U.S. Indexes saw mild gains to start the week as NVIDIA gains (PT raise at Jefferies) supported in light newsflow, with Fed speak coming via Williams, Musalem, and Hammack, and US data in Pending Home Sales, which was better than expected. On the Fed footing, little new was said, and the influential New York Fed President reiterated data dependence. Sectors were almost exclusively in the green with only Energy and Communications in the red, with the former weighed on by weakness in the crude complex amid a couple of bearish factors: 1) Kpler’s Bakr reported that OPEC+ will likely raise oil production quotas by at least 137k bpd at its October 5th meeting; 2) resumption of flows on the Ceyhan pipeline. In FX, the Dollar saw weakness to the benefit of G10 FX peers, with the Japanese Yen outperforming and buoyed by comments from Bank of Japan’s Noguchi overnight, whereby he noted that upside risks are becoming more important in making policy decisions, and the need to adjust policy has heightened. Treasuries saw slight gains and within thin ranges ahead of a slew of US jobs data this week, which culminates with US Payrolls on Friday. Another thing to watch is the looming US Government shutdown, whereby BLS said it plans not to release economic data during the Government shutdown and will suspend all operations. Pending Home Sales rose 4% in August, above the expected +0.2% and the prior -0.3%. Pending Sales lifted M/M in the Midwest, South, and West, and declined in the Northeast – Y/Y sales increased in all regions. NAR Chief Economist Yun said, “Lower mortgage rates are enabling more homebuyers to go under contract. In the Midwest, low mortgage rates combined with high levels of affordability are attracting more buyers compared to other regions.” Williams, The NY Fed President said monetary policy continues to be restrictive and they are still in a position to put downward pressure on inflation. Williams noted that some upside inflation risks have ebbed, so it made sense to cut rates. He reiterated his view of a low-neutral rate era being far from over, saying his model estimate for the real neutral rate is 0.75%. Ahead, Williams noted the Fed are to decide on monetary policy meeting-by-meeting. Musalem, The St. Louis Fed President once again argued there is limited room before policy becomes too loose. Similar to Hammack, Musalem noted the impact of tariffs has been more muted than expected, and is only responsible for perhaps 10% of current inflation. Going forward, Musalem expects inflation to be elevated for two or three quarters. On policy, Musalem said it is between modestly restrictive and neutral; open-minded to future potential cuts but needs to be cautious. Finally, Fed Member Hammack maintained her recent posture, voicing concerns over inflation. Hammack continues to view policy as a short distance from neutral and the need to maintain restrictive policy, with current policy “mildly restrictive”. Hammack sees inflation reaching 2% target in late 2027 or early 2028. She views inflation as a greater concern than employment, noting that services inflation has remained elevated and is concerning. Ahead, the Cleveland Fed President expects firms to pass on more of tariffs; More difficult to see that tariffs will be a one-time impact. Elsewhere, Oil got hit hard on Monday ending the session lower by 4% while Gold closed at a new all-time high with a near 2% gain.
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For anyone following my Platinum Service it made 380 points yesterday and is now ahead by 3624 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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