China’s Caixin services PMI for November was the lowest in 6 months, but more signs of a thaw on Covid restrictions helped push Asian markets mostly higher. The Nikkei 225 added +0.15%, the Shanghai Composite rose +1.76%, and the Hang Seng Index jumped +4.51%.
European markets except the FTSE fell. The DAX Index lost -0.56%. 10-year bunds yield 1.88%.
October Factory Orders were up +1.0% compared to consensus of +0.7%. November Composite PMI printed at 46.4, with the S&P Global Services PMI down from 49.3 in September to 46.2. The ISM Services Index printed at 56.5 vs. 53.4 expected.
10-Year Notes yield 3.602%. The December US$ Index bounced +0.74% to 105.270. OPEC+ is maintaining its 2M bbl production cuts. January Crude sank -3.8% to $76.93. February Gold fell
-1.6% to $1,781.30.
The WSJ’s Timiraos’ reported the obvious, that the Fed may hike higher, and for longer, due to elevated wage pressures continuing to exacerbate inflation. In the overnight, stocks initially sank, then worked their way back to where they began, only to sink again as the regular session unfolded. By the close, major indices were deeply red.
Traders are searching for clarity on just how far China will go in easing Covid restrictions. Asian markets fell back. The Nikkei lost -1.59% and the Shanghai Composite slipped -0.29%.
European markets were mixed. The DAX Index gained +0.27%. 10-year bunds yield 1.854%.
For the week of 11/26 the Baker-Hughes U.S. rig count was up 1 to 979. Nov Motor Vehicle Sales were 14.1M vs. 14.7M exp., Nonfarm Payrolls jumped +263K vs. 200K exp., with Oct revised up from 261K to 284K. The Unemployment Rate held at 3.7%, Avg Hourly Earnings popped +0.6% vs. +0.3% exp. due to the Workforce Participation Rate easing to 62.1%.
10-Year Notes yield 3.489%. The Dec US$ Index faded -0.17% to 104.515. Jan Crude lost -1.5% to $79.98. Feb Gold dipped -0.3% to $1,809.60.
Today’s +263K payroll print was the worst since Dec. 2020, but smashed expectations. After its release, stocks sold off hard, and Treasury yields/$USD index spiked. At midday, the Chicago Fed’s Evans reiterated what Powell said Wed., "We probably are going to have to have a slightly higher peak funds rate, even as we likely will step down“…the pace of hikes. Stock indices then pared losses, with the ES ending marginally down.
China’s Nov Caixin mfg PMI was higher than expected (though still in contraction). The Nikkei rose +0.92%, the Shanghai Comp. climbed +0.45%.
European markets strengthened. The DAX Index added +0.65%. 10-year bunds yield 1.815%.
For the week of 11/26, Initial Claims fell back to 225K vs. 238K exp. Oct Personal Income was up +0.7%, Personal Consumption Expenditures rose +0.8%, the PCE Price Index added “only” +0.3%, and Construction Spending was -0.3% vs.
-0.1% exp. Nov Challenger Job Cuts jumped to 76,835 (vs. 33,843 prior), S&P Global Mfg PMI printed at 47.7 (contraction, weakest since June 2020) vs. 47.6 consensus, and the ISM Mfg Index was 49.0 (contraction, weakest since May 2020) vs. 49.9 exp.
10-Year Notes yield 3.519%. The Dec US$ Index sank -1.15% to 104.680. Jan Crude gained +0.8% to $81.22. Feb Gold shot upwards by +3.1% to $1,815.20.
Yesterday, on the last day of Nov., Powell stated that in effect, there was no change in the Fed’s rate hike path. Panicked capitulatory short-covering ensued. Initially today, the ES edged upwards, then it almost immediately sank, only to mostly recover near unchanged by the close.