Risk-on trade was seen across markets on Tuesday amid greater optimism regarding US/Iran talks, as TASS said the two countries have shown readiness for further negotiations, after President Trump told the New York Post that talks with Iran could be happening over the next two days in Pakistan. As such, US indices posted strong gains, with the NASDAQ 100 outperforming, and most sectors in the green led by Communications, Consumer Discretionary, and Technology. Energy was the clear laggard and hit by the notable weakness in the crude complex, whereby benchmarks saw losses of $4.30/bbl amid the more encouraging risk environment. The Dollar saw losses, to the benefit of G10 peers, as the New Zealand Dollar outperformed while the Japanese Yen was buoyed on reports that the Bank of Japan will lift inflation forecasts. Given the aforementioned risk sentiment, precious metals gains, with spot silver surging in excess of 5%. Treasuries were bid on US/Iran hopes as talks look set to resume. On data, the US PPI was softer than anticipated, although key PCE components were firmer. However, the report was viewed as somewhat stale given its March 10th reference period, likely not capturing the full impact of the recent energy price shock, so market reaction was limited. Fed speak via Goolsbee offered little new. Earnings season has begun with mixed results across the Financials space, as missing on NII quarterly figures or guidance is weighing on names, as shown by weakness in JPMorgan and Wells Fargo yesterday. March PPI rose 0.5% M/M, below the 1.2% forecast and cooling from the prior 0.7%, leaving the Y/Y rate at 4.0%, below the 4.6% forecast but up from the prior 3.4%. Core measures rose 0.1% (forecast 0.6%), slowing from the prior 0.5% pace. Core Y/Y eased to 3.8% from 3.9%, below the 4.2% forecast. The super core measure, excluding food, energy and trade, rose 0.2% M/M (prior 0.5%) and 3.6% Y/Y (prior 3.5%). Meanwhile, the report showed that nearly half of the March increase in the index for final demand goods was due to a 15.7% rise in gasoline prices. The Indexes for diesel fuel, jet fuel, home heating oil, meats and primary basic organic chemicals also increased. Pantheon Macroeconomics highlighted that the reference date for the PPI data was March 10, and therefore, near the start of the energy price shock. The desk said April PPI energy prices would rise considerably further. Overall, Pantheon Macroeconomics wrote that the modest rise in March core PPI brought some genuinely good news, suggesting momentum in January and February was partly due to residual seasonality. It also highlighted that retailers’ healthy margins suggested tariff pass-through was now complete. Although the report was softer than expected the components that feed through to PCE accelerated in March, particularly air passenger transport PPI amid rising fuel costs in the face of the US-Iran war. Pantheon Macroeconomics expects that core PCE rose 0.29% M/M and 3.2% Y/Y. Fed Member Goolsbee said there are circumstances where rates can go up, and circumstances for a hold, or decrease. Goolsbee’s concern is how long this is going to last, noting that more rate cuts in 2026 are unlikely without disinflation. If gas gets to $5 and stays there for months, inflation expectations could get unanchored, which they have to pay attention towards. He would feel better if core inflation made progress, even if headline inflation was high. The longer it lasts, if inflation stays up, it pushes cuts out of 2026. Despite this, he affirmed they will get inflation to 2%, and expectations are anchored so far. Chicago Fed President added have had good news on housing inflation, and so far, the consumer just keeps chugging along. Elsewhere, Oil closed lower by a whopping 8% while Gold was firm, ending Tuesday’s session with a 2% gain.
To mark my 3350th 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 lost 657 points yesterday and is now ahead by 1446 points for April 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 1.18% higher at a price of 6967.
The Dow Jones Industrial Average closed 317 points higher for a 0.66% gain at a price of 48,535.
The NASDAQ 100 closed 1.81% higher at a price of 25,842
The Stoxx Europe 600 Index closed 0.99% higher.
Yesterday, the MSCI Asia Pacific closed 1.2% lower.
Yesterday, the Nikkei closed 2.43% higher at a price of 57,877.
Currencies
The Bloomberg Dollar Spot Index closed 0.25% lower.
The Euro closed 0.31% higher at $1.1794.
The British Pound closed 0.44% higher at $1.3565.
The Japanese Yen rose 0.35% closing at $158.78.
Bonds
U.K.’s 10-Year Gilt closed 9 basis points lower at 4.73%.
Germany’s 10-Year Bund Yield closed 3 basis points lower at 3.03%
U.S.10 Year Treasury closed 4 basis points lower at 4.26%.
Commodities
West Texas Intermediate crude closed 7.87% lower at $91.28 a barrel.
Gold closed 1.96% higher at $4835.10 an ounce.
This morning on the Economic Front we have German WPI at 7.00 am, followed by U.S. NFIB Small Business Optimism at 11.00 am and the ADP Employment Change at 1.15 pm. Next, we have PPI at 1.30 pm. Finally, we have speeches from Fed Members Goolsbee, Barr, Barkin and Collins at 5.10 pm, 5.45 pm, 6.00 pm and 6.05 pm respectively.
Cash S&P 500
Wrong! The stock market has had an impressive move, but time may be running out. The most pressing issue is that today is tax day, which means the Treasury General Account (TGA) is likely to rise significantly—potentially moving back above $1 trillion from its current $759 billion, up from $703 billion just yesterday. As a result, reserve balances held at the Fed are likely to decline meaningfully from here. They have already slipped back below $3.1 trillion and are probably headed toward the $2.9 trillion level. This could begin to put pressure on overnight funding rates, potentially similar to the strains we saw last October. That said, these dynamics are relatively easy to monitor, and we will know it when we see it. The dispersion trade also appears to be running very hot, which is evident in the S&P 500 Dispersion Index. It has surged to 37.5 from 29.3 at the end of March. This is most clearly reflected in the recent moves in mega-cap stocks. The dispersion index is already back near its highs and at levels where it has historically topped out. Typically, when the dispersion index peaks and begins to trade sideways or lower, the broader stock market tends to follow a similar path. Additionally, the spread between dispersion and implied correlation has widened back to its highs. This is largely the mechanical effect of earnings season, as funds position for rising single-stock implied volatility against falling index-level implied volatility. However, this is not a typical environment. We are not in a normal earnings cycle—we are in the middle of a geopolitical conflict, with critical global trade routes under pressure. That makes the risks this time materially higher than during a standard earnings season. Just look back to February, when staples were seen as part of a “healthy rotation” trade—that didn’t age well. Take a simple example. Suppose S&P 500 implied volatility, as measured by the VIX, is being pushed lower as part of this trade, while the implied volatility of a mega-cap stock is rising. That would be a favorable setup for dispersion. However, consider a different scenario. What if the VIX is being driven lower ahead of options expiration by dealer hedging flows—specifically, collapsing call delta forcing dealers to unwind hedges? Then, once VIX options expiration passes, the VIX snaps higher, and does so faster than single-stock implied volatility—say, something like Meta. That would not be a favorable outcome for the trade. Take today as an example, with VIX options expiration. The VIX has clearly been pushed lower over the past couple of days, as call premiums decay, forcing hedges to unwind and driving the index down toward 18—coinciding with the put wall. But what if implied volatility was not actually declining in a fundamental sense? What if it only appeared that way because of how the VIX moves along the S&P 500 implied volatility curve? If that is the case, the VIX could be falling not because volatility is truly compressing, but simply because the S&P 500 is rising. Meanwhile, implied volatility at fixed strike levels could actually be increasing. So while it may look like volatility is coming down, what is really happening under the surface is more nuanced—fixed-strike vol rising even as the VIX falls. Tricky stuff. That would be a brutal unwinding process, especially if liquidity dries up. Unfortunately, I was too early with my short S&P position as the market has now rallied an incredible 250 Handles off Monday morning’s 6728 low print. This has been a straight line move higher with now two-way price action. I was stopped out of my 6861 average short position at 6931 and I am still flat. With Money Supply at a new record high the Fed is still pushing money into the system. In February, M2 Money Supply jumped 4.8% and is now at a record high of $22.7 trillion, having risen higher for each of the past 24 months. It surpassed the March 2022 peak last September and is now roughly $700 billion above it. Meanwhile, the Fed tells us that they tightened money last year which is another fairy tale. That record liquidity is supporting markets. Increasing Money Supply means that the value of each Dollar is diminishing. The McClellan Oscillator closed last night at +197 and is very close to giving a sell signal. The S&P has short-term resistance from 7002/7028 where I will again be a seller with a 7051 wider ‘Closing Stop’. If triggered, I will have no T/P level for now.
EUR/USD
I am still short the Euro from Monday at a price of 1.1760 with the same 1.1700 T/P level. I will continue to look to add to this position at 1.1840 while leaving my 1.1905 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still long the Dollar from last week at a price of 98.65 with the same 99.05 T/P level. I will continue to look to add to this position at 97.95 while leaving my 97.25 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
The Russell hit my sell range for a now 2700 short position. I will now raise my T/P level to 2650 while leaving my 2795 ‘Closing Stop’ unchanged. I will continue to look to add to this position at 2750. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
FTSE 100
No Change: I will not chase the market lower as I continue to be a seller on any further rally to 10710/10810 with the same 10905 ‘Closing Stop’. If I am taken short, I will have a T/P level at 10630.
Dow Rolling Contract
The Dow finally rallied to Tuesday’s sell range for a now 4850 short position. I will continue to look to add to this position at 48800 while leaving my 49005 tight ‘Closing Stop’ unchanged. I will also raise my T/P level to 48310. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX was the strongest of the American Indexes closing higher by 1.25%. The NDX has now rallied over 12% since the March 30 lows. This move higher saw my 25750-sell level triggered. I will continue to look to add to this position at 26000 while leaving my 26205 ‘Closing Stop’ unchanged. I will also raise my T/P level to 25530. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
The Bund rallied to my revised 126.03 T/P level on my latest 125.60 average long position and I am now flat. Today, I will again be a buyer from 124.90/125.60 with a lower 124.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 126.10.
Gold Rolling Contract
No Change: Unfortunately, I have no edge in Gold at this time. Gold had its weakest month (March) since 2008 despite a late rally at the end of the Month that has continued into April. I still do not trust the rally in Gold. My only interest in buying Gold is on a dip lower to 4280/4380 with the same 4195 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4470. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver rallied 5% yesterday and is now 30% higher from its March low at $61. I still do not want to chase the price of Silver higher as I believe like Gold both of these markets are due a bigger correction. For this reason I will continue to stay flat Silver until I feel I have a better edge. If this view changes, I will be back with a new update for my Platinum Members.
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