Market Update – November 08

Wall Street posted solid gains as Treasury yields tumbled further. Beliefs the FOMC and other DM central banks are done hiking rates continue to boost investor sentiment. Hawkish jawboning from a number of Fedspeakers was generally dismissed.

Treasury yields continued to richen, led by the long end. Rates lagged lower after the decent 3-year auction eased fears the auctions would see limited demand. Fear of missing out (FOMO) on some of the highest yields in 16-years helped feed the rally.

  • USDIndex regained some ground as Fedspeeches left the door open to further rate hikes, and traders looked to a speech from Chair Jerome Powell on the central bank’s future policy path later on.
  • Fed Logan worries that inflation remains too high, even though progress has been made. Officials need to be sensitive to inflation expectations. She said the Fed needs to be very attentive to the economic risks of war in the Middle East, but will be able to look through any energy price shock. She will also be monitoring yields to assess the policy implications there too.
  • Fed Governor Bowman said she expects the FOMC will have to raise rates further. But she added that she supported the unchanged policy stance last week (as we knew by the 12-0 vote).
  • Stocks: The US100 advanced 0.90%, with the US500 up 0.28%, while the US30 was 0.17% higher, though off their best levels. Also, this is the 8th straight increase on the US100 and 7th for the S&P.
  • Walmart, Uber stocks hit multi-years highs as US500 tallies longest winning streak since November 2021.
  • Oil declined to $76.39, dropping by 4.2% on Tuesday. A US government report predicts a 20-year low in American gasoline demand per capita next year due to high prices at the pump and inflation, leading to reduced discretionary driving. The decline in oil prices is attributed to the disappearance of the Israel-Hamas war-risk premium and a deteriorating demand outlook. Concerns about China’s economy, the world’s largest oil importer, and uncertainties regarding the Federal Reserve’s tightening measures, have also contributed to the market worries. Additionally, Russian oil shipments are at a four-month high, and US crude stockpiles increased by almost 12 million barrels last week, according to industry data.

Interesting Mover: Gold  fell to a 2-week low at $1956 as the yellow metal continues to lose its haven bid and as the Dollar strengthens.

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Andria Pichidi

Market Analyst

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Having completed her five-year-long studies in the UK, Andria Pichidi has been awarded a BSc in Mathematics and Physics from the University of Bath and a MSc degree in Mathematics, while she holds a postgraduate diploma (PGdip) in Actuarial Science from the University of Leicester.

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