North American News
Big closing gains for stocks as Powell rides to the rescue
- Dow Jones Industrial Average enters a technical bull market
These markets are really something. Flows, news, central banks, volatility…. all at once.
The mood was sour earlier today as yields continued to creep higher and the market worried about Powell, but the Fed chair said it was likely time to slow the pace of hikes and that he didn’t want to overtighten.
- S&P 500 +3.1%
- Nasdaq +4.4%
- DJIA +2.2%
- Russell 2000 +2.4%
US JOLTS job openings 10.33m vs 10.3m expected
- Highlights of the Job Openings and Labor Turnover Survey from the Fed
- Prior was 10.717m (revised to 10.687m)
- Quits rate 2.6% vs 2.7% prior
- Layoffs 0.9% vs 0.9% prior
US advanced goods trade balance for October $-99 billion versus -$91.90 billion last month
- US advanced goods trade balance for October 2022
- Advanced good trade balance $-99 billion versus at $-90.7 billion estimate. Last month came in at $-91.90 billion
- exports came in at $173.7 billion which was $-4.7 billion less than September
- imports came in at $272.7 billion which was at $2.4 billion more than September
US pending home sales for October -4.6% vs -5.0% estimate
- Pending home sales for the month of October
US Pending home sales shows:
- Pending home sales MoM -4.6% vs -5.0% est.
- Prior month -10.2% revised to -8.7%
- Pending home sales index 77.1 vs 79.5 last month
- YoY -37% vs a year ago
- The 30 year mortage has come down to 6.65% in November
Commodities
Gold perks up on Fed Powell dovish speech
- Gold price is bid on the back of a dovish Fed Chair Powell.
- There could be consolidation ahead the bulls can not get above $1,770.
Gold price is rising because of a dovish speech by Federal Reserve’s Jerome Powell on Wednesday that sunk the US Dollar. At the time of writing, Gold price is up around 0.6% and has climbed from a low of $1,744.95 to score a high of the day at $1,764.85.
Earlier in the day, Gold price pared gains as US bond yields climbed ahead a much-awaited speech from Federal Reserve Chair Jerome Powell. However, Powell said that policy will most likely need to remain restrictive for some time and that it makes sense to moderate the pace of interest rate increases. He said that the time to slow the pace of rate hikes could come as soon as the December meeting.
Consequently, a weaker dollar has kept Gold price on track for its best month since May 2021. The US dollar index, DXY, was last seen down 0.5% to 106.29, while the yield on the US 10-year note was down to 3.694%, not far from an over 7-week low of 3.62% on November 28th. The greenback is on track for its biggest monthly loss since September 2010 as investors look toward the Fed reaching a peak rate early next year. Markets now see a 75% chance for a smaller 50 bps interest rate hike in December, after four consecutive 75 bps increases.
US labour data cooling
Also, data suggested the labour market started to cool. ”The number of job openings in the US edged down to 10.3 million in October (10.7 million previously). The number of hires and total separations was little changed at 6.0 million and 5.7 million respectively. Job openings have eased from their peak of just under 12 million in March, but with 1.7 job openings per unemployed person in the US, the mismatch between labour demand and supply remains large,” analysts at ANZ Bank explained.
Meanwhile, analysts at TD Securities argue that a bull trap is being set-up in precious metals markets. ”Systematic trend followers have significantly covered their gold shorts over the past few days, while the resilient price action has likely continued to attract new long interest from discretionary money managers looking for a recession hedge amid peak central bank hawkishness.”
”However,” the analysts said, ”narrative is chasing prices, and we see several catalysts on the docket that could spark a renewed leg lower as CTAs run out of dry-powder on the bid. Chair Powell’s speech is an obvious candidate for a catalyst, alongside inflation and jobs data.”
Russia oil price cap will be between $60-63/barrel – report
- Fox citing a source
Oil has been on a nice run today, rising $2.44 to $80.62 despite yesterday’s report that OPEC+ won’t cut. Eyes are on Russia and the oil price cap after Poland and the Baltic states dug in yesterday on the price cap.
Meanwhile, Fox’s Edward Lawrence cites a source familiar and says the cap will be between $60-63 with an announcement coming next week and a few things still to be finalized in the G7.
Russia is already selling oil cheaper than that but where it could get interesting is if oil spikes about $100 and Russian Urals oil comes above the cap. That would take out incremental supply as prices are rising.
There’s also the question of Russia cutting off exports, which it has said it will do to any country that participates in the scheme.
EIA weekly US oil inventories -12,580K vs -2758K expected
- US energy inventory data
- Prior was -3691K
- Gasoline +2769K vs +1625K expected
- Distillates +3547K vs 1457K expected
- SPR draw of 1.4m barrels
- Refinery utilization +1.3% vs +0.2% exp
- Mogas demand 8.32m vs 8.33m prior
OPEC output fell 710k bpd in November – report
- Reuters’ secondary sources survey
The key numbers from Reuters’ influential secondary sources survey are out for OPEC November production and they show a 710k bpd decline from October. That’s 163% of the pledged cuts, including the additional 2 mbpd OPEC+ cut agreed early in October that kicked in for November. That’s about 800k bpd below current quotas.
Note that these numbers are for OPEC, not OPEC+, which includes Russia. Total output was 29.01mbpd, which is just under one-third of global production.
EU News
The European indices end the day higher
- France’s CAC leads the way today
The major European indices are ending higher on the day led by the France’s CAC which rose by over 1%.
The final numbers are showing:
- German Dax, up 0.29%
- France’s CAC up 1.04%
- UK FTSE 100, up 0.81%
- Spain’s Ibex, up 0.49%
- Italy’s FTSE MIB, 0.59%
Other News
Fed Powell: Makes sense to moderate pace of interest rate hikes
- Federal Chair Powell speaking at Brookings Institute
- makes sense to moderate pace of interest rate hikes
- time to moderate pace of rate hikes may come as soon as December
- have made substantial progress toward sufficiently restrictive policy, have more ground to cover
- it seems to me likely rates must ultimately go somewhat higher than policymakers thought in September
- likely to need to hold policy at restrictive level for some time
- history portions strongly against prematurely loosening policy
- we have a long way to go on restoring price stability
- we will stay the course until the job is done
- October inflation data was welcome a surprise; will take substantially more evidence to give comfort inflation is actually declining
- we estimate PC price index rose 6% in 12 months through October
- the path ahead for inflation remains highly uncertain
- moderation in labor demand growth will be required to restore labor market balance
- so far seen only tentative signs of moderation in labor demand, wage growth
Powell Q&A: Slowing down at this point is a good way to balance risks
- Jobs data today was more or less in line with expectations, decline in job openings a positive
- So far seen only tentative signs of moderation in labor demand, wage growth
- Jobs data today was more or less in line with expectations, decline in job openings a positive
- For most workers, wage increases are being offset by inflation
- Initial surge in inflation not related to wages
- Questions about the elasticity supply is an important one the Fed is thinking about
- Hard to pin down the natural rate of unemployment given disruptions
- Fed continues to think job openings versus number of unemployed is important
- It’s difficult to forecast inflation now given circumstances remain unusual
- Slowing down at this point is a good way to balance risks
- Still thinks there’s a path to a soft or soft-ish landing without a severe recession
- Soft landing scenario plausible but won’t speculate on odds
- One risk management tool is to go slower, one is to hold longer
- “I don’t want to overtighten”
Beige Book: Economic activity was about flat or up slightly since the previous report
- Highlights of the Nov 30 Beige Book
- Economic activity was about flat or up slightly since the previous report (vs modest growth previously)
- Five Districts reported slight or modest gains in activity, and the rest experienced either no change or slight-to-modest declines
- Many contacts expressed greater uncertainty or increased pessimism concerning the outlook
- Consumer spending eked out slight gains
- Manufacturing activity was mixed across Districts but up slightly on average
- Higher interest rates further dented home sales, which declined at a moderate pace overall but fell steeply in some Districts
- Inflation was expected to hold steady or moderate further moving forward.
Here’s the full commentary on inflation:
“Consumer prices rose at a moderate or strong pace in most Districts. Still, the pace of price increases slowed on balance, reflecting a combination of improvements in supply chains and weakening demand. Retail prices faced downward pressure as consumers increasingly sought discounts. Prices fell for some commodities, including lumber and steel, but food prices increased further or remained elevated in some Districts. Housing rent growth started to moderate in some Districts and home prices grew less rapidly or declined outright amid weak demand. Inflation was expected to hold steady or moderate further moving forward.”
Cryptocurrency News
Auros Global misses payment on Defi Loan as FTX contagion spreads
- Fallout from FTX
Auros Global, a crypto trading firm, is the latest to face liquidity problems following the FTX collapse as it missed payment Wednesday on a decentralized-finance (DeFi) loan.
The firm borrowed 2,400 wrapped ether (wETH) worth about $3 million from a credit pool on Maple Finance, a DeFi lending platform.
“Auros is experiencing a short-term liquidity issue as a result of the FTX insolvency,” pseudonymous credit pool manager
ECB director calls for Bitcoin ban, says BTC is not suitable for payments or investments
- European Central Bank’s head stated Bitcoin should not be legalized.
- The bank’s director general Ulrich Bindseil states that regulation of cryptocurrencies is not equivalent to legalization.
- The blog post from the central bank comes after the FTX exchange filed for bankruptcy on November 11.
The European Central Bank (ECB) detailed its stance on Bitcoin (BTC) and the cryptocurrency ecosystem in a blog post on November 30. In the article, the financial institution outlined the stark differences between regulation of digital assets in Europe and the US and that they should not be legitimized.
Join Our Whats App Group for all the latest stock market news
https://chat.whatsapp.com/KuCI3obDFfz7J6QI8tK1fX
