Economic Indicators & Central Banks :
- The US GDP report implied a Q3 productivity growth boost to a robust 5.1% from 4.7%, after an unrevised 3.6% Q2 clip. There was a Q3 growth rate trimming for the hours-worked index to 1.0% from 1.1% due to weakness in the hours-worked data in the last employment report.
- Fed rate cut bets deepened thanks to the lack of pushback from most Fed officials, and expectations for this pivot continued to drive the markets. There was no impact from the 5.2% GDP print.
- China’s manufacturing sector contracting for a 2nd consecutive month in November and performing worse than forecast indicates weakening momentum despite increasing government efforts to boost growth.
- EU: French inflation dropped sharply & German retail sales bounced in October. It was the first real improvement since May, which is likely also related to the moderation in inflation.
Market Trends
- Treasury yields richened further, and especially at the front end. Fed funds futures brought forward an easing in the policy rate to May from June. The curve dis-inverted to -38 bps on the bull steepener.
- Bonds are set to post the best month ever. Concurrently, the rate cut frenzy has boosted EGBs too, sending the global index to its best since 2008 the financial crisis.
- Stocks traded cautiously and lost steam into the close, as several Big Tech companies offset gains. The US30 gained 0.04%, while the US100 dropped -0.16%, with the US500 off -0.09%. Asian stocks were mixed as well, with CSI300 adding 0.5%.
- Meta fell 2%, Alphabet gave up 1.6% and Microsoft dropped 1%. General Motors surged 9.4% after the company announced a big stock buyback.
- The VIX was up 2.2% to 12.97, recovering from the 12.46 low from last week that had not been challenged since January 2020.
Financial Markets Performance:
- The US Dollar steadied at 102.80, with a 102 handle for a 3rd straight day. It’s slumped from the October 3 peak of 107.00.
- EURUSD reversed below 61.8% Fib level on July-September downleg, at 1.0945. It remains well above 1.09.
- USDJPY retests a potential break of its 146.70 low for a 2nd day in a row, USDCAD extends below 1.36 confirming an ascending head and shoulders formation in the daily chart.
- Gold edged up 0.16% to $2044.18 per ounce.
- USOIL climbed 2% to $78.79 per barrel ahead of the OPEC+ meeting. The delayed meeting of the expanded OPEC+ group will be held online.
- Bitcoin still hovering near the $38,000-mark.
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Andria Pichidi
Market Analyst
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