U.S. Indices were choppy throughout the day but ultimately finished Wednesday’s session flat-to-slightly-higher, with outperformance in the NASDAQ, thanks to a solid showing in the Communication Sector, with strong gains in Meta (META), while Google (GOOGL) pared some of its prior day’s weakness. Note, Apple (AAPL) saw slight losses after a downgrade at Needham (which gave no price target). Energy and Utilities were the laggards. T-notes were bid across the curve, with a flatter bias, as direction was primarily influenced by weak US data. The soft ADP and soft ISM Services PMI saw T-notes climb higher throughout the session. The data also led to Dollar weakness while havens (JPY, CHF and XAU) were bid on increased economic fears in the US. Meanwhile, the CBO revised down its deficit impact estimate of Trump’s ‘big, beautiful’ bill, which also gave Treasuries a helping hand on reduced fiscal pressures. Energy prices ultimately settled lower, paring the morning’s geopolitically-induced upside on sourced reports from Bloomberg, which said that Saudi Arabia is pushing for more production hikes in August and potentially September too. Attention largely looks to Friday’s key risk events, including the US NFP and Trump-Xi call. ISM Services for May unexpectedly fell into contractionary territory, as it printed 49.9 (exp. 52.0, prev. 51.6), while prices paid rose to 68.7 from 65.1, which signals businesses are seeing a rapid rise in costs as the full effect of tariffs takes hold. Business activity and new orders dropped to 50.0 (previously 53.7) and 46.4 (previously 52.3), respectively. Employment lifted back into expansionary territory as it came in at 46.4 from 49.0. Inventories, Backlog of orders, and new export orders all declined and remain beneath 50.0, with the former falling into that territory. Within the respondents’ answers, as expected, tariffs were heavily mentioned and the comments indicate suppliers are mostly passing the tariffs on to customers rather than sharing the burden. Overall, Oxford Economics notes that after an initial surge in front-loaded demand, uncertainty is paralysing many businesses and halting new orders as customers navigate tariff policy. The consultancy adds that while one month’s reading does not make a trend, the report does support their forecast for slow growth and higher inflation throughout the year. Ahead of the US payrolls report on Friday, ADP national employment was weak as the pace of hiring reached its lowest level since March 2023. The headline added just 37k private jobs for May, against the prior 60k and the expected 110k. Note, that the bottom end of the forecast range was 69k. Median change in annual pay remained at 4.5% for job stayers, while job changers ticked higher to 7.0% from 6.9% in April. ADP Chief Economist, Nela Richardson, said “After a strong start to the year, hiring is losing momentum. Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers.” For the record, after the report, US President Trump posted on Truth “ADP NUMBER OUT!!! “Too Late” Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!”. ADP release comes ahead of NFP on Friday, whereby the headline is currently seen at 130k (previously 177k). The Bank of Canada left rates on hold at 2.75%, the midpoint of the BoC’s estimate of the neutral rate range (2.25-3.25%), disappointing those expecting a 25bps rate cut, although the majority had expected rates to be left unchanged. The BoC said it held the policy rate as it wanted to gain more information on US trade policy and its impacts. It noted that it was proceeding carefully. Governor Macklem highlighted that there was a clear consensus to hold as they await more information. The statement noted that the economy is expected to be considerably weaker in Q2 vs Q1 while noting that inflation has moved up and that recent surveys indicate households continue to expect that tariffs will raise prices, and many businesses say they intend to pass on the costs of higher tariffs. Looking ahead, the BoC continues to provide no guidance, noting it “will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs” – seemingly indicating that it is focused more on inflation. Looking ahead, money markets are currently split on whether the BoC will reduce rates in July, as markets await more information to assess how the BoC will react. Governor Macklem noted specifically that it will be looking at the next two CPI reports, adding that policymakers do not want to focus too closely on one month’s data. Through the end of this year, 37bps of easing is priced by money markets, which fully discounts one rate cut, with a 50/50 probability of another. Elsewhere, Oil closed lower by 0.62% while a weaker Dollar saw Gold end Wednesday with a gain of 0.7%.
To mark my 3200th 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 flat yesterday and is still ahead by 855 points for June, 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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