U.S. Indexes closed the first session of the week firmly in the green, albeit slightly off intraday highs, as risk sentiment took its cue from the US and Iran reaching a peace agreement that is expected to be formally signed in Switzerland on Friday. While full details of the agreement have yet to be released, reports suggest the US will lift its naval blockade while Iran will reopen the Strait of Hormuz. The positive developments surrounding the US-Iran agreement drove a broad risk-on move across asset classes. Crude prices suffered hefty losses as traders removed much of the geopolitical risk premium embedded during the conflict, while the Dollar weakened against most major peers. Currency-specific newsflow was relatively sparse, although the Swiss Franc also found support after voters rejected a proposal to cap the country’s population at 10 million, avoiding a potential source of tension with the EU. Precious metals were firmer, while Treasuries also gained, with the front end outperforming as lower oil prices helped ease inflation concerns. However, Treasury gains were pared throughout the session, with Nvidia’s (NVDA) USD 25 billion bond offering weighing on the market after the deal was upsized from an initially proposed USD 20 billion following roughly USD 85 billion of investor demand. Sector performance reflected the improved risk backdrop. Technology, Communication Services, and Consumer Discretionary led the gains, while Energy was the clear laggard amid the sharp decline in oil prices. On the data front, the New York Fed Empire Manufacturing survey, Industrial Production, and the NAHB Housing Market Index all came in softer than expected, although the releases generated little market reaction. Attention now turns to Wednesday’s FOMC decision. Rates are widely expected to remain unchanged, but focus will centre on Chair Warsh’s first press conference as Fed Chair. Markets will also closely watch whether the Committee removes its easing bias from the statement, revises inflation forecasts higher, lowers unemployment projections, and delivers a more hawkish set of dot plots. Business activity in New York State increased modestly in June, with the headline general business conditions index falling to 5.7 from 19.6, below the 13.20 forecast, which Pantheon Macroeconomics says “bolsters the case for thinking the manufacturing cycle is beginning to turn down”. New orders eased to 3.5 from 22.7, and shipments slowed to 8.6 from 18.9, while unfilled orders edged up to 5.0 from 4.9. Delivery times continued to lengthen, albeit at a slower pace, with the index falling to 11.9 from 20.4, while supply availability worsened further to -13.9 from -10.7. Employment metrics were mixed, with the number of employees index rising to 9.6 from 8.3, although the average workweek index eased to 5.1 from 11.5. Price pressures remained elevated, with prices paid little changed at 61.0 (prev. 62.6) and prices received at 31.4 (prev. 31.8). Pantheon Macroeconomics writes that “The prices received index was essentially unchanged in June, consistent with prices for CPI core goods, excluding used autos, rising at a near-4% annualised pace over coming months. But with energy prices down decisively over the last month, the pace of price rises looks set to moderate soon, enabling the FOMC to look through the current momentum.” Looking ahead, firms remained fairly optimistic, although the future business conditions index slipped to 30.1 from 33.5. Expectations for new orders and shipments improved to 32.5 (prev. 30.1) and 32.2 (prev. 26.6), respectively, while firms also anticipated stronger inventories, longer delivery times, and continued employment growth. Future prices paid eased to 59.4 from 62.1, but future prices received rose sharply to 51.6 from 43.6, the highest since 2022. US industrial production rose 0.1% M/M in May (exp. 0.2%, prev. 0.7%), while manufacturing output was unchanged (prev. 0.6%), indicating activity grew at a slower pace than expected. However, both series saw sizeable upward revisions to prior months, with industrial production revised up by a net 0.4ppts and manufacturing by 0.5ppts. Mining output rose 1.3%, offsetting a 0.4% decline in utilities production, while capacity utilisation edged up to 76.2% from 76.1%, in line with expectations. On an annual basis, industrial production accelerated to 1.7% Y/Y from 1.4%, while manufacturing production rose 1.4% Y/Y from 1.3%. Within manufacturing, durable goods output increased 0.8%, led by gains in wood products, nonmetallic minerals, primary metals and motor vehicles, although this was offset by a 0.9% decline in nondurable goods production. High-tech manufacturing remained a key source of strength, with computer and electronic products output rising 0.9% M/M and 10.3% Y/Y. The Fed release noted business equipment output rose 0.6%, construction supplies increased 1.1%, and materials production gained 0.3%. Pantheon Macroeconomics notes that strength in computers and electronics is continuing to support overall manufacturing output, likely reflecting the benefits of earlier CHIPS Act-related investment, but argues that recent production gains have also been supported by precautionary inventory-building amid supply chain concerns. Pantheon expects production growth to soften in the months ahead as inventory accumulation fades and higher manufactured goods prices weigh on demand. The NAHB Housing Market Index moved lower in June to 35 despite expectations to remain at 37. The drop came from current sales conditions falling two points to 38. Meanwhile, sales expectations in the next six months and the traffic of prospective buyers both held steady at 45 and 25, respectively. 35% of builders cut prices in June (prev. 32.0%) at an average price reduction of 6% in June (prev. 6.0%). The use of sales incentives was 62% (prev. 61%), marking the 15th consecutive month of being over 60%. Oxford Economics writes that “soft homebuilder sentiment is consistent with our view that housing starts will mostly move sideways for the next couple of quarters before starting to edge up slightly around year-end.” The firm needs to see builders work off more of their unsold inventory before we see a notable pickup in single-family housing starts. Elsewhere, Oil closed lower by 5% while Gold continued last week’s rebound, ending Monday’s session with a gain 0f 2.5%.
To mark my 3400th 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 140 points yesterday and is now ahead by 5107 points for June 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 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 1.65% higher at a price of 7554.
The Dow Jones Industrial Average closed 468 points higher for a 0.92% gain at a price of 51,671.
The NASDAQ 100 closed 3.06% higher at a price of 30,543.
The Stoxx Europe 600 Index closed 0.25% higher.
This Morning, the MSCI Asia Pacific closed 0.9% lower.
This Morning, the Nikkei closed 1.31% lower at a price of 66,588.
Currencies
The Bloomberg Dollar Spot Index closed 0.17% lower.
The Euro closed 0.31% higher at $1.1600.
The British Pound closed 0.15% higher at $1.3427.
The Japanese Yen fell 0.02% closing at $160.29.
Bonds
U.K.’s 10-Year Gilt closed 2 basis points lower at 4.82%.
Germany’s 10-Year Bund Yield closed 5 basis points lower at 2.95%
U.S.10 Year Treasury closed 1 basis points lower at 4.47%.
Commodities
West Texas Intermediate crude closed 5.22% lower at $80.45 a barrel.
Gold closed 2.51% higher at $4325.10 an ounce.
This morning on the Economic front we already have the German and Euro-Zone Economic Sentiment Indicator at 10.00 am. Next, we have U.S. ADP Weekly Employment Change at 1.15 pm and Building Permits at 1.30 pm. Finally, we have a 20-Year Treasury Auction at 6.00 pm.
Cash S&P 500
Stocks rallied sharply on Monday as volatility was crushed after news of a deal between the U.S. and Iran eased tensions in the Middle East and allowed oil prices to fall. The VIX 1-Day, which closed around 19 on Friday, traded down to 13.5 yesterday, while the VIX Index fell to 16. That was really the story of the day. Volatility has largely reset, and with much of that repricing now behind us, I think the biggest gains in the S&P are likely already in the rearview mirror. From here, the market may shift into a more grinding, range-bound move heading into OPEX on Thursday, with volatility-related tailwinds becoming less supportive after today’s sharp decline in implied volatility. Micron rose about 10% on the day, but more importantly, the company is set to report earnings on June 24. Seven-day implied volatility is now above 120%, an exceptionally high level that reflects elevated expectations for the report. The stock is also heavily skewed toward CALL positioning, similar to what has been seen in Broadcom and other AI-related names. That suggests investors continue to lean aggressively bullish heading into earnings, which can create a setup where expectations become increasingly difficult to exceed. The bond market saw far less excitement. In fact, the 30-year Treasury yield finished the day nearly 1 basis point higher at 4.98%. That may not sound like much, but the yield traded as low as 4.92% intraday, making for a fairly significant move over the course of the session. Overnight, we had the release of the BOJ rate decision, where rates were raised to a 31-year high, dragging the Yen lower. The BOJ will need to deliver a hawkish enough message to stabilise and strengthen the Yen when we have the press conference in the next hour. Otherwise, the currency risks pushing above the highs last seen in July 2024. At this point, a rate hike alone may not be enough, as markets will likely focus more on the path of future policy tightening and whether the BOJ signals additional rate increases later this year. Monday’s gap higher sees the S&P leave a massive Gap from Friday’s Chicago close at 7431 to Monday’s 7516 low print. As we know all gaps eventually get filled. This move higher saw the S&P trade the whole of my sell range for a now 7552 average short position. I will leave my 7587 ‘Closing Stop’ unchanged while raising my T/P level to 7537. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat. The Euro has support below from 1.1440/1.1520 where I will again be a buyer with the same 1.1365 ‘Closing Stop’. If I am taken long, I will have a T/P level at 1.1580. I still do not want to be short the Euro at this time.
Dollar Index
I am still long the Dollar from last week at a price of 99.70. I will now lower my T/P level to 100.10. I will continue to look to add to this position at 99.00 with the same 98.25 ‘Closing Stop’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat as the Russell never came close to Monday’s sell range. Today, I will lower my sell level to 3000/3070 with a lower 3125 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2955.
FTSE 100
The FTSE traded heavy for Monday’s session, ignoring the rally in American Indexes. Today, I will be a small buyer from 10240/10320 with the same 10155 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10390. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well as the market rallied to my 31830 sell level before selling off to my revised 31690 T/P level and I am now flat. The Dow has short-term resistance from 31980/32280 where I will again be a seller with a higher 32505 ‘Closing Stop’. The Dow has short-term support from 50150/50450 where I will again be a buyer with a 49895 ‘Closing Stop’. If I am taken short, I will have a T/P level at 51570. If I am taken long, I will have a T/P level at 50790.
Cash NASDAQ 100
The NDX surged over 3% on Monday led by the 10% rally in Micron. It is as if June’s historic 1100-point daily plunge did not occur with the NDX now less than 200 points from all-time highs. This move higher saw the whole of my sell range triggered for a now 30375 average short position. I will leave my 30605 ‘Closing Stop’ unchanged while raising my T/P level to 30180. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
I am still flat as the Bund just missed my sell level before having a small sell-off into Monday’s close. Today, I will be a small seller from 126.60/127.40 with a higher 128.05 ‘Closing Stop’. If triggered, I will have a T/P level at 126.05.
Gold Rolling Contract
The Gold rally stalled at the 20-day exponential moving average (4390) on Monday, which has acted as resistance since mid-May. A failure to break above that moving average would likely lead to even lower Gold prices. I am still flat. Today, I will again be a small buyer on any further move lower to 4120/4220 with a lower 4035 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4305.
Silver Rolling Contract
Silver traded heavy on Monday and I am still flat. Today, I will again be a buyer on any dip lower to 63.00/66.00 with the same 61.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 68.20. If this view changes, I will be back with a new update for my Platinum Members.
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