U.S. Indexes closed lower on Wednesday, weighed by a combination of continued weakness in the AI trade and heightened volatility surrounding the FOMC. Overnight, SK Hynix earnings failed to impress despite reporting record profits, adding further pressure to semiconductor names and the NASDAQ 100, which is now down more than 10% from its record highs. Meanwhile, industrial names exposed to the AI theme also underperformed after Caterpillar (CAT) fell 6.9% following a downgrade at Baird, which cited expectations for slowing order and backlog momentum in 2027 and 2028. Volatility picked up around the FOMC announcement and Chair Warsh’s press conference. As expected, the Fed left rates unchanged, although the decision saw a 9-3 vote split, with Logan, Hammack and Kashkari preferring a 25 basis point rate hike. The absence of a hike, versus roughly a one-third probability priced before the meeting, initially sparked a dovish reaction across asset classes. However, the moves in equities, gold and the 10-year Treasury quickly reversed during Warsh’s press conference. Warsh largely reiterated his commitment to restoring price stability, continued to avoid providing forward guidance and downplayed the significance of the June CPI report in the policy decision. The most notable market reaction came in the Treasury market, where the curve underwent a pronounced steepening, led by the long-end. Likely reflecting investors demanding greater term premium amid the continued absence of forward guidance. Following the meeting, money markets pushed back expectations for further tightening, with a 25bp hike no longer fully priced by year-end. Attention now turns to Friday, when markets will hear from Logan, Hammack and Kashkari, providing further insight into the rationale behind their dissents. Geopolitical developments also tilted back towards escalation, helping crude prices recover some of this week’s losses. President Trump vowed to respond forcefully following Iranian strikes on US targets in Jordan, while reports suggested the Houthis were considering imposing fees on commercial vessels transiting the southern Red Sea, although the group’s leader later pushed back on those reports. Separately, the EIA reported a larger-than-expected draw in US crude inventories, with the decline even steeper once the Strategic Petroleum Reserve draw was included. Spot gold and silver ended modestly higher, supported by a weaker Dollar, although gains were pared as longer-dated Treasury yields moved higher after the Fed press conference. attention was firmly on the FOMC. The Fed left rates unchanged, as expected, although the decision saw three dissenters—Logan, Hammack and Kashkari—who all preferred a 25bps rate hike. The statement itself generated a dovish market reaction, with front-end Treasury yields initially falling as participants unwound hawkish positioning built ahead of the meeting, with money markets having priced around a 33% probability of a hike. Attention then shifted to Chair Warsh’s press conference, which ultimately triggered a pronounced steepening of the Treasury curve, lead by the long-end. While front-end yields remained lower on the session, longer-dated maturities sold off sharply, with the 30-year yield briefly rising above 5.20%, its highest level since 2007. Warsh again refrained from offering any forward guidance, instead emphasising that markets should react to incoming data rather than Fed communication. The continued absence of guidance may be encouraging investors to demand additional term premium further out the curve, reflecting greater uncertainty over the future policy path. Attention on Thursday turns to the US GDP and PCE reports, which will provide the next key test of the inflation outlook following the Fed’s decision. However, Warsh stressed today he looks at a range of indicators for reaching 2% inflation. Elsewhere, Oil closed higher by over 6% while Gold ended Wednesday’s volatile trading session with a gain of 0.6%.
To mark my 3425th 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 1155 points yesterday and is now ahead by 8031 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 1.52% lower at a price of 7316.
The Dow Jones Industrial Average closed 1153 points lower for a 2.19% loss at a price of 51,594.
The NASDAQ 100 closed 2.06% lower at a price of 27,192.
The Stoxx Europe 600 Index closed 0.29% lower.
Yesterday, the MSCI Asia Pacific closed 0.8% lower.
Yesterday, the Nikkei closed 1.71% lower at 61,315.
Currencies
The Bloomberg Dollar Spot Index closed 0.58% lower.
The Euro closed 0.61% higher at $1.1463.
The British Pound closed 0.41% higher at $1.3362.
The Japanese Yen rose 0.31% closing at $163.36.
Bonds
U.K.’s 10-Year Gilt closed 10 basis points higher at 5.05%.
Germany’s 10-Year Bund Yield closed 5 basis points higher at 3.16%
U.S.10 Year Treasury closed 9 basis points higher at 4.69%.
Commodities
West Texas Intermediate crude closed 6.56% higher at $84.46 a barrel.
Gold closed 0.6% higher at $4067.10 an ounce.
Today on the Economic front we have German GDP at 9.00 am, followed by Euro-Zone Consumer Confidence, Unemployment and GDP at 10.00 am. Next, we have the Bank of England Rate Announcement at 12.00 pm and German CPI at 1.00 pm. At 1.30 pm we have U.S. Weekly Jobless Claims and the PCE Price Index. Finally, we have a speech from Bank of England Governor Bailey at 2.15 pm.
Cash S&P 500
A very strange post-meeting reaction from the market following Wednesday’s Fed meeting. The front end of the Treasury curve rallied sharply, with September rate hike expectations largely priced out of the swaps market. At the same time, the long end of the curve sold off aggressively. The spread between the 30-year Treasury yield and the 3-month Treasury bill widened by roughly 20 basis points on the day to 1.43%—a massive steepening move. The interesting takeaway from yesterday’s meeting is that the long end of the Treasury curve clearly got the message: the Fed is not going to stand in its way. Warsh acknowledged that both nominal and real yields have risen sharply since the June meeting, suggesting the Fed is watching the market and recognising that financial conditions have already tightened significantly. That is important because it allows the Fed to avoid raising the policy rate further. In effect, the market is doing the tightening for the Fed, and that is ultimately what matters. If the Fed is no longer relying on forward guidance and is instead allowing the market to dictate the narrative, then long-term interest rates can adjust to levels that appropriately compensate investors for inflation while allowing the yield curve to steepen naturally. The yield curve remains historically flat, and that has been one of the reasons Powell and his colleagues struggled to bring inflation back to target. Long-term interest rates were never allowed to rise sufficiently relative to short-term rates, preventing the yield curve from steepening in a way that would have produced more restrictive financial conditions. In the meantime, the S&P 500 has entered the danger zone, closing at 7,315. The options put wall sits at 7,300, a level that could provide support if it holds. That is where put holders may choose to monetise their positions and unwind hedges, potentially helping to stabilise the market. However, a break of support does open the gates to significantly lower levels. The market has also moved into negative gamma, meaning market maker hedging flows become directional and can amplify price swings. As a result, volatility is likely to increase, with market moves becoming larger in either direction. Below that, technical support shows around 7,250 and 7,130. My S&P plan worked well on Wednesday as after the Market hit my 7350-buy level we rallied to my 7392 T/P level and I am now flat. Today, I will be an aggressive buyer on any further dip lower to 7240/7265 with a lower 7219 ‘Closing Stop’. Today’s buy range is right in the middle of the June low meaning any tag in this oversold market should lead to a decent rebound. If I am taken long, I will have a T/P level at 7328. I no longer want to be short the S&P at this time.
EUR/USD
The Euro finally rallied to my 1.1445 T/P level on my latest 1.1410 long position and I am now flat. Today, I will again be a buyer on any further dip lower to 1.1320/1.1390 with a lower 1.1255 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1460.
Dollar Index
Wednesday’s 0.6% fall in the Dollar saw the market hit my 100.80 buy level. I am still long with the same 101.40 T/P level. I will continue to look to add to this position at 100.10. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
No Change: I am still flat. I will now lower my sell level to 2980/3040 with a now lower 3105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2930. I still do not want to be long the Russell at this time.
FTSE 100
The FTSE continues to trade near all-time highs. A late sell-off saw the FTSE hit my 10810 T/P level on my 10860 average short position and I am now flat. The FTSE has strong resistance from 10900/10980 where I will again be a seller with a higher 11065 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10820.
Dow Rolling Contract
The Dow got hit hard on Wednesday, closing lower by over 1100 points, completely reversing this week’s gains. This move lower saw my too tight 52610 T/P level triggered on my latest 52700 average short position and I am now flat. As I am away next week, I am going to stay flat the Dow until I return. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well as the market traded the whole of my buy range for a 27400 average long position before rallying to my 27820 T/P level and I am now flat. The 14-Day RSI closed at a near oversold level of 32, meaning we are one/two down days from a more sustained rally. The NDX has support below from 26700/26900 where I will be an aggressive buyer with a 26495 wider ‘Closing Stop’. If I am taken long, I will have a T/P level at 27350.
December BUND
I am still flat. With Yields closing near year-to-date highs I will now lower my Bund buy level to 123.00/123.80 with a lower 122.35 ‘Closing Stop’. If I am taken long, I will have a T/P level at 124.50.
Gold Rolling Contract
Gold just missed Wednesday’s buy range before having a late rally into the New York close. Today, I will lower my buy level to 3820/3920 with a lower 3695 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4050.
Silver Rolling Contract
My latest 57.00 long Silver position worked well as the market rose to my 58.40 T/P level and I am now flat. Silver has support from 53.50/56.50 where I will again be a buyer with a lower 51.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 58.70.
Please Note: With Ireland closed for the August Bank Holiday on Monday I am taking next week off. My next Daily Commentary will be on Monday August 10. Any of my calls that are not hit today and are subsequently triggered when I am away will see me return with updated emails for my Platinum Members.
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