A November to remember. The markets were all over the place to end the month. While the FOMC is still the focal point, repositioning after some big moves on the month and positioning into year-end were the main drivers. The FOMC has reached peak rates, according to Fed funds futures, and rate cuts are the next action, now fully priced for May.
Economic Indicators & Central Banks:
- PCE: Data has been mixed but generally reflect progress on the FOMC’s inflation goal and has convinced markets that rate cuts are underway — core PCE fell to 3.5% y/y from 3.7% y/y previously, but is still well above the 2% target. US pending home sales declined.
- OPEC+ announced an additional 1 mln barrels in cuts. The cuts will be announced individually by members, according to delegates. The Saudi Arabia is expected to extend its down voluntary cut of 1 million barrels.
Market Trends:
- Best month in 40 years! Treasuries rallied on FOMC expectations. But profit taking ahead of comments from Chair Powell today unwound some of the froth. The curve steepened to -36 bps versus -50 bps Monday.
- Stocks: Wall Street befittingly finished mixed. The US30 rallied 8.9% with the US100 up 10.7%. For the month the US30 was up 8.8%, its second best November since 1980, according to Bloomberg.
- For the S&P, 10 of the 11 sectors are higher on the month.
- Asia Stock markets were under pressure overnight, with the Hang Seng underperforming, despite a better than expected China Caixin manufacturing PMI that managed to lift above the 50 point no change mark again.
Financial Markets Performance:
- The USDIndex finished at 103.40 recovering from the slide to the 102.36 the prior two days after weaker than expected European and Chinese data.
- EURUSD broke below 1.09, indicating a possible reversal of the 2-month rally, however 1.0830-1.0860 remains the key support area.
- USDJPY rebounds to 148.30, USDCAD dips further into 1-year triangle with immediate support at 1.35, while GBPUSD settles above 1.26 despite US Dollar appreciation.
- Gold slipped about -0.4% to the $2036 area on the rise in yields and some fading of haven trades.
- USOIL slumped 2.9% to $75.59 after spiking 2.2% to $79.60 after OPEC+ announced a further production cut.
- Key Mover: EURCHF down by 1.26%. Next Support levels: 0.95, 0.9440 and 0.9375.
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Andria Pichidi
Market Analyst
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