U.S. Indexes closed lower again on Tuesday, with the NASDAQ 100 and Russell underperforming, while the equal-weight S&P fell 0.4%. Calls for a slowdown in AI development remained an overhang for sentiment, although the SOXX and DRAM ETFs were marginally firmer following their sharp declines on Monday. Sectors were predominantly lower, with weakness led by Consumer Discretionary, Communication Services and Utilities. Energy was the only sector to close higher as crude prices rallied. The upside in crude was driven by fresh supply concerns after Libya’s NOC said operations had been suspended at three oil fields, while Saudi Arabia reportedly informed some European refiners that their September crude cargo loadings had been cancelled. Oil loadings were also reportedly suspended at the key Saudi Red Sea port of Yanbu following the recent attack on the East-West pipeline. The Treasury yield curve steepened marginally, with front-end yields edging lower and long-end yields slightly higher, despite the rally in crude prices. The New York Fed Manufacturing survey had little impact, with participants largely awaiting Wednesday’s FOMC rate decision, updated SEPs and Chair Warsh’s press conference. Meanwhile, the 20-year Treasury auction saw a very weak reception, tailing the WI by 2 basis points alongside a sharp decline in indirect demand. In FX, the Dollar outperformed amid the broader risk-off backdrop and firmer crude prices, while the Yen and Kiwi lagged. Gold was little changed, while silver saw gains. Bitcoin was sold after the Senate failed to advance the CLARITY Act. The Empire State Manufacturing Index fell to 7.6 in September (exp. 14.75, prev. 20.6), below expectations but still signalling a modest expansion in New York manufacturing activity following August’s strong growth. Under the hood, New Orders slowed sharply to 2.0 (prev. 17.3), while Shipments fell into contraction at -3.2 (prev. 11.7) and Unfilled Orders eased to 5.9 (prev. 15.5). Supply-chain pressures remained elevated, with Delivery Times at 18.8 (prev. 20.6) signalling significantly longer lead times, while Supply Availability remained negative at -11.9 (prev. -13.4). Labour indicators were notably stronger, with Employment rising to 10.6 (prev. 9.3) and the Average Workweek jumping to 17.0 (prev. 6.9), its highest in nearly five years. Meanwhile, inflation pressures intensified, with Prices Paid rising to 63.1 (prev. 58.6), edging above its recent four-year high reached in May, while Prices Received increased to 28.1 (prev. 22.7). Looking ahead, firms remained optimistic, although expectations moderated somewhat, with Future Business Conditions at 29.0 (prev. 32.1), Future New Orders at 25.3 (prev. 37.1), and Future Employment at 20.0 (prev. 28.2). Expected Prices Paid jumped to 67.3 (prev. 57.7), suggesting firms anticipate input-cost pressures remaining elevated, while capital spending plans remained modest. Overall, the report points to slower but still-positive manufacturing growth, alongside solid labour demand and intensifying price pressures, with supply constraints continuing to weigh on the sector. Elsewhere, Oil closed higher by 4.5% while Gold ended the day flat.
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For anyone following my Platinum Service it made 565 points yesterday and is now ahead by 4185 points for September after ending the month of August with a gain of 2645 points after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, 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 previous 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 0.45% lower at a price of 7585.
The Dow Jones Industrial Average closed 328 points lower for a 0.63% loss at a price of 52,093.
The NASDAQ 100 closed 0.65% lower at a price of 28,937.
The Stoxx Europe 600 Index closed 0.28% lower.
This Morning, the MSCI Asia Pacific closed 0.2% lower.
This Morning, the Nikkei closed 0.19% lower at 64,142.
Currencies
The Bloomberg Dollar Spot Index closed 0.25% higher.
The Euro closed 0.12% lower at $1.1540.
The British Pound closed 0.18% lower at $1.3477.
The Japanese Yen fell 0.51% closing at $155.12.
Bonds
U.K.’s 10-Year Gilt closed 1 basis points higher at 5.33%.
Germany’s 10-Year Bund Yield closed 3 basis points higher at 3.54%
U.S.10 Year Treasury closed 4 basis points higher at 5.00%.
Commodities
West Texas Intermediate crude closed 4.44% higher at $105.90 a barrel.
Gold closed 0.17% higher at $4317.10 an ounce.
This morning on the Economic Front we already had the release of U.K. CPI which rose 3.1% Y/Y as expected. Next, we have the Euro-Zone Industrial Production at 10.00 and a German 30-Year Bund Auction at 10.30 am. This is followed by U.S. Retail Sales at 1.30 pm and Wholesale Inventories along with the NAHB Housing Market Index at 3.00 pm. Finally, we have the FOMC Statement at 7.00 pm and the Warsh Press Conference at 7.30 pm.
Cash S&P 500
The S&P 500 closed 0.45% lower on Tuesday one day ahead of the Fed’s rate decision. The VIX 1-Day closed at 17, which is notable given that today’s session still has several hours of trading before the 7 p.m. announcement. That suggests the VIX 1-Day could be even higher by the time the decision is out, probably well above 20. That sets up the potential for an implied volatility crush once the announcement is behind us, as implied volatility falls and resets. That said, the crush has sometimes held off until the following day and played out overnight, as it did after the July meeting. But with all of the uncertainty heading into this meeting, a higher-than-usual VIX reading seems reasonable. The left-tail VIX has also been rising over the last few days, a measure of traders looking for downside protection. There is not much data to go on, but it shows a steady upward trend, while the measure itself remains fairly low. So, to me, this seems more about normalisation than anything else at this point. The vol setup is about today. The rates setup is about everything after the FOMC Statement and Warsh Press Conference. The market expects the Fed to hike, with the 3-month Treasury rate trading more than 40 basis points above the effective Federal Funds Rate. If the Fed passes on hiking, it would be beyond bizarre. The market is telling the Fed that it is time to hike, and this is a Fed that has said it wants to take signals from the market. By that measure, the Fed has to hike, and anything less would be very difficult to defend. The June 2027 Fed Funds Futures are trading at 4.5%, suggesting a Fed that hikes three to four times before all is said and done. So, at least based on current market pricing, this is unlikely to be a one-and-done hike. This is why long-end rates are rising, and why real yields are rising. The market is pricing in a new neutral rate for the economy, one that requires the Fed to keep policy rates higher than markets grew accustomed to over the past 10 to 15 years. The increase in the 10-year real yield has come almost entirely from rising nominal rates rather than rising inflation expectations. In fact, 10-year breakeven inflation rates have been largely flat throughout this move, while real yields have continued to climb and are now above 10-year inflation expectations. Historically, it has been relatively rare for the 10-year real yield to rise meaningfully above the 10-year breakeven rate and stay there for a prolonged period. If it holds, it would underscore just how significant the repricing in real rates has become. If the Fed does not raise rates this evening and signal more to come, I think the bond market’s response could be brutal for the Fed. TBD. The plan of buying dips ahead of the Fed Meeting has worked well this week, After the S&P hit my 7575 buy level the market rallied to my revised 7594 T/P level and I am now flat. I expect plenty of two-way volatility following the FOMC Statement. The key support level for the S&P is from 7500/7520. As long as the S&P can hold this support then I will continue to be a buyer of dips. Today, my buy range will be from 7550/7575 with a 7529 ‘Closing Stop’. If I am taken long, I will have a T/P level at 7610. I still do not want to be short the S&P at this time. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
I am still long the Euro from Monday at a rate of 1.1540. I will continue to look to add to this position at 1.1460 while leaving my 1.1385 ‘Closing Stop’ unchanged. I will now lower my T/P level to 1.1585. 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 flat. Today, I will continue to be a buyer on any dip lower to 98.30/99.10 with the same 97.55 ‘Closing Stop’. If I am taken long, I will have a T/P level at 99.60.
Russell 2000
I am still flat. Today, I will continue to be a buyer on any dip lower to 2800/2860 with the same 2745 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2910.
FTSE 100
My FTSE plan worked well as after the market hit my 10600 buy level we rallied to my revised 10660 T/P level and I am now flat. Today, I will again be a buyer from 10550/10630 with the same 10475 ‘Closing Stop’. If I am taken long, I will have a T/P level at 10700.
Dow Rolling Contract
The Dow traded the whole of my buy range for a now 52020 average long position. I would expect some follow through to the upside ahead of the FOMC Statement. I will now have a T/P level on this position at 52310. I will also raise my ‘Closing Stop’ to 51795. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well. After the NDX hit my 28940-buy level the market rallied to my revised 29125 revised T/P level and I am now flat. I do not know how long the buy the dip will continue given the rise in Bond Yields. The NDX has strong support below from 28710/28910 where I will be a strong buyer with the same 28595 ‘Closing Stop’. If I am taken long, I will have a T/P level at 29170. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
I am still long the Bund at an average rate of 121.00. I will leave my 119.85 ‘Closing Stop’ unchanged while also leaving my T/P level unchanged at 121.30. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Frustratingly Gold missed my 4260-buy level by $1 before rallying to sit at a price of 4330 this morning. Ahead of the Fed Meeting I will not chase the price of Gold higher as I continue to look to buy the market on any dip lower to 4180/4260 with the same 4095 ‘Closing Stop’. If I am taken long, I will have a T/P level at 4338. If this view changes, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
Silver rallied to my 63.90 T/P level on my latest 62.80 long position and I am now flat. There is every chance that Silver put in a meaningful bottom over the past few trading sessions. Today, I will be a buyer from 60.50/63.50 with a higher 58.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 66.20.
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