U.S. Equity Markets closed lower yesterday following the release of the latest inflation report from Uncle Sam which came in “hotter than expected”. The March consumer price index (“CPI”) rose 0.4% for the month, making for a 3.5% year-over-year gain. This was the fourth consecutive month which witnessed higher than expected inflation. Notably, “core CPI” – which excludes food and energy and has some similarities to the Federal Reserve’s preferred inflation measure, personal consumption expenditures (“PCE”) – also accelerated by 0.4% in March and 3.8% from a year ago. Add it up and it looks to me that for the third straight month in 2024, the pace of inflation has tracked closer to 5% annualised than the Fed’s supposed 2% goal. Elevated inflation with a reported unemployment rate still below 4%, and first-quarter GDP estimated around 2.5% annualised leaves little room to argue that the Fed will cut interest rates anytime soon, as has been the prevailing market expectation. Volatility picked up on Wednesday as the VIX ended the session with a near 6% gain which is to what we saw during previous higher-than-expected inflation readings this year. This action was arguably more significant, though. The 10-year Treasury yield rose almost 20 basis points to above 4.5%, its highest level since mid-November. And the 2-year yield rose by 22 basis points to nearly 5%, also its highest since November (before expectations for rate cuts in 2024 became popular). The small-cap Russell 2000 Index shed about 2.5% yesterday, and the S&P 500 Index, tech-heavy Nasdaq Composite Index, and Dow Jones Industrial Average were off roughly 1%. Suddenly, the U.S. Dollar Index (“DXY”) – which measures the dollar relative to other major global currencies – is trading above its 200-day moving average and made a new high for 2024 on Wednesday. For the prevailing expectations regarding the Fed, I like to look at the CME Group’s FedWatch Tool, which tracks the bets of Federal-Funds Futures Traders. Today, bets on rates staying where they are through June rose to 83% from around 43% just yesterday. These same traders are now also increasingly putting odds on the Fed-Funds rate staying in a range of 5.25% to 5.5% at the Fed’s following meeting in July, with the first-rate cut coming in September. For that to happen, it would likely take a series of more “normal” inflation readings – say, 0.1% to 0.2% per month – and/or a substantially weakening jobs market. Right now, it’s hard to argue that the pace of inflation is not running “hot” – once again. As most investors know well, the markets favour lower interest rates because they allow businesses to borrow money more cheaply. That is particularly important to startups that are not making money yet, or other companies saddled with heavy debt loads. However, the Fed will keep rates higher if it decides the economy needs to cool off to reduce inflation. It is possible the pace of inflation will slow again if energy costs stop rising. Oil prices have been up 20% since mid-December, which has reaccelerated the inflation data based on many metrics. Will they rise another 20%? Place your bets. Either way, it is also entirely possible that this inflation pace will keep up as higher costs continue to “stick.” For instance, in the CPI report, shelter costs – which make up about a third of the headline data – rose 0.4% from last month and 5.7% from a year ago. That trend won’t reverse overnight. If current trends continue, that would upend the whole idea of high(er) 1970s-style inflation being dead and gone, and support the idea of more rate hikes possibly happening next instead of cuts. The market is not showing any consideration of such a possibility. We are not there yet. The Fed is still projecting cuts to come, and long-term trends for U.S. stocks remain bullish as the “Fed pause” trade remains popular. But the possibility of the inflation and market script totally flipping is on my radar. Elsewhere, Oil closed Wednesday with a gain of 1.15% while a much stronger Dollar saw Gold end the day with a loss of 0.8%.

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The S&P 500 closed 0.95% lower at a price of 5160.

The Dow Jones Industrial Average closed 422 points lower for a 1.09% loss at a price of 38,461.

The NASDAQ 100 closed 0.87% lower at a price of 18,011.

The Stoxx Europe 600 Index closed 0.15% higher.

Yesterday, the MSCI Asia Pacific closed 0.4% lower.

Yesterday, the Nikkei closed 0.48% lower at a price of 39,581.


The Bloomberg Dollar Spot Index closed 1.03% higher.

The Euro closed 1.1% lower at $1.0741.

The British Pound closed 0.9% lower at 1.2540.

The Japanese Yen fell 0.7% closing at $152.96.


Germany’s 10-year yield closed 8 basis points higher at 2.45%.

Britain’s 10-year yield closed 12 basis points higher at 4.15%.

U.S.10 Year Treasury closed 18 basis points higher at 4.55%.


West Texas Intermediate crude closed 1.15% higher at $86.21 a barrel.

Gold closed 0.8% lower at $2329.10 an ounce.

This morning on the Economic Front we have the Bank of England Credit Conditions Survey at 9.30 am. This is followed by the ECB Rate Announcement at 1.15 pm and the Lagarde Press Conference at 1.45 pm. In between, we have the U.S. Weekly Jobless Claims and PPI at 1.30 pm. Finally, we have speeches from Fed Members Williams and Bostic and 1.45 pm and 6.10 pm respectively while at 6.00 pm we have a 30-Year Treasury Auction.

Cash S&P 500

The S&P hit a new low for the month at 5129 before trading sideways to higher for the rest of the session. Crucially for the Bulls the S&P closed above last week’s 5139 low print. I must say I would have expected all three American Indexes to close lower but the fear of intervention is holding traders back. The NDX again tested its 50 Day Moving Average at 17950 which attracted some buying leading to a bounce but nowhere the 2% bounce we saw when this level was tested last week. It is a long time since we have seen 10 -Year Treasury Yields rise 20-basis points in one session. This move higher was helped by the awful Treasury Auction. No doubt Powell and his fell Fed Members will try to spin the higher CPI in a positive way especially if PPI comes in close to expectations this afternoon. My S&P plan worked well as the market traded the whole of my buy range for a 5139 average long position before rallying to my 5159 revised T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 5106/5122 with a tight 5093 ‘’Closing Stop’’. I no longer want to be short the S&P at this time. I will come back with a new update for my Platinum Members and possible change in parameters following the release of PPI.


The Euro had a nasty 1% fall yesterday. This move lower saw my second buy level at 1.0768 triggered, for a now 1.0798 average long position. I will now lower my T/P level to 1.0840 while leaving my tight 1.0712 ‘’Closing Stop’’ unchanged.

Dollar Index

The Dollar surged yesterday, trading the whole of my sell range for a now 104.90 average short position. I will leave my 105.95 ‘’Closing Stop’’ unchanged while raising my T/P level to 104.60.

Cash DAX

Unfortunately, the DAX just missed my initial 18280 sell level before falling 250 points and I am now flat. Ahead of the ECB Meeting this afternoon and the Lagarde press conference I no longer want to be short the market. The DAX has support below from 17800/17900 where I will be a small buyer with a 17705 ‘’Closing Stop’’.


No Change. I am still flat. I will continue to be a buyer on any dip lower to 7810/7890 with the same 7755 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.

Dow Rolling Contract

Since reaching its intra-day high at 39,990 on March 21, the Dow has been ratcheting lower. It has now been three weeks since the Index made its Equinox high, and the odds favour that the Dow may well lead the rest of the main Indexes lower. This is a big statement given the level of verbal intervention by the now consistent 15+ Fed Members speaking almost every week. Bostic must feel foolish after turning dovish on Tuesday following yesterday’s fourth consecutive CPI rise. Wednesday’s 500 point move lower saw the whole of my buy range triggered for a now 38500 average long position. I will now lower my T/P level to 38560 ahead of this afternoon’s ECB Rate announcement and U.S. PPI release. Meanwhile, I will leave my 38295 tight ‘’Closing Stop’’ unchanged. 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 as the market traded lower to my 17970-buy level before rallying to my revised 18040 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 17720/17870 with a lower 17595 ‘’Closing Stop’’. Despite the negative price action, I still do not want to be short the NDXC at this time.

March BUND

Just before the New York close the Bund traded lower to my 131.60 buy level. Ahead of the ECB Rate Announcement, I will now lower T/P level to 131.95. I will add to this position at 130.80 while leaving my 130.15 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.

Gold Rolling Contract

Gold had another volatile session, selling off to my 2328 T/P level following the higher-than-expected CPI data. I have no interest in buying Gold at this time, while trying to short the market is stressful despite the DSI again closing over 90. Therefore, I will stay flat Gold until I return on Monday. If this view changes I will be back with a new update for my Platinum Members.

Silver Rolling Contract

No Change. I am still flat. I will leave my buy level unchanged at 26.80/27.50 with the same 25.95 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 28.20.


Please Note: There will ne no Daily Commentary tomorrow. Any of my calls that are not hit today and are subsequently triggered on Friday will see me return with updated emails for my Platinum Members.