Equity Markets were in risk-on mode following the announced ceasefire from US President Trump between Israel and Iran. Despite reports of both Iran and Israel breaking the agreement and Trump showing discontent, risk-taking remained intact with US major indices up over 1%.. Sectors ex-Energy were in the green with gains led in Financials, Tech, and Communications, while Energy suffered amid a continued slump in crude prices. The downside move in oil stemmed from the aforementioned ceasefire and extended on Trump saying China can now continue to purchase Oil from Iran and hopes they will purchase plenty from the US. For Treasuries, the attention was on Fe Chair Powell’s testimony to the House (to also testify to the Senate on Wednesday), whereby he largely echoed his known language and in a wait and see mode, although he did keep his options open when asked about a July rate cut; a remark which helped T-Notes off session lows. Many other Fed members hit the wires: Hammack, Bostic, Williams, and Barr voiced a similar tone to Powell, Bostic still sees one 25bps cut this year, and Kashkari supports a wait-and-see approach for more clarity on tariffs’ impact on inflation. Little move was seen in response to the 2yr note auction, which was decent but with demand having eased from the prior and six-auction average. Given the developments in the Middle East, US data took the back foot, whereby US Consumer Confidence unexpectedly deteriorated, while the Richmond Fed improved, thanks to increases in shipments and new orders. In FX, the Dollar was weaker due to a lack of haven bid on the Iran/Israel ceasefire, while the Canadian Dollar underperformed amid said lower oil prices despite reduced bets over a Bank of Canada rate cut in July after slightly hotter than expected CPI. Separately, on trade, BBG reports EU warned a baseline tariff would still spur retaliation; little reaction was seen. Note, in recent trade CNN reported early US intel assessment suggests strikes on Iran did not destroy nuclear site, and only set back Iran’s programme by months, although the White House acknowledged the existence of the assessment but said they disagreed with it. Chair Powell testified in front of the House on Tuesday. In his text release, he said the Fed is well-positioned for the time being to wait to learn more about the likely course of the economy before adjusting policy, once again reaffirming his wait-and-see position on rate cuts. In the initial text release, Powell made no nod to rate cuts or, more specifically, July, so Bowman and Waller remain the outliers on the dovish side. However, as Powell spoke in the Q&A section to the House, he had a marginally dovish skew at points – when questioned about the possibility of a July cut, he said many paths are possible and could see inflation come in not as strong as expected if that was the case, that would suggest cutting sooner as would a weakening labour market. However, he swiftly offered the other side as he noted that strong inflation or a labour market could see cuts come later. The Chair added that the reason the Fed is not cutting rates is that it forecasts in and out of the Fed look for a meaningful increase in inflation this year. Powell further echoed his known stance of wait and see and as long as the economy is strong and can take a little bit of a pause here. Furthermore, the Chair repeated that if it turns out inflation pressures are contained, they will get to a place where they cut rates, but they do not need to be in any rush and won’t point to a particular month. Powell said rates are modestly, not moderately, restrictive. Fed Member Bostic sees economic growth slowing to 1.1% this year, and inflation rising to 2.9%. Bostic said there is no need to cut rates now and still sees a single 25bps reduction late this year, which puts him beneath the median year-end 2025 SEP dot plot for this year (50bps of cuts), and likely means he is one of the two Committee members who pencilled in 25bps of rate cuts this year in the latest Fed SEP’s. The Atlanta Fed President added business officials have become less pessimistic, and feel they can manage through tariffs, and price increases are just a matter of time. Meanwhile, Fed Member Hammack said rate policy could be “on hold for quiet some time” as Fed seeks clarity, does not see any imminent case to cut rates, and the Fed has time to make decision on monetary policy. On the path, Hammack added would rather be slow and right than fast and wrong on monetary policy. Re. tariffs, notes possible tariffs may have a one-time hit on inflation, but that is hard to say right now. On the dot plots, said she is towards the top end of the Fed dot plots. Overall, it shows Bowman and Waller remain the dovish outliers as opposed to a general consensus shift from FOMC members, albeit from the members we have heard from so far post-meeting. Williams said monetary policy is well positioned right now and is modestly restrictive which gives space to examine new data (echoes Powell) Note, Chair Powell in his testimony to the House said, “rates modestly, not moderately, restrictive”. The NY Fed President expects the unemployment rate to climb to around 4.5% by year end – in line with the year-end 2025 Fed median unemployment rate forecast. Williams added US economy is in a good place and the job market is still solid. Expects tariffs will boost inflation to 3% this year and expects inflation to gradually decline to 2% over the next two years. Williams reiterated familiar lines and flagged weak soft data versus more resilient hard data. Speaking on tariffs, he said they may be adding a quarter of a percentage point to inflation right now. On rates, ‘eventually’ interest rates need to move lower, and the Fed will get data over time to help make the next interest rate decision. US Consumer Confidence unexpectedly worsened to 93 (exp. 100) from an upwardly revised 98.4. The Present Situation Index fell 6.4 points to 129.1 as more consumers cited business conditions as bad, while the Expectations Index fell 4.6 points to 69.0 with fewer consumers expecting business conditions to improve and more jobs to be available. Chief Economist Guichard at the Conference Board noted tariffs remained on top of consumers’ minds and were frequently associated with their negative impacts. There were a few more mentions of easing inflation compared to last month, but ” is in line with a cooling in consumers’ average 12-month inflation expectations to 6.0% (down from 6.4% in May and 7% in April)”. Elsewhere, consumers’ views of their family’s current financial situation remained solid but deteriorated slightly, while the future component improved to a four-month high. Consumer’s perceived likelihood of US recession over the next 12 months rose, remaining at an elevated level. Elsewhere, both Oil and Gold ended Tuesday with losses of 5.62% and 1.54% respectively.
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 was flat yesterday and is still ahead by 4470 points for June, 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 1.11% higher at a price of 6092.
The Dow Jones Industrial Average closed 507 points higher for a 1.19% gain at a price of 43,089.
The NASDAQ 100 closed 1.53% higher at a price of 22,190.
The Stoxx Europe 600 Index closed 1.11% higher.
This Morning, the MSCI Asia Pacific closed 0.4% lower.
This Morning, the Nikkei closed 0.31% higher at a price of 38,912.
Currencies
The Bloomberg Dollar Spot Index closed 0.58% lower.
The Euro closed 0.41% higher at $1.1624.
The British Pound closed 0.85% higher at $1.3634.
The Japanese Yen rose 0.98% closing at $144.70.
Bonds
U.K.’s 10-Year Gilt closed 2 basis points lower at 4.48%.
Germany’s 10-Year Bund Yield closed 3 basis points higher at 2.54%
U.S.10 Year Treasury closed 2 basis points lower at 4.29%.
Commodities
West Texas Intermediate crude closed 5.62% lower at $64.66 a barrel.
Gold closed 1.54% lower at $3316.10 an ounce.
This morning on the Economic Front we have a U.K. 15-Year Gilt Auction at 10.00 am, followed by U.S. MBA Mortgage Applications at 12.00 pm and Building Permits at 1.30 pm. Next, we have New Home Sales at 3.00 pm. Finally, we have a Five-year Treasury Auction at 6.00 pm.
Cash S&P 500
Interesting times in the stock market. At 6 PM on Monday, it seemed the world was on the verge of collapse as the S&P 500 tested 5,950, seemingly poised to head straight for a test of the 5900 support area. Xers were tweeting that the Strait of Hormuz was closing, declaring oil would soon hit $150. They even shared charts tracking tankers, as though they would suddenly become shipping experts. But just like when Moses parted the Red Sea, everything shifted, and it was good. Financial media decided Iran’s retaliation was less severe than feared, oil prices collapsed, and stocks surged. By evening, a ceasefire had been reached. Amazing how quickly things can change—as if the market had anticipated a ceasefire all along. But in the meantime, when you have a 0.95% move followed by a 1.1% move in the S&P over the past two sessions, guess what? Realised volatility is bound to rise, especially when the 21-day realised vol is sitting at just 11.3. And it did—jumping to 11.8, even as the VIX dropped to 17.5. This puts us exactly back where the index stood on June 12. It also means future moves higher must become significantly smaller if the index is to keep rising without pushing implied volatility up. Sure, we might jump another 1%, 2%, or even 3% this week, but watch closely as the VVIX starts to climb, with the VIX soon following—creating the vaunted “spot up, vol up” scenario. Anyway, the cycles for the S&P 500 are supposed to be rolling over. Will this be the time the cycle does not work? I don’t know. However, the 120-day cycle has been remarkably consistent—sometimes it is late, sometimes it is early, but it always arrived. Finally, general collateral rates traded up to 4.4%, suggesting SOFR should move a bit higher today as we enter the end-of-quarter liquidity squeeze. Additionally, once the Big Beautiful Bill passes, the Treasury General Account (TGA) will likely need replenishing, depending, of course, on the Treasury’s target balance. Shortly after I posted yesterday morning the S&P rallied to my second sell level at 6085 for a now 6065 average short position. I will leave my tight 6101 ‘Closing Stop’ unchanged while raising my T/P level to 6053. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
EUR/USD
I am still short the Euro at an average rate of 1.1575 with the same 1.1665 ‘Closing Stop’. I will now raise my T/P level on this position to 1.1530. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
Tuesday’s sell-off in the Dollar saw the market trade lower to my 97.80 buy level. I will add to this position on any further move lower to 97.00 while leaving my 96.35 ‘Closing Stop’ unchanged. I will now lower my T/P level to 98.50. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat and I will not chase the Russell higher from here as I continue to be a buyer on any dip lower to 2040/2120 with the same 1985 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2170.
FTSE 100
The FTSE is having a hard time trading above 8820 as every time the market breaks above here it is met by strong selling. I will now lower my sell level to 8830/8900 with a lower 8965 ‘Closing Stop’.
Dow Rolling Contract
I am still flat the Dow as the market just missed Tuesday’s sell range before having a small sell-off into the New York close. As I am still short both the S&P and NDX I will now raise my Dow sell level to 43320/43570 with a higher 43705 tight ‘Closing Stop’. Despite the positive price action I no longer want to be long the Dow at this time. Remember we still have no new trade deals announced as we quickly move forward to the July 9th deadline.
Cash NASDAQ 100
I am still short the NDX at an average rate of 22060 with a now higher 22000 T/P level. I will leave my 21305 ‘Closing Stop’ unchanged. 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 the Bund as I continue to be a small buyer on any further move lower to 129.50/130.30 with a higher 128.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 130.90. I still do not want to be short the Bund at this time. If this view changes, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: Gold has support below from 3240/3260 where I will be a small buyer with a 3225 ‘Closing Stop’. I will continue to be a seller on any further rally to 3420/3440 with the same 3461 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3287. If I am taken short, I will have a T/P level at 3397.
Silver Rolling Contract
Yesterday, Silver traded lower to my 35.30 second buy level for a now 35.80 average long position. I do not like the price action in Silver given its huge rise over the past few weeks. As a result, I will now lower my T/P level to 36.10 while leaving my 33.95 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
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