U.S. Indices trended higher throughout Wednesday’s session, but Futures were knocked on reports in the Information that Microsoft (MSFT) is lowering AI software quotas as multiple sales teams failed to hit quotas for AI product sales last year, which hit MSFT and other AI names in the pre-market. However, stocks started to pare before accelerating once MSFT denied the story and equities moved higher throughout the US session. Gains were led by the Russell with the majority of sectors green, led by energy and financials, while tech and utilities closed red. T-notes saw two-way trade, largely in response to US data. T-notes hit peaks after the woeful ADP report, which saw employers shed jobs by 32k in November, versus expectations for a 10k increase in employment. However, T-notes then sold off on the better-than-expected ISM Services PMI, which also saw an uptick in unemployment and a downtick in inflation. However, the move was short-lived, and T-notes gradually moved higher into settlement with the curve bull steepening. Oil prices settled firmer as further remarks from US/Russian officials continue to suggest a lacklustre meeting on Tuesday. Natural Gas Futures hit a 35-month high on record flows to LNG export plans and forecasts for colder weather. In FX, the Dollar was sold on the Hassett trade while cyclical currencies outperformed as stocks rallied. Gold prices were choppy, but both gold and silver head into APAC trade flat. The Headline ISM Services PMI rose to 52.6 from 52.4, despite expectations for a decline to 52.1. Within the report, business activity was little changed at 54.5, while new orders fell to 52.9 from 56.2. Employment rose marginally to 48.9 from 48.2 but remained in contractionary territory while prices paid saw a drop to 65.4 from 70.0. Analysts at Pantheon Macroeconomics note that the rise in the headlines, to its highest level since February, provides little reassurance on Q4 GDP growth given its decoupling from the official data in the last three years. Regarding the employment print, Pantheon Macroeconomics writes, “Its three-month average points to gains in private services payrolls averaging 50K over the three months to November, continuing the run of sub-breakeven growth”. While for prices, it read the drop as a signal of fading momentum in tariff-related price rises. Pantheon adds that “The drop in the prices paid index brings it much closer in line with other survey measures of service sector prices, which suggest the tariffs are not having second-round effects.” The ADP survey of private payrolls saw 32k jobs lost in November, missing the +10k expectation and falling from the prior 47k, which was revised up from 42k. The data was within the analyst forecast range of -50 to +50k. The report noted that “Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment. And while November’s slowdown was broad-based, it was led by a pullback among small businesses.” On wages, the median change in annual pay for job stayers eased to 4.4% from 4.5%, while for job changers it eased to 6.3% from 6.7%. This report is one of the last employment gauges the Fed will see before the December FOMC; the November and October BLS NFP reports will be released on December 16th, after the Dec 10th FOMC meeting. Based on Fed commentary, rate views are very split. Several are favouring a cut, and several are favouring a hold; the weak data may help those who are undecided on voting for a cut in December. Money markets price a 25bps cut with an 84% probability – before the Fed, we will see the latest JOLTS data on the 9th December. Elsewhere, Oil closed higher by 0.5%.
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For anyone following my Platinum Service it was made 67 points yesterday and is now ahead by 512 points for December 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
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