U.S. Indices closed mixed as the focus of the day was largely on the June CPI report, which was mixed on the headline and core prints, initially sparking a dovish reaction. However, once the internals of the report were digested, like the 0.7% rise in core goods, it showed the start of the pricing impact from tariffs. Stocks and T-Notes reversed from the post-data highs to see US equity indices close mixed, with clear underperformance in the Russell (-1.9%) while Chip names kept the Nasdaq buoyed after Nvidia (NVDA) and AMD (AMD) secured export licenses to sell China the H20 and MI308 chips, respectively. Fed speak saw Bowman and Barr avoid remarks on policy, but Barkin warned more price pressures are coming from tariffs and Collins said the core goods inflation is showing some signs of tariff impact, and said it is time for the Fed to be “actively patient” with monetary policy. On trade, the US and Indonesia signed a trade agreement, where Indonesia will pay the US 19% on goods sold while the US will pay 0%. On earnings, big banks largely finished the session lower despite profit beats, although some NII and expense metrics disappointed. BLK, WFC & JPM closed red, while BK and MS finished green. Attention on Wednesday remains on earnings but also the PPI report to gauge how it impacts forecasts for US Core PCE. Oil and Gold were hit on the Dollar strength with upside in yields weighing on the Japanese Yen. The June CPI report had something for everyone. On the headline level, CPI rose 0.3% M/M, in line with expectations, but up from the prior month’s 0.1%. This took the Y/Y rate to 2.7%, above the 2.6% consensus and up from 2.4% previously. Core measures were softer, with core CPI rising 0.2% M/M, matching forecasts but still accelerating from May’s 0.1%. On a Y/Y basis, core CPI came in at 2.9%, slightly above the 2.8% prior but below the 3.0% consensus. The BLS attributed June’s all-items monthly increase primarily to a 0.2% rise in shelter. Regarding core data, the BLS noted that “Indexes that increased over the month include household furnishings and operations, medical care, recreation, apparel, and personal care. The indexes for used cars and trucks, new vehicles, and airline fares were among the major indexes that decreased in June.” The 0.7% increase in Core Goods CPI marked the fastest monthly rise in nearly two years, indicating the early impact of tariffs. Economists at Pantheon Macroeconomics called the report a “knock-out punch” to tariff inflation deniers and estimated that Core PCE—the Fed’s preferred inflation gauge—rose 0.35%, though this remains subject to revision following Wednesday’s PPI report. Looking ahead, concerns remain that price pressures could intensify in the coming months, potentially due to inventory stockpiling ahead of tariff implementation. Fed Chair Powell previously suggested that tariff-related price impacts could begin to appear in the August data, due September 11th—just ahead of the September 17th FOMC. This supports the Fed’s current wait-and-see stance, which allows more data to come in before the next decision. While both Waller and Bowman have indicated that a July rate cut could be appropriate, they remain in the minority on the FOMC. Chair Powell has reiterated the Fed’s willingness to act more swiftly if needed, but with a resilient labour market and strong economy, there appears to be no urgency for now—despite mounting political pressure to lower rates. One important caveat is the lingering uncertainty around the full impact of tariffs, especially given Trump’s latest threat to impose new tariffs if no deal is reached by August 1st. This further clouds the outlook, and Fed’s Goolsbee has warned that the latest threat could delay any potential rate cuts even further. Boston Fed Member Collins said a solid economy gives the Fed time to decide its next interest rate move, noting it is challenging to set monetary policy right now amid uncertainty. Collins stated it is time for the Fed to be ‘actively patient’ with monetary policy, warning tariffs are to boost inflation over H2 2025, with core inflation around 3% by year’s end. She said that tariffs will slow hiring but ‘not necessarily by a large amount’, noting strong business and household balance sheets may blunt the pain of tariffs. Good profit margins may also limit tariff pass-through. Collins warned tariffs will weigh for a time on what is now a strong economy, but the economy is currently in a ‘good place’ overall. She added that the core goods inflation is showing some signs of the tariff impact. US earnings season began on Tuesday morning, with numbers from the likes of Blackrock (BLK), BNY Mellon (BK), JPMorgan (JPM), Wells Fargo (WFC) and Citi (C). BLK were been very choppy post-earnings, but ultimately weighed on by a revenue miss and long-term inflows significantly underwhelming, despite AUM hitting a record high. BK are supported by EPS, revenue, and NII all beating. Akin to BLK, JPM were choppy and are now lower as NII was light, and sees adj. expenses rising Y/Y. Note, EPS, rev. beat with a strong breakdown and impressive FY25 NII outlook. WFC was hit by NII and trimming guidance. C impressed with EPS, revenue, and solid NII. On profit, the start of earnings season has seen banking names largely beating expectations, with bottom line beats strong across the board with BLK, BK, JPM, WFC, and C all topping, although financial behemoth JPM saw their profit fall Y/Y as the prior-year saw accounting gain skews. Re revenue, it was more mixed with BLK missing, although C, BK, JPM, and WFC did all surpass Wall St. expectations. Continue to highlight the mixed picture across the big banks, BK beat on NII and rose 17% (exp. 11.8%), while JPM and WFC fell short on NII. C beat on the number, and sees FY25 NII ex-markets +4%. Ahead, JPM sees FY25 NII at around 95.5 billion (exp. 94.57 billion, prev. 94.5 billion), while WFC sees FY25 NII roughly in line with 2024. On the expenses footing, JPM sees FY25 adj. expenses ~USD 4 billion higher Y/Y, meanwhile WFC sees FY non-interest expense at USD 54.2 billion, a slight rise Y/Y. Citi affirmed FY expenses, to be marginally down Y/Y. On the potential issue of credit quality, the earnings have quelled some of those fears with JPM and WFC both printing loan loss provisions someway beneath expectations. C’s total allowance for credit losses rose to 23.7 billion, vs. 21.8 billion Y/Y Looking ahead, PNC, BAC, GS, and MS report metrics on Wednesday. Elsewhere, Oil closed lower by 0.5% while Gold was essentially flat.
To mark my 3200th 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 230 points yesterday and is now ahead by 1560 points for July 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