U.S. Indices closed in the red on Tuesday, as participants returned from the long Labour Day weekend, but were hit by the broader risk aversion amid numerous factors. In particular, but not limited to, the US appeals court ruling on Trump tariffs as illegal, geopolitical uncertainty, and the US Commerce Department revoking waivers for Intel/Samsung/SK Hynix/TSMC. Meanwhile, Treasuries saw broad-based selling alongside global fixed income as the US curve bear steepened on trade rulings, global fiscal/political woes, and supply. The Dollar saw strength amid the aforementioned risk-off, while the EUR, JPY, and GBP lagged. The latter was hit as focus resides on the UK’s fiscal outlook, which saw the UK 30-Year Yield hit a 27-year high, while the Japanese Yen was hit on yield differentials. Gold hit an all-time high. In the energy space, benchmarks were choppy but ultimately gained due to the wider geopolitical footing and the US imposing sanctions targeting Iranian oil, as opposed to the firmer Dollar and risk-off sentiment. There were no Fed speakers, while ISM Manufacturing largely supported the notion of rate cuts, but did little to move the dial amid the previously mentioned themes. Recapping the data, the headline and employment rose, but by less than expected, while prices paid unexpectedly declined. Construction spending declined 0.1%, as expected. ISM Manufacturing PMI for August rose to 48.7 from 48.0, but shy of the expected 49.0, and the same was seen with the Employment Index as it printed 43.8, against the expected 44.5 and prior 43.4. Prices paid fell to 63.7 from 64.8, and below the bottom end of the forecast range. New orders lifted back into expansionary territory at 51.4 from 47.1. Within the release, it notes that the past relationship between the Manufacturing PMI and the overall economy indicates that the August reading corresponds to a change of plus 1.8% in real GDP on an annualised basis. Within the survey respondents, one noted that “tariffs continue to wreak havoc on planning/scheduling activities, due to unexpected tariff announcements (such as 50% duties on imports from India), materials/supplies are now rising in price. Plans to bring production back into the US are impacted by higher material costs, making it more difficult to justify the return.” Oxford Economics write that tariffs are still putting upward pressure on input costs, and will likely intensify over the next couple of months. Therefore, OxEco say it won’t be surprising if the dip in prices paid is temporary, and it won’t have any bearing on whether or not the Fed opts to cut interest rates in September – that burden falls on the August employment and consumer price reports, Oxford adds. US Construction spending fell 0.1% as expected in July, modestly extending the 0.4% decline seen in June. The July reading brings the YTD value to 1.232 trillion, +2.2% Y/Y. Private construction spending fell 0.2%, private residential construction rose 0.1%, with the private non-residential component 0.5% lower M/M. Concerning public construction spending, that was 0.3% higher M/M, with educational construction and highway construction both down 0.1% M/M. The data has led Oxford Economics to revise its near-term forecast for business investment in structures lower. “Fiscal policy won’t provide meaningful relief to this GDP component until next year”. Elsewhere, Gold rose 1.66%, closing at a new-all-time high while Oil was firm, ending Tuesday’s session with a 2.5% gain.
To mark my 3225th 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 127 points yesterday and is now down 83 points for September after 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 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 0.69% lower at a price of 6415.
The Dow Jones Industrial Average closed 249 points lower for a 0.55% loss at a price of 45,295.
The NASDAQ 100 closed 0.79% lower at a price of 23,231.
The Stoxx Europe 600 Index closed 1.50% lower.
This Morning, the MSCI Asia Pacific closed 0.6% lower.
This morning, the Nikkei closed 0.93% lower at a price of 41,915.
Currencies
The Bloomberg Dollar Spot Index closed 0.55% higher.
The Euro closed 0.61% lower at $1.1641.
The British Pound closed 1.12% lower at $1.3390.
The Japanese Yen fell 0.89% closing at $148.39
Bonds
U.K.’s 10-Year Gilt closed 6 basis points higher at 4.81%.
Germany’s 10-Year Bund Yield closed 3 basis points higher at 2.78%
U.S.10 Year Treasury closed 5 basis points higher at 4.28%.
Commodities
West Texas Intermediate crude closed 2.53% higher at $65.63 a barrel.
Gold closed 1.66% higher at $3534.10 an ounce.
This morning on the Economic Front we have a speech from ECB President at 8.30 am. Next, we have German, Euro-Zone and U.K. Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed by Euro-Zone PPI at 10.00 am and a German Bund 10-Year Auction at 10.30 am. At 12.00 pm we have U.S. MBA Mortgage Applications. Next, we have Durable Goods Orders, JOLTS Job Openings and Factory Orders at 3.00 pm. Finally, we have a speech from Fed Member Kashkari at 6.30 pm and the Beige Book at 7.00 pm.
Cash S&P 500
The S&P 500 closed lower by 0.65% on Tuesday, with the Index getting stuck around the ‘Put Wall at 6,400’. It was just never able to really break free of that level, most of the day, with the exception of earlier in the afternoon, but even then, it quickly snapped back. For the index to move lower today, we will need to see the put wall move lower. The S&P did manage to fall below an uptrend that started at the end of June, as well as the 10-day exponential and 20-day simple moving averages. That is something that has not happened very often, and so the drop yesterday is notable from that standpoint. Whether it can be maintained is another story entirely, so one has to be careful getting too bearish too soon. We did manage to give back all of the gains following that Speech by Fed Chair Powell on August 22 at Jackson Hole. Which is not surprising, at the time I had noted that those straight line rallies tend to get retraced. However, the index was partially saved late in the day by more than $3 billion by Imbalance. This helped to soften the blow. The buy imbalance was likely driven by the start-of-the-month inflows. For right now, we need to see the index close below Tuesday’s low of 6360, which would then set up a drop to 6,200. Interest Rates continue to move up, with the 30-year closing at 4.96%, while the 3-month Bill fell to 4.13%. This led to the 30yr-3mo, rising by almost 6 bps, to finish at 83 bps. At this point, the curve is very close to seeing a significant breakout, which could lead to further steepening to around 1.25%. The form is the harder part, but I still think rates on the back of the curve have further to rise, then the front of the curve has to fall. The interesting thing is that rates are rising all over the world; it is not just in the US. In fact, they are rising much faster in places like the UK. The UK 30-year is now trading 73 bps over the US 30-year and has reached its widest point since October 2022, which we all remember was when Liz Truss had to resign as Prime Minister and then you have to go back to 2011. Overall, this seems to be an important spot for this spread, given its history. In the meantime, keep an eye on those Italian-German spreads after tightening to historic levels, the spread is starting to widen again. Where this spread goes will be a big tell for spreads globally. I am still flat the S&P as the market never came close to my sell range. The bounce of Tuesday’s 6360 low print is impressive and will act as short-term support on any further test. Today, I will be a small buyer from 6350/6366 with a 6335 tight ‘Closing Stop’. The S&P has short-term resistance from 6450/6470 where I will be a seller with a lower 6485 ‘Closing Stop’. If I am taken long, I will have a T/P level at 6388. If I am taken short, I will have a T/P level at 6428.
EUR/USD
My latest 1.1695 short position worked well as shortly after I posted yesterday morning the Euro traded lower to my 1.1640 T/P level and I am now flat. Today, I will again be a seller from 1.1690/1.1760 with the same 1.1825 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1630.
Dollar Index
The Dollar rallied to my 98.30 T/P level on last week’s 97.80 long position and I am still flat. Today, I will again be a buyer on any dip lower to 97.10/97.90 with a higher 96.45 ‘Closing Stop’ . If I am taken long, I will have a T/P level at 98.50.
Russell 2000
Monday’s intra-day sell-off saw the Russell hit a low at 2323. This move lower saw my revised 2343 T/P level triggered on my latest 2365 short position and I am now flat. Today, I will again be a seller from 2390/2450 with a higher 2505 ‘Closing Stop’. If I am taken short, I will have a T/P level at 2350.
FTSE 100
The FTSE closed lower for the seventh consecutive trading session which is a rare occurrence. A late rally into the New York close could not see the market close positive. I am still flat. The FTSE has support from 9020/9090 where I will be a strong buyer with an 8965 ‘Closing Stop’. If I am taken long, I will have a T/P level at 9155. I no longer want to be short the FTSE at this time.
Dow Rolling Contract
I am still flat. The Dow got hit hard initially yesterday afternoon, hitting a low at 44950 before bouncing into the close. The close of 45295 was the ‘high’ of the day. Today, I will be a small buyer on any further dip lower to 44700/44950 with a tight 44495 ‘Closing Stop’. If I am taken long, I will have a T/P level at 45200. I no longer want to be short the Dow at this time. If this view changes I will come back with an updated email for my Platinum Members
Cash NASDAQ 100
I am still flat the NDX. I will now lower my sell level to 23450/23610 with a lower 23755 ‘Closing Stop’. If I am taken short, I will have a T/P level at 23300. I still do not want to be long the NDX at this time.
December BUND
I am still long the Bund from Monday morning at a price of 129.15. I will add to this position on any further move lower to 128.45 while leaving my 127.75 ‘Closing Stop’ unchanged. I will now lower my T/P level to 129.60. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold continued to surge on Tuesday, again trading the whole of my sell range for a now 3526 average short position. I will leave my 3551 ‘Closing Stop’ unchanged while raising my T/P level to 3508. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Silver Rolling Contract
I am still flat Silver as the market traded in a narrow range yesterday, not following the surge in Gold. Today, I will continue to be a buyer on any dip lower to 38.70/39.70 with the same 37.25 ‘Closing Stop’. If I am taken long, I will have a T/P level at 41.10.
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