Market News

The major U.S. stock indices closed mixed, but the technology-heavy Nasdaq indices continued to outperform. Both the Nasdaq Composite and Nasdaq 100 finished at record closing levels, while the S&P 500 ended virtually unchanged and the Dow declined.

Hopes for progress toward ending the war with Iran helped support sentiment and pushed crude oil modestly lower. President Trump expressed optimism that negotiators Steve Witkoff and Jared Kushner could reach an agreement, including the renewed flow of oil through the Strait of Hormuz.

However, the diplomatic situation remains fluid. Reports said the U.S.-Iran meeting had been planned in advance and focused on reopening negotiations and the Strait of Hormuz. No agreement was reached on most of…

• Recap: US and Iran meet in New York on UNGA sidelines, Hormuz conditions on the table
• Trump and Bessent talk about a diesel export ban. Also says spoke with Iran for 3 hours
• Fed's Barkin says he thinks the hiking cycle could be like the Greenspan "mid-cycle adjustment"
• US treasury sells $69 billion of two-year notes at a high yield of 4.787%
• Richmond Fed’s Barkin says inflation risks outweighed employment risks in last week’s rate hike
• Trump: I believe we will make a deal with Iran right after US election
• Fed's Williams doesn't comment on monetary policy or economic outlook
• US September Richmond composite index -2 vs +4 prior
• EU Consumer Confidence (flash) for September -16.5 vs -16.0 estimate
• Fed's Collins: With jobs market on a better footing,…

• Iran FM Araghchi met US envoys Witkoff and Kushner at UN headquarters, per NYT citing two Iranian officials
• Trump: Witkoff and Kushner met with Iran mediators, "lots of good thoughts"
• Iranian state broadcaster: Tehran accepted Witkoff's meeting request because Iran had announced its conditions for reopening the Strait of Hormuz; "strict conditions" were conveyed to the US side
• Israel's Channel 12 (citing US sources): meeting was planned in advance, talks centred on conditions for renewing negotiations and reopening Hormuz, no agreement on most disputes
• Al Arabiya source: meeting "broke the deadlock," breakthrough possible but requires multiple steps
• Fars: the US "has not left a red line in the region," Iran ready for all scenarios (responding…

One of the most important lessons in trading is that you do not have to risk a lot to make a lot.

In fact, the better trading opportunities often come when traders can define their risk against a nearby technical level. If that level holds, the price has room to move in the anticipated direction. If it breaks, the trader can get out with a relatively small loss.

That is the idea behind risking a little to make more than a little.

Technical levels help define risk

Technical tools such as moving averages, Fibonacci retracements, swing highs, swing lows and trendlines identify areas where buyers or sellers should enter the market.

For example, assume a currency pair is trending higher and correcting toward its rising 100-hour moving average. If…

What is a pennant formation?

A pennant is a technical continuation pattern that often develops after a strong, directional price move.

The initial surge is sometimes called the flagpole. After that sharp move, the market pauses as buyers and sellers battle for control. The price begins making lower highs and higher lows, creating two converging trendlines that resemble a small pennant.

That contraction signals that the market is building energy. Neither side has taken firm control during the consolidation, but as the two trendlines move closer together, there is less room for the price to maneuver. Eventually, something has to give.

Pennants frequently resolve in the direction of the original move. However, traders should not assume the…

Trump and Bessent talked about a diesel export ban, with Bessent saying they examined it and Trump saying he called for it.

Perhaps more importantly, Trump said they spoke with Iran "went very well" and lasted for three hours. He also said another one was scheduled in the near future.

There are negative ticks on oil on the Iran talk but the diesel ban could create some real problems for allies.

Further to the Iran meeting, US Envoy Witkoff said they "feel very good right now".

Finally, on the Ukraine war he said  "Zelensky and I are working to formulate a solution that will bring an end to the war" and that Putin wants to meet to end the war.

Now that we're in a rate-hiking cycle, the question is: How long will it last?

Barkin just offered a clue as he said he would like to think this will be like the 1990s mid-cycle adjustment.  Now the term 'mid-cycle adjustment' was actually made famous by Powell as the retrospectively looked back at the 1990s. 

Looking through the history of the time, there were two hiking cycles in that era of 300 bps and 175 bps. The current 105 bps of total hikes priced in (including the 25 bps already done) would be a historical aberration for hiking cycles.

However, Barkin was comparing it to an easing cycle in the 1990s, when Greenspan cut rates by 75 bps over seven months at the end of 1995. So by that analogue -- if you took it directly -- would be…

USDCAD has moved sharply higher over the last three weeks of trading. The pair has risen from a low near 1.3760 on September 8 to a high of 1.4080 today—a gain of approximately 320 pips over 11 trading days.

The move has been supported by a series of bullish technical breaks:

• The 200-day moving average, currently near 1.38377, was broken on September 11.
• The 100-day moving average, currently at 1.3952, was broken on September 16.
• The pair then moved above the 50% retracement of the decline from the June 24 high to the August 21 low at 1.39894.
• Today, buyers extended the price above the 61.8% retracement at 1.40503.

Each technical break has given buyers additional confidence and strengthened the bullish bias. However, the pair is now…

Comments from Richmond Fed’s Barkin cross the wires, followed by remarks from his Q&A:

• The US central bank raised rates last week because risks to inflation outweigh risks to maximum employment.
• Last week’s rate hike will help restore price stability; we’ll see if more hikes are needed.
• Economic conditions are, if anything, firming.
• “Passing” shocks like tariffs and energy are not fading; there is a risk that high inflation today will impact future inflation.

In the Q&A, Barkin added:

• The labor market is not overheated or even particularly tight.
• Don’t see much evidence that consumer balance sheets are stretched.
• Consumers will spend as long as the job market remains healthy.

Analysis: Barkin is keeping the door open to more rate…

Comments from Richmond Fed’s Barkin cross the wires:

• The US central bank raised rates last week because risks to inflation outweigh risks to maximum employment.
• Last week’s rate hike will help restore price stability; we’ll see if more hikes are needed.
• Economic conditions are, if anything, firming.
• “Passing” shocks like tariffs and energy are not fading; there is a risk that high inflation today will impact future inflation.

Analysis: Barkin’s message is hawkish. He sees enough strength in the economy to keep the focus on inflation, while leaving the door open to another hike. For traders, the question is whether inflation begins to stabilize after last week’s move. His comments do not commit the Fed to a further…

• High yield of 4.787%
• WI level at the time of the auction 4.785%
• Tail 0.2 basis points versus average of 0.1 basis point
• Bid to cover 2.63X average of 2.61X
• Directs 29.2% versus average of 28.3%
• Indirects 57.79% versus average of 58.6%
• Dealers 13.19% versus average of 13.1%

Auction grade: C

The auction was close to average overall. The high yield of 4.787% was 0.2 basis points above the when-issued level, a slightly larger tail than the 0.1-basis-point average. Demand was modestly better on the bid-to-cover ratio at 2.63 times versus 2.61 times, and direct bidders took a slightly larger share than usual. Indirect bidding was a touch below average, while dealer takedown was essentially in line. There was no standout sign of strength or weakness,…

The optimism about a break through in Iran is fading after Trump's UN speech.

A report earlier from Kyodo suggested Iran was willing to open the Strait of Hormuz in exchange for the US lifting its blockade but there were denials of the report via FARS and Trump didn't mention anything along those lines in his UN speech. Instead, he said a deal was likely after the midterms.

Naturally, he would be aiming for a deal before the midterms in order to preserve Republican control but it doesn't look like he thinks that's possible. That said, there are credible reports that neigbboring countries are working on the diplomatic side so it can change quickly.

The market is voting for 'no deal' at the moment though, with WTI up to $91.68 from a low of…