U.S. Indices closed at new all-time highs on Tuesday while the Dollar was sold and T-Notes steepened in response to a “not as bad as feared” CPI in the face of President Trump’s tariffs, keeping a September rate cut on the table following the weak July jobs report – for more on CPI, please see analysis below. Outperformance was led by the Russell, which rose almost 3% while the other three indices saw gains of around 1%. The majority of sectors were green, with notable outperformance in Communication and tech stocks, while Real Estate, Consumer Staples and Health Care lagged. T-Notes steepened, with the front-end bid while the long-end was sold after CPI, with T-Notes hitting lows after Trump announced he is considering suing Fed Chair Powell over the Fed renovations, raising more concerns over Fed independence and boosting term premium. The CPI and post from Trump hit the buck, seeing the Dollar and the Canadian Dollar underperform in the FX space while the Swiss Franc prospered, paring some of the recent weakness in the fallout of the US/Switzerland trade war. Sterling also performed well after the latest jobs data showed an easing in the pace of the labour market slowdown. Crude prices settled red with attention still on the Trump/Putin meeting on Friday, although Ukraine announced that Russia has made more advances today and that Ukraine is not willing to pull out of Donbas. Elsewhere, the OPEC MOMR saw world oil demand unchanged, but the EIA boosted their forecasts for 2025 and 2026. Meanwhile, Fed Speak saw Schmid maintain a hawkish tone – stating that the Fed are close to neutral and he still favours a wait-and-see approach. Headline CPI rose 0.197%, in line with the 0.2% forecast and cooling from the prior 0.287%, Y/Y rose by 2.7%, below the 2.8% forecast and matching the prior pace. The Core CPI rose by 0.322%, accelerating from the prior 0.228% but in line with the 0.3% forecast, while Y/Y was hotter than expected at 3.1% (exp. 3.0%, prev. 2.9%). Regarding the Fed, the inflation levels are manageable and would likely endorse a September rate cut given the slowdown in the labour market. Pantheon Macroeconomics notes that core goods prices, ex-autos, rose 0.2%, less than the 0.5% increase in June, but still outpacing the 2024 trend, when prices were flat. The desk notes that it remains the case that prices have risen the most since January for goods that are primarily imported. Pantheon also highlights that Core Services prices rose by 0.4%, but Pantheon says it is no cause for alarm as a 4.0% rebound in airline fares contributed 0.05pp to changes in overall prices. Nonetheless, a move higher in services prices alongside rising goods prices, disputes the theory that the fall in services prices will be offset by the rising goods prices – this will be something to watch in the months ahead. Reminder, this is July data, and the latest tariff rates did not kick in until August. We will be looking at the August metrics and data ahead to see the implications of the latest tariff rates. Despite keeping the door open for a September rate cut, in the wake of the data, Fed’s Schmid (hawk) spoke, noting that retaining a modestly restrictive policy stance is appropriate, adding that inflation is too high. However, Barkin noted that they may see pressure on inflation and unemployment, noting the balance between the two is unclear. Meanwhile, in regard to PCE implications, Pantheon suggests the CPI data is consistent with a 0.23% increase in Core PCE. Elsewhere, both Oil and Gold closed lower by 1.13% and 0.3% respectively.
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 190 points yesterday and is now ahead by 1327 points for August 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
Recent Comments