U.S. Indices closed mixed, while T-notes were bid and the Dollar soft. The mixed equity performance saw the Nasdaq and S&P outperform, largely a function of upside in Google and Apple, leading to the Communication and tech sectors outperforming. The upside was due to a US court ruling that Google can keep its Chrome browser, seen as a major win for both Apple and Google (more below). Meanwhile, breadth was soft with the majority of sectors down, with decliners outpacing advancers (275 stocks fell, 225 gained), with small caps and equal-weight S&P underperforming. The upside in T-notes and downside in Dollar largely stemmed from dovish data and Fed Speak. The JOLTS report missed analyst expectations, adding to the recent concerns about the state of the US labour market, with attention turning to NFP on Friday, after the ADP report on Thursday. Governor Waller reiterated his case for rate cuts, expecting rate cuts to take place over the next three to six months, but the pace of cuts will be data-driven. Musalem, meanwhile, who is usually a hawk, reiterated that the current stance of restrictive policy is appropriate, but noted he has marked up labour market risks and marked down inflation risks. The dovish development and following moves in yields and the Dollar supported Gold prices to fresh highs of USD 3,563/oz. Crude prices slumped on Reuters reports that OPEC are considering another output hike at the weekend, despite expectations earlier that they were to leave production levels unchanged. Headline JOLTS fell to 7.181 million from 7.357 million (revised down from 7.437 million), below the 7.378 million consensus. This saw the vacancy rate slip to 4.3% from 4.4%, while the quits rate was unchanged at 2.0%. The drop in JOLTS only added to labour market concerns ahead of the August NFP report on Friday (albeit this is for July). Many have been attributing the drop in the July jobs report (and two-month revisions) to President Trump’s immigration policies, with estimates of the breakeven rate being revised much lower (Fed’s Musalem suggested as low as 30k). This is largely a labour supply factor, but the JOLTS data highlights the accompanying drop in demand too. Before the data, Fed Governor Waller had suggested that the drop in labour supply is masking the drop in labour demand, and that is not a good situation for the Fed to be in. However, OxEco highlights that the drop is not as worrisome thanks to the drop in labour supply. But it does suggest that “the labour market is more vulnerable to a more severe weakening if layoffs start to increase, leading to a negative cycle of reduced spending, further job losses and a more significant rise in the unemployment rate.” Fed Governor Waller largely reiterated recent dovish arguments, but looking ahead, he added the Fed could see multiple cuts in the next 3-6 months, while market pricing for Fed rate cuts over the next few months is reasonable. He repeated that the Fed should cut at the next meeting, but it does not need to go in a lock-step sequence of cuts. Whether it is every meeting or every other meeting will depend on the data. He also said the Fed could adjust the rate cut pace, depending on how data comes in. He reiterated that the tariff impact on inflation is not permanent, and that he wants to get to a more neutral stance; it would take 150bps of rate cuts to get to neutral. Waller also warned that the fall in labour supply is masking the fall in labour demand. Musalem, the 2025 Voter reiterated that the current restrictive monetary policy stance is appropriate, given the data. He noted the Fed needs to balance inflation and job goals going forward, warning that there is a risk that tariffs could cause a persistent rise in inflation, but he does expect it to ebb back to 2% by H2 26, noting that below-trend growth and stable expectations should temper inflation. Musalem has marked up labour market risks and marked down inflation risks. He said tariffs will work through the economy over two to three quarters but expects the tariff impact to fade eventually. He noted policy uncertainty that has held back business and household spending continues to lift, and he also expects some stimulus to growth from fiscal policy. He sees modest GDP growth this year before returning to the trend in 2026. Ahead of NFP on Friday, Musalem said that the job market break-even level is between 30-80k jobs per month. Elsewhere, Gold closed higher by 1.66% while Oil slumped ending Wednesday’s session with a 2.5% loss.
To mark my 3225th 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 45 points yesterday and is now down 38 points for September after 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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