Global Markets Have Positive Tone
STOCK INDEX FUTURES
Global markets have rebounded from modest early pressure and have a mildly positive tone coming into this morning’s action. The latest NBS readings for Chinese manufacturing PMI and non-manufacturing PMI came in well below forecasts. European data included a surprise uptick in German unemployment and Euro zone CPI that came in well below trade forecasts. Asian shares finished mostly in positive territory, while European shares and US stock index futures were posting moderate early gains.
October wholesale inventories is forecast to have a moderate uptick from September’s 0.6% reading. The November Chicago PMI is expected to have a modest uptick from October’s 45.2 reading. The October job openings and labor turnover (JOLTS) survey is forecast to have a moderate downtick from September’s 10.717 million reading. October pending home sales is expected to have a sizable uptick from September’s -31.0% year-over-year rate. The latest Fed Beige Book will be released during early afternoon US trading hours. Fed Governor Bowman and Fed Governor Cook will speak during morning US trading hours, while Fed Chair Powell will speak during the early afternoon. Earnings announcements will include Hormel Foods before the Wall Street opening while Salesforce and Synopsys report after the close.
The NASDAQ has been a big drag on the entire market but it is difficult for the market to go up with its tech leadership under attack at the top level. On top of the China situation, the market faces an OPEC Plus meeting on Sunday and deadlines just ahead for the US Rail Workers who could be on strike as soon and December 9.
DOLLAR: The Dollar has fallen back on the defensive as it is having a lackluster finish to its worst monthly performance in 12 years. A mild rebound in global risk sentiment has fueled safe-haven outflows from the Dollar this morning, but it continues to hold its ground above Monday’s low and the mid-November low. While there is a large set of US data to digest, Fed Chair Powell’s speech later today will be a highlight for the Dollar as the market will want to hear his viewpoint on the progress of inflation.
EURO: The Euro is finding moderate support, but continues to see coiling action within a fairly tight 2-day trading range. The latest Euro zone CPI reading had a sizable downtick in its year-over-year reading while there was a surprise uptick in German unemployment, both of which may give the ECB pause for their upcoming policy moves.
YEN: The Yen continues to hold within its post-Thanksgiving consolidation zone and is showing more signs of being top-heavy at current price levels. The latest readings for Japanese industrial production and Japanese housing starts came in well below trade forecasts and should give the BOJ more evidence for holding back on making any hawkish policy shifts.
SWISS: The Swiss franc put some brakes on its near-term pullback as it has rebounded from a 1-week low with moderate early gains this morning. The latest readings for the Swiss KOF leading indicator and Swiss ZEW survey came in below expectations, which follows Tuesday’s lukewarm Swiss GDP result and may give the SNB pause for thought on the size of their future rate hikes.
POUND: The Pound continues to see coiling price action as it has found support this week just above the 1.1945 level. Recent UK inflation readings have not had the pullback seen in the latest Euro zone readings, and that has helped the Pound remain on-track for a second sizable monthly gain. Given news headlines over UK economic hardships going into winter, BOE officials are likely to have a lower “peak” in UK rates than the market is pricing in.
CANADIAN DOLLAR: The Canadian dollar has been able to regain upside momentum with a moderate gain this morning. While their third quarter GDP reading was disappointing, Tuesday’s downdraft was exacerbated by news that the Canadian bank RBC purchased the Canadian banking operations of UK-based HSBC.
The Treasury markets have kept within fairly tight ranges early today as Bonds and Notes have given back mild early gains and returned to unchanged levels. The 2-year/10-year yield spread continues to pull back from last Friday’s 41-year high, and that may be fueling end-of-month profit-taking and long liquidation. A surprisingly downtick in Euro zone inflation provided brief support to Bonds and Notes, but that has faded coming into this morning’s action. While his speech later today will be a highlight, the market is mostly interested in Fed Chair Powell’s comments on inflation as the mentality that the Fed will hike by 50 basis points next month is getting old.
Following a weekly private survey of mortgage applications, the November ADP employment survey is expected to have a moderate downtick from October’s 239,000 reading. Third quarter gross domestic product is forecast to hold steady with the previous 2.6% annualized rate. Third quarter core personal consumption expenditures (a favorite Fed inflation gauge) is expected to hold steady at a 4.5% rate. October wholesale inventories is forecast to have a moderate uptick from September’s 0.6% reading.
The November Chicago PMI is expected to have a modest uptick from October’s 45.2 reading. The October job openings and labor turnover (JOLTS) survey is forecast to have a moderate downtick from September’s 10.717 million reading. October pending home sales is expected to have a sizable uptick from September’s -31.0% year-over-year rate. The latest Fed Beige Book will be released during early afternoon US trading hours. Fed Governor Bowman and Fed Governor Cook will speak during morning US trading hours, while Fed Chair Powell will speak during the early afternoon.
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