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
Equities
The S&P 500 closed 0.41% lower at a price of 6243.
The Dow Jones Industrial Average closed 436 points lower for a 0.98% loss at a price of 44,023.
The NASDAQ 100 closed 0.13% higher at a price of 22,884.
The Stoxx Europe 600 Index closed 0.37% lower.
This Morning, the MSCI Asia Pacific closed 0.3% higher.
This Morning, the Nikkei closed 0.16% higher at a price of 39,740.
Currencies
The Bloomberg Dollar Spot Index closed 0.58% higher.
The Euro closed 0.53% lower at $1.1602.
The British Pound closed 0.29% lower at $1.3385.
The Japanese Yen fell 0.76% closing at $148.83.
Bonds
U.K.’s 10-Year Gilt closed 4 basis points higher at 4.63%.
Germany’s 10-Year Bund Yield closed 2 basis points lower at 2.71%
U.S.10 Year Treasury closed 4 basis points higher at 4.48%.
Commodities
West Texas Intermediate crude closed 0.51% lower at $66.64 a barrel.
Gold closed 0.39% lower at $3330.10 an ounce.
This morning on the Economic front we already had the release of U.K. June CPI which rose 3.6% versus +3.4% Y/Y expected. Next, we have the Euro-Zone Trade Balance at 10.00 am and a 30-Year German Bund Auction at 10.30 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm and PPI at 1.30 pm. At 2.15 pm we have Capacity Utilisation and Industrial Production. Finally, we have the Beige Book at 7.00 pm.
Cash S&P 500
Stocks finished mostly lower yesterday, and it could have been far worse if not for Nvidia’s 4% rise. The S&P 500 declined by 0.4%, while the equal-weight RSP fell sharply by 1.4%. The S&P 500 futures closed precisely at their 10-day exponential moving average. Notably, trading volume picked up slightly, reaching the 20-day moving average. The critical question now is whether sellers return today to drive prices lower—and given how thin volumes have been over the past month, it likely won’t take much to tip the scales. Following the hotter-than-expected headline CPI report, the 30-year Treasury yield closed at 5.02%. The yield appears to have decisively broken above key resistance at 4.97%, setting the stage for a potential retest of the mid-May highs around 5.15%. And frankly, given current momentum, there is no obvious reason it could not push even higher. The 10-year rate is also now around 4.5%, and it is at a point where it could be much higher, with the potential to rise to around 4.8%. Rates are going up because inflation expectations are rising, and the cause-and-effect relationship here is as straightforward as one can get. There is no doubt that equity markets are expensive but for bears to regain control the S&P needs to break and close below the Feb high of 6145. Until this happens the S&P will continue to be a buy on dips as frankly valuations have now mattered for the past two years. Yesterday’s S&P reversal off its latest 6301 all-time high saw the market hit my revised 6266 T/P level on my 6278 average short position and I am now flat. Today, I will continue to be an aggressive buyer on any dip lower to 6145/6165 with a 6129 ‘Closing Stop’. Ahead of this afternoon’s PPI my only interest in selling the S&P is from 6260/6280 with the same 6305 wider ‘Closing Stop’. If I am taken long, I will have a T/P level at 6190. If I am taken short, I will have a T/P level at 6242.
EUR/USD
The Euro just missed Tuesday’s sell range before falling almost 100 points yesterday afternoon. Today, I will now lower my sell level to 1.1670/1.1750 with a lower 1.1825 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1590. I still do not want to be long the Euro at this time.
Dollar Index
My view that the Dollar bottomed in June at a price of 96.38 is certainly working well with the market trading at 98.48 this morning. Yesterday, I exited my 97.40 average long position at my revised 98.50 T/P level and I am now flat. The Dollar made a notable move higher yesterday, and it appears to have broken out of its downtrend, potentially paving the way for further rise. Today, I will be a buyer from 97.40/98.20 with a higher 96.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 98.90.
Russell 2000
No Change: I have no interest in chasing the Russell higher especially as the market has risen 34% since the April 7 lows. I will continue to be a buyer of the Russell on any dip lower to 2100/2170 with the same 2065 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2220.
FTSE 100
There is no doubt that Markets can remain illogical longer than I can remail solvent’ (Keynes) and this is certainly true with the recent melt up in the FTSE. I have no idea why the FTSE rallied to new highs on Monday/Tuesday as the economy is not growing, the budget is a mess and is overbought meaning I cannot justify a long position at these levels. Adding to the negativity was this morning’s CPI print which came in higher than expected at +3.6% Y/Y. This morning the FTSE is trading 80 points lower from where I was stopped out on Monday night (9005) and I am still flat. Today, I will be a seller from 8970/9050 with a 9125 ‘Closing Stop’. If I am taken short, I will have a T/P level at 8910.
Dow Rolling Contract
I am still flat the Dow as the market never came close to Tuesday’s sell range, trading at 43900 this morning. I will now lower my Dow sell level to 44300/44550 with a lower 44805 ‘Closing Stop’. The Dow will have short-term support 43800 which is where the 20-Day Moving Average is. Therefore, I will be a small buyer from 43620/43820 with a tight 43495 ‘Closing Stop’. If I am taken short, I will have a T/P level at 44060. If I am taken long, I will have a T/P level at 44040.
Cash NASDAQ 100
I am still short the NDX at an average rate of 22895 while leaving my 23105 ‘Closing Stop’ unchanged. I will now raise my T/P level to 22780. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
No Change: I am still flat as I continue to be a buyer on any dip lower to 127.90/128.60 with the same 127.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.20. Despite the extremely low yields I still do not want to be short the Bund at this time.
Gold Rolling Contract
No Change: I am still flat and have no interest in chasing the price of Gold higher as I prefer to wait for a move lower before buying. Gold has support below from 3260/3280. I will now raise my buy level to this area with a higher 3245 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3304.
Silver Rolling Contract
I am still long Silver at a price of 38.20. I will add to this position on any further move lower to 37.20 with the same 35.95 ‘Closing Stop’. I will now lower my T/P level to 38.70. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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