Share:

On Tuesday, US Treasury yields and the dollar index dropped to their lowest in months following dovish remarks from Federal Reserve governor Christopher Waller. The yield on the two-year US Treasury, which correlates with Fed Fund interest rate expectations, reached 4.75%, marking its lowest point since August 10. Similarly, influenced by monetary policy expectations, the US dollar index reached its lowest since August 11. Despite earlier declines, stocks rebounded, with the S&P 500 closing up by 0.1% and the Nasdaq Composite gaining 0.3%.
\
So far this week, US stock markets have been treading water as investors appear to be wary of taking too much of a directional view ahead of the early December run of tier-one economic data. For this week, that would encompass Thursday's PCE inflation release and Friday's ISM Manufacturing Index.

With stocks not firing higher cross-asset and momentum, traders continue to pile into "the path of least resistance trades". On Tuesday, the dollar reached a three-month low after Waller's dovish comments. US Treasury yields declined as investor confidence grew regarding the possibility of the US Federal Reserve initiating interest rate cuts by mid-2024

Usually, lower rates might be a welcome sign for shares as the pressure from high yields ebbs. But given the widely diverse economic narratives around 2024 expectations, there's also a lingering fear that what might drive those cuts could be a weakening economy. Hence,, selling the dollar and buying gold makes sense in many investors' eyes, especially with the market receiving a dose of a rate cut confirmation bias from Fed  Waller, a hawkish and influential voice at the central bank. Indeed, dollar bears are having a field day with a Fed hawk now roosting with the doves.

While investors await news on inflation and business sentiment, the focus remains on the US consumer following the Black Friday and Cyber Monday shopping bonanza. The Conference Board's consumer confidence survey increased to 102.0 from 99.1 a month ago, surpassing expectations and offering some support to the soft landing camps. Although arguably,, survey data reliability has become a bigger problem in the post-pandemic era as seasonal adjustments remain distorted and the number of survey responses continues to decline.

While the weaker US dollar and lower rates will likely encourage investors to return to oil markets, the focus remains on OPEC. Given reduced compliance among some OPEC members, adherence to current production cuts will likely be a significant topic of discussion at Thursday's OPEC+ meeting. The prevailing lean is for an extension of the individual cuts made by Saudi Arabia and Russia, continuing at least through the first quarter of 2024, along with the group maintaining their existing cuts. However, oil prices are finding a bid as speculation builds that an additional modest backstop cut could possibly be considered during the discussions.

Share: Feed news

SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.

Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.

Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD stabilizes above1.0800, looks to post weekly gains

EUR/USD stabilizes above1.0800, looks to post weekly gains

EUR/USD continues to trade in a tight channel above 1.0800 in the second half of the day on Friday, as the improving risk mood makes if difficult for the USD to gather strength. The pair remains on track to snap a five-week losing streak.

EUR/USD News

GBP/USD clings to modest daily gains above 1.2650

GBP/USD clings to modest daily gains above 1.2650

GBP/USD trades in positive territory above 1.2650 in the American session on Friday. The bullish opening in Wall Street doesn't allow the USD to gather strength and helps the pair stay on track to close higher for the fifth consecutive day.

GBP/USD News

Gold holds steady above $2,020 as US yields edge lower

Gold holds steady above $2,020 as US yields edge lower

Gold regained its traction and stabilized above $2,020 after falling below this level during the European trading hours. The benchmark 10-year US Treasury bond yield is down nearly 1% on the day below 4.3%, allowing XAU/USD to keep its footing heading into the weekend.

Gold News

Ethereum price risks decline as increasing exchange supply raises chances of profit taking

Ethereum price risks decline as increasing exchange supply raises chances of profit taking

Ethereum price crossed $3,000 several times this week but the altcoin failed to sustain above this key level, raising concerns regarding its price trend. ETH price faces the risk of decline as the supply of the altcoin on exchanges is on the rise. 

Read more

Up go stocks, down go bonds

Up go stocks, down go bonds

We knew that yesterday was going to be a good day – at least for the stock markets, given that Nvidia defied the expectations that it would - maybe – fail to deliver $20bn sales in the latest quarter. 

Read more

Majors

Cryptocurrencies

Signatures