It was a risk-off session on Tuesday with underperformance in the Russell 2000 and Dow versus the S&P and NASDAQ 100. Sectors were predominantly lower, led by losses in Industrials, Energy and Financials while Consumer Discretionary, Consumer Staples and Healthcare were the relative outperformers. Meanwhile, Treasuries were ultimately flat with downside seen early on with T-Notes tracking Gilts lower after hotter-than-expected UK wages data. However, a soft US ex-autos print within US retail sales result (headline beat, control in line) saw T-Notes catch a bid, which extended after soft industrial production data. In FX, the Dollar Index continued to hover around 107 with eyes turning to the FOMC rate decision on Wednesday. Elsewhere, the Japanese Yen and Swiss Franc were bid on the risk off trade while Sterling was buoyed by the aforementioned wages data ahead of UK inflation on Wednesday and the Bank of England on Thursday. Antipodes and the Canadian Dollar lagged FX peers during the risk-off trade. Crude prices were also weighed on amid the poor sentiment. Separately, other updates to be aware of include, Reuters reporting via sources that China is to maintain its growth target of “around 5%” for 2025, and it is targeting a budget deficit of 4% in 2025 (vs 3% initially), adding that more stimulus will be funded through issuing off-budget special bonds. The German IFO business climate missed expectations, but ZEW economic sentiment beat, while the German Finance Agency announced it intends to issue around EUR 380 billion via Federal debt sales in 2025, which is -13% Y/Y. The US 20 Year Treasury Auction was soft versus averages but an improvement from the prior. Meanwhile, US Congressional Leaders struck a bipartisan deal to push the government funding deadline to March 14th, via Politico. Canadian inflation data saw the average of the Bank of Canada core measures slip marginally to 2.43% from the upwardly revised 2.5% in October. Elsewhere, Pfizer (PFE) was bid after issuing 2025 guidance, while ADRs of Nissan (NSANY) and Honda (HMC) were choppy on reports the two are to merge. Meanwhile, China is reportedly poised to investigate more US tech deals after the NVDA probe, according to The Information. U.S. Retail Sales for November rose 0.7%, above the expected 0.5%, and lifting from the prior, revised higher, 0.5%. Retail sales ex-autos came in beneath forecasts at 0.2% (exp. 0.4%, prev. 0.2%), and ex-gas/autos was 0.2% (prev. 0.2%). Retail control printed 0.4%, as expected, lifting from October’s -0.1%. The solid headline was led by vehicle sales (+2.6% M/M) but still showed signs of broad-based strength, with control group sales increasing at a healthy pace too. As such, Capital Economics thinks this suggests Q4 consumption growth will be close to 3% annualised. In addition, the 0.4% M/M rise in building materials sales may reflect some rebuilding following the hurricanes, although department store sales fell 0.6% M/M despite Black Friday, with CapEco suggesting it signalling the structural shift among consumers towards online retail, which lifted by 1.8%. For the record, the data will have little to no bearing on the Federal Reserve’s rate decision on Wednesday whereby they are widely expected to cut rates by 25bps. Lastly, the updated Atlanta FedGDP Now estimate was released following the data, and also IP, whereby it revised down its Q4 estimate to 3.1% from 3.3%. The Federal Reserve will release its latest rate decision on Wednesday 18th December at 19:00GMT/14:00EST, alongside the updated Summary of Economic Projections (SEPs). Overall, the Fed is widely expected to lower the Federal Funds Rate target by 25bps to 4.25-4.50%, with the latest Reuters poll showing 93 out of 103 economists expecting this as the outcome. Following the recent commentary and economic data, it is now almost a certainty that the central bank will cut by 25 basis points, highlighted by money market pricing moving more dovish and pricing in a 96% probability of such an outcome. Regarding the statement and press conference, Goldman Sachs says the focus will be on the relative emphasis the Fed puts on language around either slowing the pace of rate cuts, or that decisions remain on a meeting-by-meeting and data-dependent basis. Nonetheless, GS expects to hear both messages, including an addition to the statement that nods toward a slower pace. Ahead, analysts and market pricing expect the central bank to pause on rates in January, amid some concerns about rising inflation risks, with inflationary pressures potentially set to rise due to President-elect Trump’s proposed tariffs and tax cuts. Attention will then turn to Fed Chair Powell at 19:30GMT/14:30EST to explain the Fed’s decisions with any clues for guidance ahead but he will not want to front-run any fiscal policy measures from US President-elect Trump. Elsewhere, Oil closed 0.9% lower while Gold was basically flat as it closed lower by 0.2%.
To mark my 3100th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 300 points yesterday and is now ahead by 428 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 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
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