gains in crude benchmarks as the US and Iran seemed no closer to any breakthrough, with punchy rhetoric from both sides on Wednesday. Treasuries were lower across the curve, while precious metals were in the red, with Spot Silver underperforming Gold. The Dollar gained, with the Antipodeans the clear laggards after Australian inflation was softer than expected and trimmed bets for hikes at next week’s RBA meeting. USD/CAD rose after the Bank of Canada held Interest Rates, as expected, and acknowledged it would look through the war’s immediate impact on inflation. Ahead, there more central bank rate announcements, US data and earnings on Thursday. The updated FOMC Statement and vote split was hawkish. The most striking development in the statement was the dissent; as anticipated, Governor Miran again voted for a 25bps rate cut; however, three additional dissenters (Hammack, Kashkari, and Logan) voted against the inclusion of any easing bias in the statement. Another key shift in the policy language was on inflation, with the line that inflation “remains somewhat elevated” being replaced with “elevated”, with the Fed explicitly attributing this to the recent surge in global energy prices, a hawkish tilt suggesting the Committee views the oil shock as more than purely transitory. On the Middle East, the Statement drops the prior “uncertain implications” framing, instead stating directly that developments there are “contributing to a high level of uncertainty”. Meanwhile, growth and labour market language was largely unchanged; activity continues to expand “at a solid pace” and unemployment remains “little changed.” At his last post-meeting press conference as Fed Chair, Powell was asked a lot about Fed governance and independence. He said he will remain as Governor after his Chair term expires in May until the DoJ matter is “well and truly over”, framing the decision around unprecedented legal and political attacks on the Fed rather than policy opposition to Kevin Warsh. He said he would not act as a ‘shadow Fed Chair’, expects a normal transition, and described Warsh as qualified, but repeatedly warned that Fed independence is at risk and that the Committee is concerned that political pressure may continue. On policy, Powell repeatedly said policy is in a “good place” to wait and see but acknowledged that the Committee is moving closer to dropping its easing bias, with more officials now viewing a hike as likely as a cut. He stressed no one is calling for a hike right now; however, analysts said that the threshold for cuts has risen: the Fed wants to see more progress on tariffs and energy prices before easing, while he noted that core inflation risks are “real”. He noted that in addition to the three dissenters, there were non-voters who would have preferred to move away from easing bias but still supported the rate decision. On inflation, Powell said the Fed had long assumed tariffs would be a one-off, and is already looking through that shock, but was more cautious on energy, noting prices may not have peaked and could feed into gas, airfares and petroleum-linked services. He again said that the labour market was not a source of inflation, describing it as cooling, with low hiring and low quits, while growth and consumer spending remain resilient for now. In terms of the policy outlook, analysts said the bar for September cuts is now higher, and Powell suggested that the next 30-60 days are key for whether guidance shifts. Building Permits for March fell 10.8% to 1.372 million (exp. 1.39 million) from 1.538 million, with single-family authorisations down 3.8%, while units in buildings with five units or more were at a rate of 427k. Housing Starts rose 10.8% to 1.502 million from 1.356 million, above the consensus of 1.40 million. Single-family housing starts increased 9.7% to 1.032 million, and the March rate for units in buildings with five units or more was 446k. Housing Starts were stronger than expected, but Oxford Economics notes based on Building Permits, the more forward-looking indicator, it does not expect the March pace of starts to be repeated in the coming months. The consultancy added that for housing starts to improve on a sustained basis, homebuilders will need to reduce their existing inventory of completed homes for sale. Mortgage rates have retraced about half of the rise that followed the start of the war with Iran, which should support some sales, but it does not expect rates to fall further any time soon. The Bank of Canada held rates at 2.25% as expected, keeping its options open amid the Middle-East conflict. The central bank reiterated it is looking through the war’s immediate impact on inflation, but will not let higher energy prices become persistent inflation. As expected, the BoC raised its CPI inflation outlook, with 2026 lifted to 2.3% (prev. 2.0%), but unchanged at 2.1% for 2027. GDP growth projections were raised despite the ongoing war, 1.2% for 2026 (prev. 1.1%) and 1.6% for 2027 (prev. 1.5%). The central bank noted that since Canada is a large net exporter of oil, higher oil prices increase national income even as consumers are squeezed by higher gasoline prices. Ahead, it guided that changes in the policy rate are expected to be small as the economy evolves broadly in line with the base case. On trade, in the event the US imposes significant new trade restrictions on Canada, the BoC said they may need to cut the policy rate further to support economic growth. The BoC maintained its neutral rate estimate range of 2.25-3.25%. A very much expected decision, statement, and MPR from the BoC, leaving money markets slightly paring hawkish bets as any clear guidance towards hiking was absent. Elsewhere, Oil surged a further 7% while Gold continued Tuesday’s move lower with a 1.2% fall yesterday.
To mark my 3375th 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 was made 180 points yesterday and is now ahead by 1910 points for April 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 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 0.04% lower at a price of 7135.
The Dow Jones Industrial Average closed 280 points lower for a 0.57% loss at a price of 48,861.
The NASDAQ 100 closed 0.58% higher at a price of 27,186.
The Stoxx Europe 600 Index closed 0.77% lower.
This Morning, the MSCI Asia Pacific closed 0.7% lower.
This Morning, the Nikkei closed 1.32% lower at a price of 59,123.
Currencies
The Bloomberg Dollar Spot Index closed 0.32% higher.
The Euro closed 0.23% lower at $1.1697.
The British Pound closed 0.27% lower at $1.3489.
The Japanese Yen fell 0.29% closing at $159.97.
Bonds
U.K.’s 10-Year Gilt closed 6 basis points higher at 5.08%.
Germany’s 10-Year Bund Yield closed 5 basis points higher at 3.10%
U.S.10 Year Treasury closed 7 basis points higher at 4.43%.
Commodities
West Texas Intermediate crude closed 6.98% higher at $106.90 a barrel.
Gold closed 1.22% lower at $4539.10 an ounce.
This morning on the Economic Front we already had the release of German Retail Sales which fell 2% versus -0.1% expected. Next, we have German Unemployment and GDP at 8.55 am and 9.00 am respectively, followed by Euro-Zone CPI and Unemployment at 10.00 am. At 12.00 pm we have the Bank of England Rate Announcement, and this is followed by the ECB 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, GDP, Employment Cost Index and Personal Income/Spending. Finally, we have the Chicago PMI at 2.45 pm and the Dallas Fed PCE at 3.00 pm.
Cash S&P 500
Although the S&P closed flat we are now in the middle of what is likely to be a period of volatility until we come out the other side tomorrow evening, following Apple’s results after the close. The Fed meeting was a non-event on the surface, but the three dissents set up a challenging path ahead for Kevin Warsh to cut at the next Fed meeting in June. With Powell staying on, I doubt Warsh will garner the votes needed to cut at any point in the near future. December Fed Funds Futures closed today at 3.65%. In the meantime, the 3-month Treasury bill 12-month forward is now trading 25 basis points above the 3-month Treasury Bill, implying that part of the market expects the 3-month Treasury rate a year from now to be 25 basis points higher than it is today. Let us not forget that this afternoon we have the Bank of England and the ECB, and failing to pay attention to them would be a mistake. If global rates continue to rise, U.S. rates are likely to move much higher from current levels. Today, the British 10-year closed at 5.07%, its highest close since June 2008, and it looks like it could rise further toward resistance around 5.25%. To me, this appears to be a breakout from multi-year consolidation. This appears to be the same situation with the 10-Year Bund which closed at new highs for the year in Yields terms at 3.09%. In the meantime, we are now past peak dispersion season, and we should start the unwinding process. Meanwhile, as the dispersion season passes, the equity market is likely to start focusing on oil. I find it highly unlikely that both will continue trading together higher. Meanwhile Market Cap to GDP closed at a new record of 252%. To put this in context the 1929 Crash happened when this indicator was at 65%, the 1987 Crash at 85/90% and the 2000 Crash with a reading of 170%. Historically markets mean revert every ten years. With the NDX hitting a new all-time high overnight before attracting some selling anyone long the stock markets at these levels are playing with fire. When I left the banking industry in 1995 and joined FINEX which was a trading floor newly opened in Dublin and part of the New York Cotton Exchange, well know trader Paul Tudor Jones opened our facility. He is one of the most savy traders and I follow him regularly. When he speaks, I listen especially when it agrees with my views. Please see the following three minute video that he posted:
https://x.com/masterpandawu/status/2049170525570687162?s=51&t=jyXipxgx94bdds-chqwkhA
I am still short the S&P at an average rate of 7097. I will leave my 7070 T/P level unchanged for now and reassess if triggered. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
Overnight, the Euro finally sold off to my initial 1.1660 buy level. I am still long with a now lower 1.1720 T/P level. I will continue to look to add to this position at 1.1580 while leaving my wider 1.1495 ‘Closing Stop’ unchanged. 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. I will now raise my buy level to 97.60/98.40 with a higher 96.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 98.95. I still do not want to be short the Dollar at this time.
Russell 2000
No Change: I am still short the Russell at an average rate of 2725 from last week. I will now lower my T/P level on this position to 2680 while leaving 2795 ‘Closing Stop’ also 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 continues to trade heavy, trading the whole of Wednesday’s buy range for a now 10215 average long position. I will now lower my T/P level to 10280 while leaving my 10095 ‘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
The Dow got hit hard yesterday from where I marked prices 24 hours ago. This sell-off continued overnight as the market hit my buy range for a now 48580 long position. We are seeing huge negative divergence between the Dow and both the NDX and S&P where these market are making new highs while the Dow underperforms. I will add to my Dow long position at 48280 with a now lower 48095 ‘Closing Stop’. I will now lower my T/P level on this position to 48760. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wow! Even though Oil is trading at $110 per barrel it did not matter as following better than expected earnings from the Mag 4 yesterday the NDX hit a new all-time high at 27490 overnight leading to a more stretched and overvalued market. This move higher saw my second sell level at 27430 triggered for a now 27305 average short position. I will leave my 27605 ‘Closing Stop’ unchanged while raising my T/P level to 27020. If any of the above levels are triggered, I will be back with a new update for my Platinum Members.
December BUND
The Bund followed both the Gilt and Treasury market lower on Wednesday, hitting my buy range for a now 124.90 long position. I will add to this trade at 124.20 while leaving my 123.55 ‘Closing Stop’ unchanged. I will now lower my T/P level to 125.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
I am still flat. The bottom of the Bollinger Band comes in at a price of 4364 this morning. Today, I will continue to be a buyer from 4330/4430 while leaving my 4195 wider ‘Closing Stop’ unchanged. If I am taken long, I will have a T/P level at 4540. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
My Silver plan worked well as the market traded lower to my 71.10 buy level yesterday before rallying overnight to my revised 72.90 T/P level and I am now flat. Today, I will again be a strong buyer on any further dip lower to 67.00/70.00 with a lower 64.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 73.10.
Please Note: Due to the May Bank Holiday on Monday my next Daily Commentary will be posted on Tuesday. Any of my calls that are not executed today and are subsequently triggered on Friday/Monday will see me return with updated emails for my Platinum Members.
Recent Comments