North American News
Major US indices close higher. Gains led by the Nasdaq and the S&P indices
- Broader indices rise by 1.3%
The major US indices are closing higher led by the NASDAQ and S&P indices which both closed up 1.36% on the day.
The final closing levels are showing:
- Dow industrial average up 397.80 points or 1.18% at 34098.11
- S&P index up 53.62 points or 1.36% at 4003.57
- NASDAQ index up 149.91 point or 1.36% at 11174.42
- Russell 2000 rose 21.2994 points or 1.16% at 1860.44
US treasury auctions off 35 billion of 7 year notes at a high yield of 3.890%
- WI level at 3.863%
- High yield of 3.890%
- WI 3.863%
- Tail 2.7 basis points vs. six-month average of -0.4 basis points
- bid to cover 2.33 vs. 2.57 X
- dealers 21.4% vs. six-month average of 11.7%
- directs 16.8% vs. six-month average of 19.6%
- indirects 61.9% vs. six-month average of 68.7%
Impact from poor 7 year auction not lasting
- The yields move lower out the curve especially
The 7 year note auction was pretty bad.
However, after a brief tick higher in yields, buyers came back in and yields started to move back to the downside.
A look at the yield curve currently shows:
- 2 year yield 4.518%, unchanged
- 5 year yield 3.939%, -3.8 basis points
- 7 year yield 3.877% -5.2 basis points
- 10 year yield 3.755%, -7.1 basis points
- 30 year yield 3.829%, -7.7 basis points
The further inversion of the yield curve now has the 2-10 year spread at a new low inversion going back to 1988 at -75.9 basis points. This is saying the market is thinking the Fed will tighten into a recession that will lead to the Fed reversing course on policy as well.
Fed commentary this week has the Fed continuing to raise rates into 2023 with a terminal rate near 5%, but it could also be higher.
A US rail strike clock is ticking down. Dec 9th is a proposed strike date for rail workers
- Negotiations still working on an agreement
The potential for a US rail strike is one of those risks that have the potential to throw another wrench into the US economy.
Currently leaders from four railroad unions along with the management of the major US freight railroads are meeting to find a solution to the current labor agreement.
The workers rejected the 5-year labor agreements that were similar to one that were negotiated with 8 other rail unions recently. 51% of the union voted against the proposed deal sending representatives back to the drawing board.
The strike is set for December 9.
At stake is the US supply chain and in turn the US economy which uses rail for 30% of the nations freight.
The proposed deal would have included at 14% raise with back pay to 2020 and pay raises totaling 24% during the 4 year life of the contracts. The pay would give workers an average pay rise of $11K.
Fed’s Mester: Inflation expectations remain anchored
- Fed’s Mester is speaking
- labor demand still outpacing supply workers
- in most sectors, wage gains are still behind inflation rise
- inflation expectations remain anchored
Richmond Fed November manufacturing index -9 vs. -9 estimate
- Richmond Fed November 2022 manufacturing index
- Prior month -10 (expected -5)
- Manufacturing composite index for November
- Services index -2
- Shipments -8 vs. -3 last month
- new orders -14 vs -22 last month
- prices paid 10.19 vs. 1221 last month
- prices received 9.91 vs. 8.62 last month
- number of employees -1 vs 0 last month
- wages 25 vs. 34 last month
- availability of skills needed -12 vs. -14 last month
- backlog of orders -25 vs. -28 last month
- capacity utilization -16 vs. -9 last month
- lender lead times -10 vs. -15 last month
- local business conditions -6 vs. -16 last month
- capital expenditures 8 vs. 18 last month
- finished goods inventories 1 vs. -2 last month
- raw materials 24 vs. 20 last month
- equipment and software spending 12 vs. 12 last month
- services expenditures -9 vs. 4 last month
Looking and expectations six-month forward:
- shipments 15 vs. -4 last month
- new orders 3 vs. -16 last month
- backlog of orders -20 vs. -25 last month
- employees 20 vs. 10 last month
- wages 55 vs. 47 last month
- availability of skills needed 1 vs. -16 last month
- capital expenditures 20 vs. 8 last month
- lender lead time -15 vs. -24 last month
Philadelphia Fed November nonmanufacturing index +13.6 vs. -14.9 last month
- Philadelphia Fed nonmanufacturing index for the month of November
- Nonmanufacturing business activity index -13.6 in November vs. -14.9 in October
- firm level business activity index -2.6 vs. 11.2 in October
- new orders -6.3 vs. -5.5 last month
- full-time employment 10.0 vs. 30.3 last month
- wage and benefits 41.5 vs. 49.9 last month
Commodities
Gold will only recover lastingly once an end to rate hikes is in sight – Commerzbank
Gold price dropped to a 10-day low near $1,730 on Monday. Economists at Commerzbank do not expect the yellow metal to stage a lasting recovery until the first quarter of next year.
Gold under pressure again due to firmer USD
“Gold price has dropped sharply again since the US Dollar ended its phase of weakness. Though the latest cooling of US inflation has dampened fears of rampant inflation and thus ever more pronounced rate hikes by the US Federal Reserve, it is still clear that the central bank has not yet finished tightening its monetary policy. After all, at 7.7% inflation is still a long way off its 2% target.
“The latest surge in the Gold price was largely attributable to short covering. This price-driving factor has now evaporated, as the most recent CFTC data for the last reporting week revealed a shift to speculative net long positions.”
“We are sticking with our assessment that the Gold price will only recover lastingly once an end to the rate hikes is in sight. This is likely to be the case in the first quarter of 2023.”
WTI crude oil futures settle at $80.95
- Up $0.91 or 1.14%
The price of crude oil futures settled at $80.95, up $0.91% or 1.14%. The high for the day reached $82.25. The low reached $79.86.
US energy Hockstein: Oil prices are bit higher than they should be
- US energy Enovy Hochstein speaking
- oil prices are bit higher than they should be
- will be opportunistic on SPR
- look to immediately repurchase when prices are in a $70 per barrel range
Don’t think it’s a good time to tell the market what price you’re looking to buy. The price of crude oil reached the lowest level since the beginning of the year yesterday at $75.27
WSJ: Western allies set to agree on Russian oil price cap at around $60/BBL
- Wall Street Journal reports
The Wall Street Journal is reporting that Western areas are set to agree on Russian oil price cap around $60 per barrel. However it could be as high as $7 per barrel ahead of the December 5 start date.
The sanctions that the G7, EU and Australia will set, will ban the provisions of maritime services for shipments of Russian oil unless the oil sells below the cap price. The hope is that the Western countries are able to take advantage of their control of the world’s “maritime insurance, financing and shipping services” as a way to dictate the terms of Russia’s oil sales, and limit the price they can receive for their oil.
EU News
European indices closing higher. German Dax approaches 100 week MA
- Higher levels across Europe today
The major European stock indices are closing the day with gains. The Spanish Ibex is leading the way with a rise of 1.68%.
A look at the closing levels shows:
- German DAX, +0.30%
- France’s CAC +0.35%
- UK’s FTSE 100 +1.03%
- Spain’s Ibex +1.67%
- Italy’s FTSE MIB +1.07%
Eurozone November consumer confidence -23.9 vs. -26.0 estimate
- Eurozone consumer confidence for November 2022 remains in a negative territory but better than expectations
- Eurozone consumer confidence -23.9 vs. -26 estimate.
- Prior month -27.7 vs. -27.6 previously reported
Other News
Best Buy says higher end iPhones are going to be more difficult to find for holiday gifts
- Sees private brands outpacing national brands
The Best Buy CEO says he sees higher and iPhones more difficult to find for holiday gifts 22 supply constraints.
Instead seen private brands outpacing national brands for 39 weeks in around which is something not seen in the past 5 – 7 years.
False news: Zuckerberg not retiring next year
False news.
Zuck to stay on as CEO of Facebook.
ECB’s Simkus: 50 basis point and 75 basis point hikes are both possible in December
- ECBs Simkus speaking
- Both 50 basis points at 75 basis point hikes are possible in December
- premature to pick the next hike without updating forecasts
- Sooner QT starts the better
- recession alone will not solve inflation situation
- sees compensatory effects between rates and QT
- rate hikes will continue past March if needed
Cryptocurrency News
XRP bucks bear market trend as Ripple gathers support against the SEC
- SEC v. Ripple case dragged on, counsel Stuart Alderoty stated that the regulator does not have the power to label XRP a security.
- Investor sentiment turned bullish with rising support for Ripple through amicus curiae filings from industry giants.
- Analysts predicted a rally in XRP, eyeing the $0.40 level as the target for the altcoin.
SEC v. Ripple case has significantly influenced XRP price since the beginning of the legal battle in December 2020. With no updates from the court, Ripple’s legal counsel’s statement defending XRP and its position as a non-security is doing the rounds. There is a spike in bullish sentiment among XRP traders and the altcoin is likely to print an extended rally.
SEC has no power to label XRP a security: Ripple’s legal counsel lashes out
Ripple (largest public holder of XRP) has defended itself against the US Securities and Exchange Commission (SEC) for nearly two years now. The regulator accused Ripple of unregistered sale of securities, XRP tokens being the “security” in question.
Ripple’s legal counsel, Stuart Alderoty lashed out at this and made a new statement. Alderoty was quoted as saying:
To be clear, the SEC hasn’t labeled XRP a security, nor does it have the power to do so. One Judge put it this way: the SEC can only ask the question and the court ultimately answers.
BOC Rogers: Crypto has not proven itself to be a stable store of value
- More from BOC Deputy Gov. Rogers
- Crypto has not proven itself to be a stable store of value or an effective form of payment facilitation
- consumer protection is something that we worry about when it comes to crypto currencies
the price of bitcoin has moved back above the $16,000 level at $16,101. The high price has reached $16,281. The low price was at $15,613. The low price yesterday reached $15,479 which was the lowest price since November 11.
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