The US Dollar strengthened as yields eased on Friday, with various economic indicators and market movements shaping the day’s events. In Canada, the October employment change came in at +14.5K, slightly below the expected +25.0K. Meanwhile, the UMich November prelim consumer sentiment exceeded expectations at 73.0 compared to 71.0. On the energy front, Baker Hughes reported that oil rigs remained unchanged at 479 for the week.
In political news, President Trump has asked Robert Lighthizer to oversee trade policy once again. Additionally, BOE’s Pill mentioned the possibility of more rate cuts if disinflation persists. These developments impacted the markets in various ways.
The S&P 500 saw a 0.4% increase, while WTI crude oil prices fell by $1.88 to $70.48. Gold prices also experienced a decline of $24 to $2683. US 10-year yields were down by 4 basis points to 4.30%. In terms of currency performance, the Japanese Yen led the way while the Australian Dollar lagged behind.
The day’s events were largely influenced by China’s disappointing stimulus announcements, which led to a 5.5% drop in US-listed China ETFs and put pressure on the Australian Dollar. Concerns about China’s economic growth also impacted oil prices and contributed to lower yields due to reduced inflationary pressure.
Market participants have been closely monitoring the yield curve, particularly the long end, which has retraced the post-election surge. This trend reflects a shift in market sentiment towards a more cautious approach, as investors reassess the likelihood of certain policies being implemented. The market seems to be focusing on a more moderate agenda akin to “Trump 1.0”, as opposed to the aggressive campaign rhetoric.
Despite the decline in yields, the US Dollar (excluding the Yen) strengthened during the day. The Euro and Pound both faced selling pressure, with the Euro dropping to 1.0700 from 1.0775 at the start of the day. Commodity currencies also struggled in the face of these market dynamics.
Overall, the markets are navigating through various themes and challenges, reflecting the historical significance of the week’s events. As we look ahead to the coming week, it’s important for investors to stay informed and prepared for further developments. Rest up and have a great weekend as we await the unfolding of new market trends and opportunities.
