North American News
US stocks close higher. Two day up streak for the major indices
- NASDAQ leads the way today
The major US stock indices are closing the day with gains across the board. The NASDAQ index is a leading the way with a rise of near 1% Dow industrial average is the laggard as it tested the August high and backed off in trading today.
Today, US yields moved lower helped by weaker data. The initial claims for the current week were much higher at 240K versus 225K estimate. Durable goods orders were stronger, but the S&P Global manufacturing and services PMI data was weaker for the month of November.
The two year yield is down -3.4 basis points. The 10 year yield is trading down -6.5 basis points. The 30 year yield is down -10 basis points.
The FOMC meeting minutes confirm the idea that the “pace” of Fed tightening’s is to slow (i.e. 75 bps goes to 50 bps), but the Fed would continue to tighten.
The final numbers for the stock indices are showing:
- Dow industrial average is up 97 points or 0.28% at 34195.10
- S&P index is up 23.88 points or 0.60% at 4027.45
- NASDAQ index is up 110.92 points or 0.99% at 11285.33
- Russell 2000+3.07 points or +0.17% at 1863.51
US new home sales 0.632M versus 0.570M estimate
- US new home sales for the month of October 2022
- Prior month new home sales 0.603M revise to 0.588M
- new home sales for October 0.632M versus 0.570M estimate
- new home sales +7.5% in October (MoM)
- supplies at 8/9 months
University of Michigan’s consumer sentiment (final) for November 56.8 versus 55.0 expected
The final University of Michigan’s consumer sentiment index shows:
- consumer sentiment 56.8 versus 55.0 estimate. Last month 59.9
- current conditions 58.8 versus 57.8 preliminary. Last month 65.6
- expectations 55.6 versus 52.7 preliminary. Last month 56.2
- one year inflation 4.9% versus 5.1% in the preliminary. Last month 5.0%.
- Five year inflation 3.0% versus 3.0% in the preliminary. Last month 2.9%
Atlanta GDPNow 4.3% versus 4.2% last
- Q4 growth estimate from the Atlanta Fed GDP model
The Atlanta Fed GDPNow estimate for Q4 growth rose to 4.3% from 4.2% last. In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 is 4.3 percent on November 23, up from 4.2 percent on November 17. After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of fourth-quarter real gross private domestic investment growth increased from 0.4 percent to 1.0 percent.
Commodities
Gold bulls move in on dovish FOMC minutes
- Gold bulls jump into action around a dovish FOMC minute.
- Thanksgiving holidays around the corner are holding up the bid.
Gold had rallied to a high of $1,753 on the back of a dovish set of Federal Open Market Committee minutes but has since come off to test below $1,750 again and is oscillating between the range of the move. Thanksgiving holidays are upon us which likely means there are fewer participants around the event.
Nevertheless, the minutes show that a substantial majority of participants at the November meeting judged a slowing in the pace of the interest rate hikes would likely still be appropriate. In other key statements, the minutes showed that a slower pace of rate hikes would better allow the FOMC to assess progress toward its goals given the uncertain lags around monetary policy. A few participants said slowing the pace of rate hikes could reduce the financial system risks; others that slowing should await more progress on inflation.
Prior to the event, the US PMI data had given the US Dollar bears a head start before the FOMC minutes were released. A slew of US economic data (including durable goods orders, PMIs, claims, new home sales, and final Michigan sentiment), for the most part, was solid but the emphasis was put on the shocking result in the US Manufacturing PMI that missed expectations by a mile:
US: S&P Global Manufacturing PMI drops to 47.6 in November vs. 50 expected
The US Dollar index, as a consequence, has fallen more than 1% toward 106, the lowest since mid-August, as traders raise bets of only a 50 bps rate hike by the Fed in December.
Crude oil inventories see a draw of -3.691M versus -1.055M estimate
- Weekly inventory data from the EIA
- Crude oil see a draw of -3.691M vs -1.055M estimate
- gasoline sees a build of 3.058M vs est 0.383M
- distillates sees a build of 1.718M vs estimate of a draw of -0.550M
- Cushing -0.887M versus -1.624M last week
- crude oil imports 1.124M versus -1.236M last week
WTI crude oil futures for January delivery settled at $77.94
- Down $3.01 or 3-3.72%
The price of WTI crude oil futures are settling the day down $3.01 or -3.72% at $77.94. The move lower reached a intraday low $76.85. That was close to the low from Tuesday’s trade at $75.30. The closing level from the end of year 2021 was at $75.35.
Natural gas is meanwhile higher by $0.48 or 7.1% as colder weather is forecast plan the potential for a rail strike has the price moving higher.
WSJ reports: EU talks on Russian oil cap talks have ended without an agreement
- The focus was said to be between $65 and $70.
Wall Street Journal sources are saying that the EU talks on the Russian oil cap has ended without an agreement.
The cap was earlier rumored to be between $65 and $70 per barrel, but some thought those levels were still too high.
EU News
European indices close higher on the day
- Modest gains for the major European indices
- German Dax, +0.04%
- France’s CAC, +0.32%
- UK’s FTSE 100 +0.17%
- Spain’s Ibex +0.14%
- Italy’s FTSE 100 unchanged
BOE Pill: Further rate action likely to be required to ensure inflation will return to 2%
- BOE Pill speaking
BOEs Pill speaking and says:
- further action is likely to be required to ensure inflation will return sustainably to 2% target
- does not anticipate raising bank rate to levels price by markets ahead of November monetary policy report.
Other News
FOMC minutes from the November 2022 Fed meeting: Slowing of pace of rate hikes appropriate
- Substantial majority of participants at November meeting judged a slowing in the pace of the interest rate hikes would likely still be appropriate
- a slower pace of rate hikes would better allow the FOMC to assess progress toward its goals given the uncertain lags around monetary policy
- a few participants said slowing the pace of rate hikes could reduce the financial system risks; others that slowing should await more progress on inflation
- with monetary policy approaching a sufficiently restrictive level, participants emphasized the final destination of Fed funds rate have become more important than pace
- some participants remarked that more restrictive policy was consistent with risk management; some observed rising risk of over tightening
- participants concurred there were very few signs of inflation pressures updating
- participants generally noted that risks to the inflation outlook remain tilted to the upside
- all participants agree that 75 basis point increase was appropriate
- many participants noted significant uncertainty about ultimate level of Fed funds rate needed to tame inflation
- many thought that terminal rate was higher than previously expected
- participants observed the labor market remained tight; many noted that tentative signs it might be moving slowly toward better balance of supply and demand
- despite elevated interest rate volatility in indications of strained liquidity conditions, functioning of the treasury security market have been orderly
Cryptocurrency News
WSJ: Crypto firm Genesis has approached Binance for an investment, bid for loan book
Wall Street Journal (gated) with this on whats going on at Genesis.
Cryptocurrency firm Genesis has approached crypto exchange Binance for an investment and to bid for its loan book, according to people familiar with the matter.
Binance decided not to invest, fearful that some of Genesis’s business could create a conflict of interest down the line, according to one of the people familiar with the matter.
The company also approached private equity giant Apollo Global Management for capital assistance, according to people familiar with the matter.
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