US Markets: Stocks Weak, Yen Gains 2%, Awaiting Jobs Report on the 2nd – Bloomberg

On the 1st, the US stock market remained choppy around a cornerstone of technical analysis. The Federal Open Market Committee’s (FOMC) next move is pending US jobs data released on 2.

A battle has taken place over the 200-day moving average of the S&P 500 stock index. Some analysts have said that a breakout of this level would provide room for further gains. The S&P 500 briefly broke above this level the day before, but today was volatile.

“The lower the pullback, the more likely it is to go higher,” said Fawad Razakzada, market analyst at City Index. “With less than a month left in the year, bears who want to sustain the downtrend this year should defend the trend line to bring the market back below the 200-day moving average.”

US manufacturing activity in November for the first time since May 2020scale downThe stock market plunged into negative territory after statistics revealed what had happened. US personal consumption spending (PCE) rose to the second slowest this year on fears that a series of rate hikes could push the US economy into a recession.basic price indexoptimism has diminished.

The US job market, which had shown no signs of abating, began to lose enthusiasm. But Wednesday’s November jobs report is expected to be far from a turning point in the Fed’s fight against inflation. There are signs that the demand for labor is slowly declining, but to slow wage growth, demand will need to slow further and move closer to a level that matches labor supply.

Economists polled by Bloomberg expect nonfarm payrolls to rise 200,000 in November, with average hourly wages up 4.6% from a year earlier.

“The first spikes in the economy and markets this year were inflation coming down and policy rates going up,” said Peter Bookver, chief investment officer at Bleakley Financial Group. “The next mountain to climb that will be the focus of next year will be the consequences for the economy of such a large rate hike: a higher cost of capital for businesses and households and a recession,” he said.

US treasures

US Treasury markets strengthened their rally in response to economic indicators. Expectations of a slowdown in rate hikes, which had been reinforced in President Powell’s speech the day before, were confirmed by today’s indicators.

10-year bond yields fell 10 basis points to 3.5%, the lowest level since late September. Yields on two-year bonds, vulnerable to monetary policy, temporarily fell by 8 basis points.

The end point for rate hikes priced by the swap market was below 4.9%. In a speech the day before, President Powell said he didn’t want the economy to crash due to too much tightening.

foreign currency

In the foreign exchange market, the yen rose 2% against the dollar. It was the sharpest increase since Nov. 10, and the rate of gain against the dollar was the largest among the 10 major currencies. At one point the price was 135.21 yen, the highest since August.

Remarks by Bank of Japan deliberation committee member Naoki Tamura supported the yen. The advisory committee saidinterview“I think it would be appropriate to conduct an inspection and review of the monetary policy framework and price target at an appropriate time, taking into account future developments in prices, wages and the economy.”

The dollar fell against most major currencies. Earlier in the day, Fed Chair Powell suggested that the pace of rate hikes may have slowed at the December Fed meeting earliest.

MUFG analysts said “Last night’s violent selling of the dollar was a breath of fresh air for market participants after Fed Chairman Powell did not dismiss Jackson Hole’s aggressive signals against the recent easing of financial condition. Reflects the”.

raw

New York crude futures rallied for the fourth consecutive day. The city of Beijing, China, has reacted to the partial easing of quarantine measures for people infected with the new coronavirus. He was also aware of the possibility that the US would stop releasing from its Strategic Petroleum Reserve (SPR).

Beijing accepts home isolation for some coronavirus patients, starting with the Chaoyang-Stakeholder district (1)

As coronavirus restrictions ease in China, there is growing opinion that demand will recover at the world’s largest oil importer. Meanwhile, a Biden administration official told a congressional committee that the SPR should stop being sold for refueling.

“Crude oil is riding the tailwind of changing sentiment on China’s coronavirus policy, a weaker dollar and rising risk assets,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

West Texas Intermediate (WTI) futures for January delivery on the New York Mercantile Exchange (NYMEX) closed at $81.22 a barrel, up 67 cents or 0.8 percent from the previous day. February delivery of London ICE North Sea Brent was down 9 cents to $86.88.

Money

New York gold futures climbed to the highest level since August. US inflation data announced this morning fell short of market expectations, easing pressure on monetary authorities to raise interest rates.

“It would be premature to expect a change in Fed policy, and the recent decline in the dollar appears excessive,” UBS Group strategists wrote in a note. “While we do not recommend chasing gold, if these trends persist over the long term, the price of gold could rise more than we expected.”

Gold futures for February delivery on the New York Mercantile Exchange (COMEX) rose $55.30, or 3.1%, to close at $1,815.20 an ounce.

Original title:Stocks reel as big rally hits a wall short of jobs – markets wind down