- US stocks gained and the major indices printed fresh record highs with the Nasdaq leading advances amid outperformance in Tech, Consumer Discretionary and Communication names as Tech was buoyed by the strong Salesforce (CRM) and Marvell (MRVL) earnings, while Energy, Materials and Financials lagged. T-notes were bid with upside primarily supported by a big miss on the ISM Services PMI which printed beneath all analyst forecasts.
- USD was ultimately flat on the day as the upside in GBP, CHF, and EUR offset the greenback's gains against the JPY and AUD, while the initial advances in the DXY were pared following a weak ISM Services PMI report in which the headline reading missed the bottom of the forecast range and ADP jobs data also disappointed. Furthermore, there were several Fed comments including from Powell but provided very little incrementally.
- Looking ahead, highlights include South Korean GDP, Australian Trade Data, Philippines CPI, Singapore Retail Sales, Comments from BoJ's Nakamura, Supply from Japan.
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LOOKING AHEAD
- Highlights include South Korean GDP, Australian Trade Data, Philippines CPI, Singapore Retail Sales, Comments from BoJ's Nakamura, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks gained and the major indices printed fresh record highs with the Nasdaq leading advances amid outperformance in Tech, Consumer Discretionary and Communication names as Tech was buoyed by the strong Salesforce (CRM) and Marvell (MRVL) earnings, while Energy, Materials and Financials lagged. T-notes were bid with upside primarily supported by a big miss on the ISM Services PMI which printed beneath all analyst forecasts.
- SPX +0.61% at 6,086, NDX +1.24% at 21,492, DJIA +0.69% at 45,014, RUT +0.42% at 2,427.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed Chair Powell said the US economy is in remarkably good shape and he feels very good about where monetary policy is, while he added they are not quite there on inflation but are making progress. Powell said they are on a path to more neutral rates over time and though downside risks are less than thought, the Fed can afford to be cautious in finding neutral.
- Fed's Barkin (2024 voter) said he is encouraged with where inflation is headed and sees positives and risks on both sides of the Fed's mandate, while he said they cannot ignore the October jobs report and that inflation is still above 2%.
- Fed's Musalem (2025 voter) said time may be approaching to slow or pause interest rate cuts and additional policy easing is likely needed over time. Musalem said it is possible to pause on cuts at upcoming Fed meetings but will wait to see data before deciding on the December Fed meeting and is keeping all options open.
- Fed Beige Book stated economic activity rose slightly in most Districts and employment levels were flat or up only slightly, while prices rose only at a modest pace across Districts.
- US President-elect Trump picked Paul Atkins for SEC Chair, while he picked Faulkender for Deputy US Treasury Secretary and Gail Slater as assistant AG for the antitrust division at the Department of Justice.
DATA RECAP
- US S&P Global Services PMI Final (Nov) 56.1 (Prev. 57.0)
- US S&P Global Comp Final PMI (Nov) 54.9 (Prev. 55.3)
- US ISM N-Mfg PMI (Nov) 52.1 vs. Exp. 55.5 (Prev. 56.0)
- US ISM N-Mfg Price Paid Idx (Nov) 58.2 (Prev. 58.1)
- US Factory Orders MM (Oct) 0.2% vs. Exp. 0.2% (Prev. -0.5%, Rev. -0.2%)
- US ADP National Employment (Nov) 146.0k vs. Exp. 150.0k (Prev. 233.0k, Rev. 184k)
FX
- USD was ultimately flat on the day as the upside in GBP, CHF, and EUR offset the greenback's gains against the JPY and AUD, while the initial advances in the DXY were pared following a weak ISM Services PMI report in which the headline reading missed the bottom of the forecast range and ADP jobs data also disappointed. Furthermore, there were several Fed comments including from Powell but provided very little incrementally.
- EUR traded indecisively and on both sides of the 1.0500 level amid political uncertainty in France where PM Barnier lost the no-confidence vote, while the next course of action goes to President Macron who is expected to find another PM although candidates for the role haven't been forthcoming as they know they are unlikely to be able to form a working government and pass the necessary fiscal reform.
- GBP initially retreated after comments from BoE Governor Bailey who said he sees four 25bps rate cuts in 2025 although GBP/USD then staged a recovery in the aftermath of stronger-than-expected UK Services PMI data and which was also facilitated by the soft US ISM Services report.
- JPY weakened but was off worst levels with the swings in USD/JPY at the whim of the fluctuations seen in US yields.
FIXED INCOME
- T-notes settled higher and caught a bid after soft ISM Services PMI, while comments from Fed Chair Powell provided little new.
COMMODITIES
- Oil prices sold off in the US afternoon despite no particular headline driver at the time although it was later reported that a single bank had sold a large volume of US oil futures contracts ahead of the OPEC+ meeting, while a larger-than-expected drawdown in headline EIA crude inventories only briefly supported prices.
- US EIA Weekly Crude Stocks w/e -5.073M vs. Exp. -1.0M (Prev. -1.844M).
- OPEC+ sources said cuts are likely to be extended for three months, while one source said a 6-month extension is an option and another said that a deeper cut is not a likely option, according to Reuters.
- Saudi Arabia reportedly aims to keep oil prices elevated rather than chase market share and is averse to a price war with US shale, while a delegate noted that Angola already quit the cartel and speculated that other countries could soon follow as a result of the policy, according to WSJ.
- Russia said crude production in November remained flat and broadly in line with its pledged level within the OPEC+ agreement, according to Bloomberg.
GEOPOLITICAL
MIDDLE EAST
- Israeli Defence Minister Katz said the pressure on Hamas is increasing, so there is a possibility that they will be able to reach an agreement this time, according to Sky News Arabia.
- Israeli delegation was reported to be heading to Cairo on Thursday for hostage negotiations. However, Israeli officials were later said to deny the report about a delegation heading to Cairo for hostage talks, according to Times of Israel.
- US Secretary of State Blinken said the Lebanon ceasefire is holding and they're using the mechanism for any purported violations.
RUSSIA-UKRAINE
- US issued fresh Russia-related sanctions, according to the US Treasury Department which is pursuing visa restrictions for five Russian officials and authorities for their involvement in Ukraine.
- Crew of a Russian ship in the Baltic Sea shot signal ammunition at a German military helicopter, according to dpa sources.
ASIA-PAC
NOTABLE HEADLINES
- China's Vice Premier said in a meeting with Goldman Sach’s President that China welcomes more US financial institutions including Goldman Sachs and that long-term capital is to deepen mutually beneficial cooperation with China, according to Xinhua.
- EU is to crack down on Asian online retailers such as Shein and Temu, while potential charges aim to slow the surge of goods sold on such sites that evade custom duties and checks, according to FT.
- South Korean Parliament formally introduced a motion to impeach South Korean President Yoon, while the ruling party held a lawmakers' meeting to oppose President Yoon's impeachment, according to Yonhap.
EU/UK
NOTABLE HEADLINES
- BoE Governor Bailey said he sees four 25bps BoE rate cuts in 2025 and welcomes recent inflation developments, while he added that the MPC has emphasised a gradual outlook for rates and noted the disinflation process is well embedded but there is further to travel, according to FT.
- French government lost a no-confidence motion as lawmakers voted 331 out of 574 current members in support of the no-confidence motion. It was earlier reported that French President Macron was aiming to name a new PM swiftly if the government failed and wants to name a new PM ahead of Saturday, according to Reuters sources.
- ECB's President Lagarde said the ECB will have to move from backward to forward-looking and projections will gain in relevance at some point, while she added the ECB is in sight of but has not yet fully reached the inflation target. Furthermore, she said they will continue to lower rates but cannot say at what pace.
- ECB's Nagel said he has no objection now to a rate cut next week but will reserve judgement until the meeting and he favours a gradual, cautious approach to rate cuts. Furthermore, he does not forecast a significant risk of inflation undershooting and said the ECB should not cut rates below neutral.
- ECB's Makhlouf said he prefers to move cautiously and prudently when asked if a 50bps rate cut might be needed, while he added that data in recent weeks has reinforced the view that prudence and cautiousness are needed, as well as noted that a TPI bond-buying scheme not under consideration.
- ECB's Vujcic said a December rate decision will not be difficult and that small steps on rates are better amid uncertainty, while it was noted that other ECB officials broadly agree on rates, according to Politico.
- Four South America Mercosur members support the new terms of an EU trade deal and are waiting on EU approval, according to Reuters sources.
DATA RECAP
- UK Services PMI (Nov) 50.8 vs. Exp. 50.0 (Prev. 50.0)
- UK Composite PMI (Nov) 50.5 vs. Exp. 49.9 (Prev. 49.9)
- German HCOB Services PMI (Nov) 49.3 vs. Exp. 49.4 (Prev. 49.4)
- German HCOB Composite Final PMI (Nov) 47.2 vs. Exp. 47.3 (Prev. 47.3)
- French HCOB - Services PMI (Nov) 46.9 vs. Exp. 45.7 (Prev. 45.7)
- French HCOB Composite PMI (Nov) 45.9 vs. Exp. 44.8 (Prev. 44.8)
- EU HCOB Services Final PMI (Nov) 49.5 vs. Exp. 49.2 (Prev. 49.2)
- EU HCOB Composite Final PMI (Nov) 48.3 vs. Exp. 48.1 (Prev. 48.1)
- EU Producer Prices MM (Oct) 0.4% vs. Exp. 0.4% (Prev. -0.6%)
- EU Producer Prices YY (Oct) -3.2% vs. Exp. -3.3% (Prev. -3.4%)
