U.S. Indices ultimately finished the first session of December trading lower. The session was choppy with Equity F.utures sold overnight alongside caution in APAC trade in response to soft China PMIs. Pressure extended once Europe arrived, with the DAX lagging amid a downward revision to the German manufacturing PMI. However, around the opening bell, the risk tone in equities started to improve throughout the afternoon, before fading into the closing bell. T-notes were sold across the curve in a steeper fashion. The downside tracked JGBs overnight following hawkish commentary from Bank of Japan Governor Ueda, while rising energy prices also weighed. However, sharp selling occurred during US trade amid a slew of corporate supply, namely Merck’s (MRK) USD 8 billion 8-parter, which led to rate lock selling. The US highlights included the ISM Manufacturing PMI, which surprisingly fell alongside a drop in New Orders, while Prices Paid accelerated, and employment dropped. Meanwhile, over the weekend, US President Trump said he knows who he is going to pick for Fed Chair Powell’s successor, and Hassett said he would accept the job if it were offered to him. Energy prices were higher after Ukraine continued its attacks on Russian oil facilities, tensions increasing between the US and Venezuela, while OPEC+ held output steady over the weekend, as expected. In FX, the Dollar was flat while the Canadian Dollar lagged on weak energy prices and Japanese Yen outperformed on the Ueda commentary, which touted a December rate hike from the BoJ. The US ISM Manufacturing PMI fell to 48.2 from 48.7, despite expectations for a rise to 49.0 – remaining in contractionary territory for the ninth consecutive month. Within the report, however, the overall economy continued in expansion for the 67th month (Manufacturing PMI of 42.3 or above generally indicates expansion in the overall economy). New Orders dropped to 47.4 from 49.4, showing the third straight month of contraction. The Production Index returned to expansion, rising to 51.4. Meanwhile, supplier deliveries indicated faster delivery performance after three consecutive months (and 14 of the previous 16 months) in slower territory, falling to 49.3 from 54.2. Inventories rose to 48.9 from October’s 45.8. Meanwhile, the Prices Paid component rose to 58.5 from 58.0, despite expectations for a fall to 57.0 (some had anticipated 59.0), showing price increases accelerated slightly in November vs October. The report notes, “The Prices Index reading continues to be driven by increases in steel and aluminium prices that impact the entire value chain, as well as tariffs applied to many imported goods. ” The employment index fell to 44 from 46, posting its tenth consecutive month of contraction, with 36 of the last 43 months contracting. The report noted that “For every comment on hiring, there were 3.4 on reducing headcounts, equaling the ratio in October. Companies continued to focus on accelerating staff reductions due to uncertain near- to mid-term demand. The main head-count management strategies remain layoffs and not filling open positions.” Elsewhere, both Oil and Gold closed higher by 1.5% and 0.5% respectively.
To mark my 3275th 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 made 230 points yesterday on the first trading session 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
Equities
The S&P 500 closed 0.53% lower at a price of 6812.
The Dow Jones Industrial Average closed 427 points lower for a 0.90% loss at a price of 47,289.
The NASDAQ 100 closed 0.78% lower at a price of 25,434.
The Stoxx Europe 600 Index closed 0.23% lower.
Yesterday, the MSCI Asia Pacific closed 0.8% lower.
Yesterday, the Nikkei closed 1.89% lower at a price of 49,303.
Currencies
The Bloomberg Dollar Spot Index closed 0.05% lower.
The Euro closed 0.11% higher at $1.1606.
The British Pound closed 0.19% lower at $1.3209.
The Japanese Yen rose 0.42% closing at $155.50
Bonds
U.K.’s 10-Year Gilt closed 3 basis points higher at 4.48%.
Germany’s 10-Year Bund Yield closed 6 basis points higher at 2.75%
U.S.10 Year Treasury closed 7 basis points higher at 4.09%.
Commodities
West Texas Intermediate crude closed 1.54% higher at $59.45 a barrel.
Gold closed 0.43% higher at $4237.10 an ounce.
This morning on the Economic Front we have Euro-Zone CPI and Unemployment at 10.00 am. Next, we have U.S. Construction Spending and Manufacturing PMI at 3.00 pm. Finally, we have a speech from Fed Member Bowman at 3.05 pm.
Cash S&P 500
Stocks finished the day lower, with the S&P 500 dropping about 0.5%. Most of the session was driven by volatility selling, with the Index falling around 60 to 70 basis points at the open and the VIX spiking to about 18. From there, the VIX moved steadily lower throughout the day, eventually settling in the 16 to 17 range. Once that early volatility spike was fully reset, the equity market essentially stalled and ultimately traded lower into the close, giving back most of the gains seen earlier off the opening low. Of course, Monday was a Treasury settlement day, with about $84 billion settling, which led to significantly tighter overnight financing conditions, with the DTCC-averaged overnight repo rate averaging 4.14%. This likely means we will see SOFR move even higher today, from the 4.12% yesterday morning for Friday’s trade date. Not only did SOFR rise on Friday, but the TGA also increased from $899.7 billion on the 26th to $956 billion as of the 28th. When we think about what that implies, it suggests reserve balances have likely fallen as well, and it is quite possible they have dropped back into the low $2.8 trillion range, given the amount of issuance and the volume of settlements over the past couple of trading sessions. The 30-year Treasury rate also rose nearly 8 basis points on the day to 4.75%, and it has formed what appears to be an inverse head-and-shoulders pattern over the past couple of trading sessions. On top of that, it seems to have broken out of a falling wedge pattern, with the RSI turning decisively higher and breaking its downtrend—suggesting momentum has shifted more bullish for Interest Rates. If this pattern completes, the 30-year rate could climb back toward 5%, retracing the decline that began on September 3rd. Meanwhile, the Japanese 10-Year Yield reached its highest level since 2007. The Japanese economy has been living on negative rates for years and its Central Bank refusing to raise rates even during the inflation cycle now is confronted with rising financial costs amid rate cut expectations. On top of this we have some Geo Political concerns as China is saber rattling about Taiwan and is telling Japan in rather undiplomatic terms to shut up about Taiwan. Monday’s early sell-off saw the S&P hit my 6792 T/P level on my latest 6812 average short position and I am now flat. Today, I will again be a seller from 6840/6860 with no stop and a T/P level at 6815 if triggered. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat. The Euro has resistance from 1.1670/1.1740 where I will be a small seller with a 1.1805 ‘Closing Stop’. Meanwhile, I will continue to be a buyer on any dip lower to 1.1440/1.1510 with the same 1.1375 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1605. If I am taken long, I will have a T/P level at 1.1570.
Dollar Index
The Dollar hit my sell range for a now 99.20 long position. I will add to this position on any further move lower to 98.40 while leaving my 97.95 ‘Closing Stop’ unchanged. I will now lower my T/P level to 99.70. 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 short the Russell from last Wednesday’s at a price of 2500. I will add to this position at 2560 while leaving my 2605 ‘Closing Stop’ unchanged. I will now raise my T/P level to 2465. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
I am still flat the FTSE as the market has continued to trade in a narrow range despite Wednesday’s Budget. Today, I will continue to be a buyer on any dip lower to 9480/9550 with the same 9415 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9610. I still do not want to be short the FTSE at this time.
Dow Rolling Contract
The Dow never came close to Monday’s sell range and I am still flat. I will now lower my sell level to 47730/48030 with a lower 48305 ‘Closing Stop’. If I am taken short, I will have a T/P level at 47500. I no longer want to be long the Dow at this time.
Cash NASDAQ 100
My latest 25230 average short NDX plan worked well as the market sold off to my 25200 T/P level and I am now flat. Today, I will again be a seller from 25450/25650 with a higher 25805 ‘Closing Stop’. If I am taken short, I will have a T/P level at 24290. I still do not want to be long the NDX at this time.
December BUND
The Bund got hit hard on Monday, following global bond markets lower. I am still long the Bund at an average rate of 129.50 with the same 129.80 T/P level. Meanwhile, I will leave my 128.35 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold continues to build value above $4200 and I am still flat. Today, I will raise my buy level to 4100/4130 with a higher 4075 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4168.
Silver Rolling Contract
Silver surged a further 5% on Monday, closing at yet another new all-time high. I am still flat. I am going to stay flat, preferring to observe the market price action before committing to a new trade. If this view changes, I will be back with a new update for my Platinum Members.
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