U.S. Indices were mixed on Tuesday as the tech-heavy NDX led the losses, with Technology and Communication Services the only sectors in the red amid weakness in mega-cap names. Meanwhile, the Russell 2000 and Dow Jones both saw gains in excess of a percent with a notable divergence between the US major Indices. On the day, JOLTS was a very solid report and even above the top analyst forecast, while at the same time, the ISM Manufacturing. PMI saw a slight beat. Within ISM, it remained in contractionary territory, with prices remaining elevated, but employment slipping further into contractionary territory, beneath all analyst forecasts. Nonetheless, the focus was largely on the JOLTS report, as it shows that the labour market is not yet at a point of concern and that the Fed can hold for longer to ensure inflation returns to target. Elsewhere, a brief dovish reaction was seen as Fed Chair Powell spoke at Sintra and seemingly refused to rule out a cut in July, but it appeared he was simply avoiding the question as he did not want to pre-commit ahead of the next meeting. In Washington, President Trump’s bill passed the Senate, albeit with VP Vance casting the tie-breaking vote, given it was a 50-50 vote, and it will now be sent to the House Rules Committee before the House Floor. Elsewhere, the Dollar was ultimately flat in choppy trade as safe-haven FX outperformed and Canadian Dollar again lagged. T-Notes flattened after a strong aforementioned JOLTS report, while WTI and Brent saw slight gains, albeit in choppy trade, in light crude-specific newsflow, as participants await private inventory data after-hours. Looking ahead, Tesla (TSLA) Q2 delivery numbers are due on Wednesday, as well as ADP, followed by US jobs report and ISM Services. PMI on Thursday given US Independence Day on Friday. The JOLTS for May jumped to 7.769 million from 7.395 million, above the expected 7.3 million and exceeded the top end of the forecast range of 7.50 million. Within the release, the Quits Rate rose to 2.1% from 2.0%, while the Vacancy Rate rose to 4.6% from 4.4%. Oxford Economics highlights that job openings rose, although the increase was narrowly based and hiring remains depressed, but that is less worrisome because layoffs remain low for now. On the internals, the Quits rate ticked higher, but it is still relatively low, highlighting that workers with jobs are more likely to stay put. OxEco adds, while the Fed is giving more weight to inflation in setting policy as it monitors the impact of tariffs, the Quits rate signals that wage growth is not a source of inflationary pressure. Overall, Oxford quips there was nothing in the JOLTS report to shift the Fed out of its wait-and-see mode, and thus expects the first rate cut in December, but the risk is growing that cut grows to 50bps. The ISM Manufacturing PMI for June rose to 49.0 (exp. 48.8, prev. 48.5), albeit remaining in contractionary territory. Prices paid unexpectedly lifted to 69.7 (exp. 69.0, prev. 69.4), while New Orders and Employment fell to 46.4 (prev. 47.6) and 45.0 (exp. 47.0, prev. 46.8), respectively. Production lifted back into expansionary territory, while Inventories, New Export Orders, and Imports all rose but remained sub-50. Within the respondents’ comments, tariffs remained front and centre and continued to highlight the uncertainty for businesses. Recapping a few, 1) “Business has notably slowed in last four to six weeks. Customers do not want to make commitments in the wake of massive tariff uncertainty.” 2) “The tariff mess has utterly stopped sales globally and domestically. Everyone is on pause. Orders have collapsed.” 3) “Tariffs continue to cause confusion and uncertainty for long-term procurement decisions. The situation remains too volatile to firmly put such plans into place.” 4) “The word that best describes the current market outlook is ‘uncertainty.’ The erratic trade policy with on-again/off-again tariffs has led to price uncertainty for customers”. Nonetheless, looking to the US jobs report on Thursday (a day earlier due to US Independence Day), due to the Employment sub-index declining, Oxford Economics says it supports their expectations for manufacturing employment to record another decline in the June employment report due out Thursday. Fed Chair Powell in a panel discussion at Sintra with Bank of Japan’s Ueda, Bank of England’s Bailey, ECB’s Lagarde, and BoK’s Rhee, refused to rule out anything in regards to the July meeting, and said he can’t say if July is too soon to cut rates, and would not take any meeting off the table and repeated the data dependant approach. The Chair added US economy is in a pretty good position, and inflation has come down close to target, and the economy is healthy overall. On tariffs, note they have not seen any effect yet, but expect higher readings over the summer. Ahead, Powell noted a solid majority of FOMC participants think it will be appropriate to reduce rates later this year, something we have seen from most committee members, while Waller and Bowman remain the dovish outliers and have opened the door for a July reduction. Moreover, Powell echoed that rates are modestly restrictive at this level. Elsewhere, both Oil and Gold closed higher on Tuesday by 0.86% and 1.07% respectively.
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For anyone following my Platinum Service it made 150 points yesterday on the first trading day 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
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