U.S. Indices (SPX, NDX, RUT, SPX) closed in the red on Friday following comments from Treasury Secretary Yellen. Treasury Secretary Janet Yellen has warned that the United States will hit its statutory debt ceiling around the middle of January, a development she said will prompt the Treasury to resort to “extraordinary measures” to prevent the government from defaulting on its obligations. She noted that the Fiscal Responsibility Act of 2023 temporarily suspended the debt ceiling through Jan. 1, 2025, enabling lawmakers to avert default during contentious budget negotiations. A day after that deadline—on Jan. 2—a new debt limit will be set based on the total amount of outstanding debt subject to the statutory limit as of the end of Jan. 1. Yellen noted that the debt is projected to temporarily decrease by $54 billion on that date due to scheduled Medicare trust fund redemptions, providing a brief reprieve before extraordinary measures become necessary. “Treasury currently expects to reach the new limit between January 14 and January 23, at which time it will be necessary for Treasury to start taking extraordinary measures.” Yellen wrote. Extraordinary measures, often described as accounting manoeuvres, allow the Treasury to free up cash and delay default. These measures, however, are a short-term solution. Once exhausted, they leave the government unable to meet its financial obligations without congressional intervention. Yellen emphasised the urgency of action, warning that a failure to address the debt ceiling would severely damage the nation’s economic credibility. “I respectfully urge Congress to act to protect the full faith and credit of the United States,” she wrote. Yellen’s warning comes as the national debt has climbed to a staggering $36 trillion, driven by decades of government spending outpacing tax revenue under both Republican and Democratic administrations. High inflation that soared after the pandemic led the Federal Reserve to hike interest rates, increasing borrowing costs and debt service payments. The Committee for a Responsible Federal Budget (CRFB) recently noted that interest payments on America’s public debt have nearly tripled since 2020 and in 2024 were higher than spending on Medicare and national defense. The nonprofit estimated that interest payments will continue climbing over the next decade and beyond, exceeding Social Security spending by 2051 to become the top expense. President-elect Donald Trump has proposed eliminating the debt ceiling altogether, or at least extending it through 2029, a move that would give his incoming administration more breathing room by avoiding repeated debt cap standoffs on Capitol Hill. U.S. Equity Futures are lower this morning on the back of Yellen’s letter to Congress. Elsewhere, Oil closed 1.41% higher while Gold was flat.
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For anyone following my Platinum Service it was made 455 points last week and is now ahead by 1593 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. 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 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 1.11% lower at a price of 5970.
The Dow Jones Industrial Average closed 333 points lower for a 0.77% loss at a price of 42,992.
The NASDAQ 100 closed 1.36% lower at a price of 21,473.
The Stoxx Europe 600 Index closed 0.67% higher.
This morning, the MSCI Asia Pacific closed 0.5% lower.
This morning, the Nikkei closed 0.96% lower at a price of 39,894.
Currencies
The Bloomberg Dollar Spot Index closed 0.11% lower.
The Euro closed 0.1% lower at $1.0417.
The British Pound closed 0.1% higher at 1.2571.
The Japanese Yen fell 0.9% closing at $157.80.
Bonds
Germany’s 10-year yield closed 14 basis points higher 2.39%.
Britain’s 10-year yield closed 13 basis points higher at 4.64%.
U.S.10 Year Treasury closed 10 basis points higher at 4.63%.
Commodities
West Texas Intermediate crude closed 1.41% higher at $70.60 a barrel.
Gold closed 0.05% lower at $2621 an ounce.
This morning on the Economic front we have no data of note from either the U.K. or the Euro-Zone. At 2.45 pm we have the latest Chicago Fed PMI, followed by Pending Home Sales at 3.00 pm. Finally, at 3.30 pm we have the Dallas Fed Manufacturing Business Index.
Cash S&P 500
As expected, the S&P found strong resistance so far at the 6000/6020 which is where the 14 EMA and 20-Day Moving Average is situated. Per Yellen’s letter to Congress above the debt ceiling will become a major political issue in 2025 after Biden had a free credit card over the past two years. Naturally, Trump wants to remove the debt ceiling all together. I suppose strategically it makes sense to force the issue now as opposed to next summer under Trump’s watch. Cynically I can also propose it makes sense to pressure markets now versus coming into office with the highest valuations ever and then be compared in performance to them later on. A sign of how much leverage there is in markets was a report last week stating that hundreds of thousands of crypto accounts got liquidated before Christmas. In fact all those who chased the share $MSTR got absolutely obliterated as the stock is now down over 40% from its recent highs. The stronger Dollar is not helping. I read a detailed report from Rabobank over the weekend calling for parity versus the Euro in Q1 2025 before we finally see a long-awaited correction. The recent 5800 pivot point that was tested before Christmas is now key support. A break and close below here for a few days will see an acceleration to the downside that could get nasty. My S&P plan worked well as the market traded the whole of Thursday’s range for a 6005 average short position before selling off to my revised 5980 T/P level and I am now flat. The S&P has short-term resistance from 5995/6015 where I will again be a small seller with a higher 6041 ‘’Closing Stop’’. My only interest in buying the S&P is on a further dip lower to 5878/5898 with a higher 5859 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5983. If I am taken long, I will have a T/P level at 5916.
EUR/USD
No Change: I am still long the Euro at an average rate pf 1.0553 with the same 1.0325 ‘’Closing Stop’’. This morning the Euro is trading at 1.0420. I will leave my 1.0580 T/P level on this position. I cannot believe how little movement there has been in the Euro over the last month. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
No Change: I am still short the Dollar at an average rate of 107.60. I will leave my 108.55 ‘’Closing Stop’’ on this position while raising my T/P level to 107.40. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
No Change: I am going to stay flat the DAX until the New Year. Without doubt this has been the trickiest market to trade in for the last few months. It looks like we have finally put at least a short-term top in this market last week at 20600 but given the seasonality I am afraid to short the market. I still have no interest in buying the DAX at this time.
Cash FTSE
Last week the FTSE rallied to my 8150-exit level on my 8195 average long position as outlined in Monday’s Daily Commentary. Subsequently, I emailed my Platinum Members to buy the FTSE again which I did at a price of 8126. I will add to this position on any further move lower to 8056 with a now lower 7995 ‘’Closing Stop’’. I will have a T/P level on this latest long position at 8180. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well as the market sold off to my 42500 buy level before rallying to my 42750 T/P level as outlined in last Monday’s Commentary and I am still flat. This morning, the Dow is trading higher at a price of 42900. We have short-term support from 42480/42740 where I will again be a buyer with a higher 42295 ‘’Closing Stop’’. If triggered, I will have a T/P level at 42950. I still do not want to be short the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members
Cash NASDAQ 100
I am still flat. Although the NDX traded in a wide range over the past few days I am still flat as last Monday’s buy range was never threatened. This morning, the NDX is trading at 21500. The NDX has short-term support from 21200/21350. I will now raise my buy level to this area with a higher 20995 ‘’Closing Stop’’. If triggered, I will have a T/P level at 21480. I still do not want to be short the NDX at this time.
March BUND
Following the surge in U.S. Treasury Yields the Bund sold off to my second buy level at 133.15 for a now 133.50 average long position. This morning, the Bund is trading at a price of 132.90. I will leave my 132.45 ‘’Closing Price’’ unchanged while lowering my T/P level to 134.10. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold traded in a narrow range over the past week, and I am still flat. Today, I will continue to be a buyer on any further dip lower to 2580/2596 with the same 2567 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2610.
Silver Rolling Contract
No Change: I am still long Silver at an average price of 30.95 with the same 28.95 ‘’Closing Stop’’. I will leave my 31.40 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: My Next Daily Commentary will be posted this Thursday, January 2, 2025. Any of my calls that are not hit today and are subsequently triggered tomorrow will see me return with updated emails for my Platinum Members. Finally, I would like to wish all my Members a Happy and prosperous New Year.
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