Wall Street, Gold stumbled on a hawkish hold by the Fed

On Wednesday all focus of the market was on the Fed’s policy decision, where the Fed was expected by the market to hold the rate with a confirmation of QT tapering and indication of a March rate cut; i.e. dovish hold. But Fed/Powell indicated no rush for an imminent rate cut in March and also indicated active discussion of any QT tapering talk in March. Overall it’s a hawkish hold or less dovish hold by the Fed.

Moreover, Powell pointed out that despite significant easing in PCE/core PCE inflation recently, retail prices are too high for essential goods & services and thus ordinary Americans/the public are not happy. Thus it’s clear that ahead of the Nov’24 Presidential Election, the Fed/Powell/White House/Biden admin is more concerned about still elevated prices compared to pre-COVID days in 2019, which may cost Biden/Democrats White House (due to incumbency wave).

Thus Fed/White House may not take any undue risk of hotter inflation just ahead of Nov’24 Presidential Election by cutting rates before July’24. As any monetary policy action (like rate cuts here) usually takes a minimum of 6-12 months to transmit into the real economy, if the Fed starts cutting rates in July, it will ensure a higher stock market with little price pressure (fresh inflation pressure) and both Wall Street and Main/Real Street would be happy ahead of the election.

The market was expecting some indication about an imminent rate cut in March by Fed/Powell; but that’s not the case as Fed Chair Powell sounded more hawkish on inflation, the labor market, and economic growth. Overall, Wall Street Futures and Gold slumped, and USD jumped to some extent as the Fed is in no mood to an early and deeper rate cuts as implied by the market quite aggressively (-150 bps rate cuts starting from Mar’24; i.e. six rate cuts against Fed’s projections of three and that too most probably from July’24-H2CY24).

Overall, the Fed does not want policy flip-flops by going for rate cuts early and thus in a wait-and-watch mode with a hawkish stance, even after acknowledging rate hike is over and the next logical action is rate cuts. Powell said in his prepared statement:

“We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the economy has surprised forecasters in many ways since the pandemic, and ongoing progress toward our 2 percent inflation objective is not assured. The economic outlook is uncertain, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer, if appropriate.”

 

On Wednesday, the U.S. Fed held all primary policy rates for a 4th consecutive meeting as unanimously expected; i.e. the target range for the Federal Fund's Rate (FFR-interbank rate) at +5.38% (5.25%-5.50%); primary credit rate (repo rate) at +5.50%; IOER (reverse repo rate) at +5.40%; overnight repurchase agreement rate (RP) at +5.50% and RRP (Overnight Reverse Repurchase Agreement Rate) at +5.30%, keeping U.S. borrowing costs to the highest level since January 2001 (23-years); as US core inflation is still quite elevated at around +4.20% (6M rolling average), while the unemployment rate continues to be around historical low, around 3.7% and below Fed’s longer-term sustainable target of 4.0%. Thus there is a need for a higher (restrictive) longer policy stance, which may further restrict economic activities and demand, helping to match with the present constrained supply side of the economy and bring down inflation in the process.

On Wednesday, a Fed statement pointed out that policymakers do not expect it will be appropriate to reduce policy restraint (cut rates) until they have gained greater confidence that inflation is moving sustainably toward the 2% target goals. Moreover, during the presser/Q&A, Fed Chair Powell said although it will be appropriate to begin reducing rates sometime this year the Fed will continue to make decisions on a meeting-by-meeting basis and he doesn't think a March cut is likely at this point.

Meanwhile, the Fed removed reference to further rate hikes from the statement, saying that the risks to achieving its employment and inflation goals are moving into better balance, but noting it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of such goals. The central bank noted that inflation has eased over the past year but remains elevated.

Highlights of Fed’s statement: 31st Jan’24

·         US Interest Rate Decision Actual 5.5% (Forecast 5.5%, Previous 5.5%)

·         Will continue bond-holding reductions (QT) as previously planned

·         FOMC does not expect it will be appropriate to reduce rates until there is greater confidence inflation is moving sustainably toward 2%

·         Federal Open Market Committee (FOMC) reaffirms its "Statement on Longer-Run Goals and Monetary Policy Strategy"

·         The Fed judges risks to achieving employment and inflation goals are moving into better balance

·         Recent data suggest economic activity has been expanding at a solid pace

·         Job gains have moderated but remain strong, unemployment remains low, and inflation has eased, but remains elevated

·         The economic outlook is uncertain, the Committee remains highly attentive to inflation risks

·         Bond holding reductions (QT) will continue as described previously

·         The Fed unanimously reaffirms its statement on longer-run goals and the monetary policy strategy adopted in August 2020

·         Highly attentive to inflation risks with economic uncertainty

Full text of Fed’s statement: 31st Jan’24- Federal Reserve issues FOMC statement

“Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; and Christopher J. Waller.”

Implementation Note issued January 31, 2024: Decisions Regarding Monetary Policy Implementation

“The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement on January 31, 2024:

The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on reserve balances at 5.4 percent, effective February 1, 2024.

As part of its policy decision, the Federal Open Market Committee voted to direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive:

"Effective February 1, 2024, the Federal Open Market Committee directs the Desk to:

Undertake open market operations as necessary to maintain the federal funds rate in a target range of 5-1/4 to 5‑1/2 percent.

Conduct standing overnight repurchase agreement operations with a minimum bid rate of 5.5 percent and with an aggregate operation limit of $500 billion.

Conduct standing overnight reverse repurchase agreement operations at an offering rate of 5.3 percent and with a per-counterparty limit of $160 billion per day.

Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in each calendar month that exceeds a cap of $60 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.

Reinvest into agency mortgage-backed securities (MBS) the amount of principal payments from the Federal Reserve's holdings of agency debt and agency MBS received in each calendar month that exceeds a cap of $35 billion per month.

Allow modest deviations from stated amounts for reinvestments, if needed for operational reasons.

Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions."

In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 5.5 percent.

This information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve's operational tools and approach used to implement monetary policy.”

Full text of Fed Chair Powell’s opening statement: 31st Jan’24

“My colleagues and I remain squarely focused on our dual mandate to promote maximum employment and stable prices for the American people. The economy has made good progress toward our dual mandate objectives. Inflation has eased from its highs without a significant increase in unemployment. That is very good news. But inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain. I want to assure the American people that we are fully committed to returning inflation to our 2 percent goal. Restoring price stability is essential to achieve a sustained period of strong labor market conditions that benefit all.

Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings. Over the past two years, we have significantly tightened the stance of monetary policy. Our strong actions have moved our policy rate well into restrictive territory, and we have been seeing the effects on economic activity and inflation.

As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment and inflation goals are moving into better balance. I will have more to say about monetary policy after briefly reviewing economic developments.

Recent indicators suggest that economic activity has been expanding at a solid pace. GDP growth in the fourth quarter of last year came in at 3.3 percent. For 2023 as a whole, GDP expanded at 3.1 percent, bolstered by strong consumer demand as well as improving supply conditions. Activity in the housing sector was subdued over the past year, largely reflecting high mortgage rates. High-interest rates also appear to have been weighing on business fixed investment.

The labor market remains tight, but supply and demand conditions continue to come into better balance. Over the past three months, payroll job gains averaged 165 thousand jobs per month, a pace that is well below that seen a year ago but still strong. The unemployment rate remains low, at 3.7 percent. Strong job creation has been accompanied by an increase in the supply of workers: The labor force participation rate has moved up on balance over the past year, particularly for individuals aged 25 to 54 years, and immigration has returned to pre-pandemic levels. Nominal wage growth has been easing, and job vacancies have declined. Although the jobs-to-workers gap has narrowed, labor demand still exceeds the supply of available workers.

Inflation has eased notably over the past year but remains above our longer-run goal of 2 percent. Total PCE prices rose 2.6 percent over the 12 months ending in December; excluding the volatile food and energy categories, core PCE prices rose 2.9 percent. The lower inflation readings over the second half of last year are welcome, but we will need to see continuing evidence to build confidence that inflation is moving down sustainably toward our goal.

Longer-term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. The Fed’s monetary policy actions are guided by our mandate to promote maximum employment and stable prices for the American people.

My colleagues and I are acutely aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher costs of essentials like food, housing, and transportation. We are highly attentive to the risks that high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our 2 percent objective.

Over the past two years, we have raised our policy rate by 5-1/4 percentage points, and we have decreased our securities holdings by more than $1.3 trillion. Our restrictive stance on monetary policy is putting downward pressure on economic activity and inflation. The Committee decided at today’s meeting to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent and to continue the process of significantly reducing our securities holdings.

We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the economy has surprised forecasters in many ways since the pandemic, and ongoing progress toward our 2 percent inflation objective is not assured. The economic outlook is uncertain, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer, if appropriate.

As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment and inflation goals are moving into better balance. We know that reducing policy restraint too soon or too much could result in a reversal of the progress we have seen on inflation and ultimately require even tighter policy to get inflation back to 2 percent. At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment.

In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess the incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. We will continue to make our decisions meeting by meeting.

We remain committed to bringing inflation back down to our 2 percent goal and to keeping longer-term inflation expectations well anchored. Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run.

To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions.”

Highlights of Fed Chair Powell’s comments in the Q&A: 31st Jan’24

·         The economy has made good progress, inflation has eased

·         The policy rate is well into restrictive territory

·         Labor demand still exceeds supply

·         The labor market remains tight

·         Activity in the housing sector has subdued

·         Our policy rate is likely at its peak

·          Longer-term inflation expectations appear well-anchored

·         If the economy evolves as expected, we will dial back the policy rate this year

·         It will likely be appropriate to begin reducing rates sometime this year

·         I am prepared to maintain the current policy rate for longer if needed

·         Reducing policy restraint too soon or too much could reverse inflation progress

·         At the same time, reducing the policy rate too late could unduly weaken the economy

·         We have confidence but need more confidence for inflation to fall back towards 2% targets on a sustainable basis

·         We have six months of good inflation data. On inflation data, need to make sure what we are seeing is a true signal

·         We don't think we necessarily need to see weaker growth for inflation to come down

·         It seems likely we will achieve confidence in Inflation.

·         Almost everyone on the committee believes it will be appropriate to reduce rates

·         We are really in a risk management mode (cuts not too early or too late)

·         The timing of cuts is linked to our confidence about inflation going down to 2% in a sustainable way

·         12-month inflation is way down and likely will continue

·         We are not looking for a slide in employment but would cut rates if we saw a weakening

·         In the base case, where the economy is healthy with a strong labor market, we can be careful as we think about rate cut timing

·         There was no proposal to cut rates today

·         There is a wide disparity of views on the committee

·         The SEP is good evidence of where FOMC is at in terms of forecasts

·         The economy is broadly normalizing

·         There may still be a tailwind on disinflation from goods

·         Supply chains are not yet back fully to where they were

·         I think lower rent costs are coming, and will feed through. Lower rental inflation is in everyone's forecast

·         The supply side has been recovering, but that won't go on forever

·         A lot of the economic growth we are seeing is due to post-pandemic healing, when that peters out, our restrictive rate will show up more sharply

·         The wage setting will probably take a couple of years to get back

·         I am more concerned that inflation will stabilize at an elevated level

·         We've had 6 months of good inflation data and the expectation is more to come

·         Based on the meeting today, I don't think likely we will have a rate cut in March

·         Some risks would make us go slower or faster on rate cuts

·         Balance sheet runoff, so far, has gone very well

·         We are getting to the time now that questions on the pace of runoff are coming into focus

·         We had some balance sheet (QT) discussion today, plan a more in-depth discussion next time in March

·         We don't see the need for the Reverse Repo to go to zero before tapering

·         Rising consumer confidence can support spending

·         I am hearing from contacts that activity is picking up a bit at the margin

·         I am not so worried that growth is too strong and inflation could come back

Reaction in FFR (Fed Fund Rate) Future after Fed/Powell Q&A:

·         Rate futures traders slash bets on Fed rate cut in March after Powell's remarks

·         Fed Swaps Pare Odds of a March cut after Powell says it isn't the base case

·         Fed rate cuts are now seen starting in May, not March, based on interest-rate futures pricing

Overall, Fed Chair Powell looked relaxed about his achievement in securing a soft & safe landing for the U.S. economy by bringing down inflation without causing any significant slowdown in the labor market; on the contrary, real GDP growth was also way above trend due to certain factors. But unlike the last meeting (December), Powell sounded less dovish or rather than hawkish as he cleared the December miscommunication (flip-flops) and made it clear that the Fed is in no hurry to cut rates and almost poured cold water on the market’s implied probability of March rate cut.

There were also some expectations that the Fed may announce QT tapering and the end of QT by June’24 before going for any rate cuts from July’24. But Powell also pushed any serious QT tapering issues for the March meeting, although the Fed may end the QT by June before going for any rate cuts. Powell said the Fed is aware that although theoretically QT and rate cuts may happen concurrently, practically it will look horrible because the Fed is tightening on one side (through QT) and loosening on the other side (through rate cuts).

Conclusions:

The 12M average between the US core CPI and core PCE inflation is now around +4.5%, which the Fed may consider as underlying core inflation, the target of which is +2.0% on a durable basis. The 6M rolling average of core inflation (PCE+CPI) is now around +3.9% or around +4.0%.

Fed may cut 75-100 bps in H2CY23 if the 6M rolling average of core inflation (PCE+CPI) indeed eased further to +3.0% by H1CY24.

As per Taylor’s rule, for the US:

Recommended policy repo rate (I) = A+B+(C+D)*(E-B) =0.00+2.00+ (0+0)*(4.50.00-2.00) =0+2+2.50=4.50% (for 2024)

Here:

A=desired real interest rate=0.00; B= inflation target =2.00; C= permissible factor from deviation of inflation target=0; D= permissible factor from deviation of output target from potential=0.00; E= average core inflation for CY23

Fed has to ensure a 2% price stability (core inflation) target keeping the unemployment rate below 4% and also 10Y bond yield below 5.00-4.50% so that borrowing cost for Uncle Sam remains manageable/sustainable to fund +34T debt (never-ending).

In any way, at the current run rate and trend, the average US core PCE inflation should be around +4.0% in 2023, +2.5% in 2024, +2.1% in 2025, and +1.5% in 2026, in line with Fed’s Dec’23 SEP. Similarly, the U.S. core CPI inflation average should be around +4.6% in 2023, +3.2% in 2024, +2.5% in 2025, and +1.8% in 2026.

If US core CPI indeed dips below +3.0% by May-June’24 and if it seems that the 2024 average core inflation will be around +3.2%, then the Fed may start cutting rates from July’24 and may cut cumulatively 75 bps at -0.25% pace till Dec’24 for a repo rate at 4.75%, so that core real rate continues to stand around +1.50%, in line with the present restrictive stance (5.50% repo rate-4.00% average core CPI for last 6M).

Looking ahead, the Fed may try to balance the financial/Wall Street stability and price stability by expressing intentions to cut (dovish jawboning) from Mar’24 (Q1CY24) to ensure a soft landing while bringing down inflation. Also, whatever the narrative, the Fed has to ensure lower borrowing costs for the U.S. Government (Treasury) endless deficit spending and mammoth public debt of almost $32T. The U.S. is now paying around 15% of its revenue as interest on public debt against China/EU’s 5.5%.

As a result of higher bond yields around 4.50%-5.00% (for 10Y UST); i.e. lower bond prices, the Fed is now in deep MTM loss for its huge bond holding. Fed is also providing higher interest to banks & financials for reverse repo operation than it getting under repo operation; i.e. Fed’s NIM/NII is now negative and theoretically the Fed is in negative profit to the tune of -$130B. The same is also true for various banks & financials, most of which are now in deep MTM loss for higher bond yields; i.e. lower prices for their HTM bond portfolio holdings due to Fed hikes. The US10Y TSY market price fell from around $140 to $105 from Jan’20 (pre-COVID) to mid-Oct’23; i.e. a fall of almost -33% in around 4 years; it recently recovered to almost $113 levels.

This is a red flag, and thus Fed has to operate in a balancing way while going for calibrated hiking to bring inflation down to target, avoiding an all-out recession; i.e. to ensure both price & financial stability and soft-landing. Fed has to bring down inflation to +2.0% targets by the  US 10Y bond yield below 4.50-5.00%, and an unemployment rate below 4.0% without triggering an all-out or even a brief recession in the US Presidential election year (Nov’24). The Fed will ensure that the US10Y bond yield is below 4.50-5.00% at any cost for lower borrowing costs for Uncle Sam (U.S.), everything being equal. Thus, overall Fed is methodically jawboning on both sides (hawkish/dovish) from time to time to achieve all its goals at the same time.

Considering all pros & cons, Fed may wait for core inflation data (average for core PCE and core CPI) for at least Dec’23-Mar’24 and if it goes down to around +4.00% from the projected 2023 average of +4.5% (4.80% core CPI and +4.20% core PCE), the Fed may cut rep rates/FFR by -25 bps in July; further if such disinflation trend continues, Fed may cut -25 bps each in September and December for a cumulative -75 bps.

We may see a synchronized global easing from H2CY24. As the Fed is the world’s unofficial central bank because the USD is the ‘King’ (the world’s most preferred FX or global reserve currency), all major G20 central banks are now bound to follow the Fed policy stance to maintain present policy/currency/bond yield parity, everything being equal.

Thus the market is now expecting a synchronized global easing (rate cuts) by major G20 global central banks including ECB, BOE, BOC, PBOC, and even India’s RBI, whatever may be the domestic macro-economic narrative (just like post-COVID synchronized global tightening to bring inflation down to targets).

Fed policymakers will now jawbone the market in a balancing way to keep the US10Y bond yield between the 3.25-5.25% range or around 4.00-4.50% on an average to maintain price/labor market/financial (Wall Street) and also Main Street/White House stability in the election year (2024). As the U.S. labor market is still robust with healthy wage growths, the incumbent Biden admin may prefer price stability and lower inflation in the coming months along with a sub/below 4% unemployment rate; i.e. price stability over GDP growths. As the 10Y bond is the main instrument for raising debt and a benchmark for US/global borrowing costs, the Fed may not allow it to hover above 5.00% for long under any circumstances, everything being equal. Fed needs to lower borrowing costs for the U.S. government from the present 15% to 10-7% over the next few years.

Fed hiked rate last in July’23 for a +5.50% repo rate and in hold mode with a hawkish stance since Aug’23; subsequently, US10Y bond yield gradually surged from around +3.75% to +5.00% by late November. As a result of higher borrowing costs and tighter financial conditions, the demand of the economy was affected to some extent, resulting in lower inflation. Now Fed has to keep on hold (neutral mode) for at least 10-12 months from July’23, so that the impact of higher borrowing costs is gradually transmitted to the real economy in full, resulting in core inflation back to targets.

Thus Fed has to wait till at least July’24 for the expected 1st rate cut; otherwise, its credibility may be at stake. If the US10Y bond yield again falls below +3.0% in the coming days (from the present +3.95%), then it may cause less restrictive financial conditions, resulting in higher core inflation. Thus Fed has to jawbone the market so that the US10Y bond yield hovers around 4.0-4.50% in the coming days so that the Fed can ensure relatively lower borrowing costs and price stability (soft landing).

Fed has to ensure 2% price stability and below 4% unemployment targets along with financial/Wall Street Stability and also keeping public/government borrowing costs at the lowest possible by directly/indirectly controlling bond yield (like YCC by BOJ). Fed is now targeting 2% core inflation with below 4% unemployment and 4.50% bond yield (10Y US) to keep borrowing costs lowest for the Government.

Bottom Line:

Fed, ECB may cut rates from July’24; i.e. in H2CY24 for a cumulative 75-100 bps (synchronized global rate cuts amid a synchronized easing in core inflation); every major central bank has to follow ‘King Fed/USD’, whatever may be the narrative.

Market wrap:

On Wednesday, on Wall Street, Gold slumped on a hawkish hold by the Fed amid fading hopes of an early and deeper rate cut along with delaying indication of QT. Wall Street was also dragged by subdued report cards by various techs and small/regional banks after New York Community Bank, which acquired the collapsed Signature Bank, cut their dividend by 70%. Blue Chip DJ-30 lost almost -320 points, tech-heavy NQ-100 tumbled -2.23%, while broader SPX-500 lost -1.61%.

On Wednesday, Wall Street was dragged by all major sectors led by communication services, techs, energy (lower oil), consumer discretionary, materials, banks & financials, industrials, real estate, consumer staples, utilities, and healthcare to some extent. Dow Jones was dragged by Cisco, Microsoft, IBM, Apple, Chevron and Nike, while boosted by Boeing (earnings beat/less loss than market consensus), United Health, Intel and J&J. Nasdaq was also dragged by Google parent Alphabet and AMD amid subdued report card including guidance warning.

Technical trading levels: DJ-30, NQ-100 Future, and Gold

Whatever may be the narrative, technically Dow Future (38340), now has to sustain over 38400-38600 levels for a further rally to 38800/39000-39200/39500 levels in the coming days; otherwise, sustaining below 38350/300-38250/200 levels, may again fall to 38000-37500-37300 levels may further fall to 37200/37000-36850/36650 and 36400/36200-36050/36000-35800*/35500 and may further fall to 35350/35250-35000/34800 and 34650/34120-34000 and 33700/33200-33000/32400 in the coming days.

Similarly, NQ-100 Future (17350) now has to sustain over 17450 for a rebound to 17650-17850 for a further rally towards 18000; otherwise, sustaining below 1736350, may again fall to 173517200/17100-17000/16850 may again fall to 16550/16300-16200/16050 and 15700/15400, and further 15100-14140 in the coming days.

Also, technically Gold (XAU/USD: 2033) now has to sustain over 2045-2055 for a further rally to 2065-2085-2105/2120 and 2130/2152 levels; otherwise sustaining below 2040-2035, may again fall to 2020-2010-2000-1990-1975-1960/1940 in the coming days.