- The end of yesterday's session on Wall Street proved weak for the major benchmarks in the US. Buyers struggled to maintain their initial lead, with the S&P 500 and Nasdaq 100 erasing gains and closing slightly lower. The Dow Jones gained a symbolic 0.04%.
- Global bonds are having their best month since 2008 and are gaining on a wave of expectations for expected Fed rate cuts in 2024. Yields on short-term, 2-year US bonds fell 0.09% to 4.65% yesterday.
- The Fed's Beige Book supported market expectations about Fed policy change in 2024, indicated that consumers are becoming more price sensitive and have reduced discretionary spending. Demand for labor continued to ease and most US districts expect moderate price increases to continue into next year "(...) economic activity slowed since the previous report, with four districts reporting modest growth, two indicating conditions were flat to slightly down, and six noting slight declines in activity. The economic outlook for the next six to twelve months diminished over the reporting period."
- China's much-awaited PMI data, reported by the state-run NBS, again disappointed negatively, raising hopes for even broader support for the economy. The Asian session saw modest gains, ranging between 0.01 and 0.3% for all benchmarks starting with China's HangSeng, which managed to hold the psychological level of 17,000 points, Japan's Nikkei and Topix, and Korea's KOSPI
- China's Manufacturing PMI came in at 49.4 versus 49.8 forecast and 49.5 previously. The non-manufacturing PMI also disappointed with a decline, despite an expected increase. It came in at 50.2 versus 50.9 expectations and 50.6 previously
- Less significant macro data from Japan performed better than analysts expected but retail sales surprised with a slight decline. Large-scale retail sales in Japan rose 4% y/y vs. 5% in the previous reading. The headline retail sales index rose 4.2% vs. a 6% forecast and a 6.2% revision of the first reading, which showed 5.8%. The country's industrial production rose 0.9% y/y vs. -4.4% previously, and in m/m terms it was 1% higher vs. 0.5% previously and 0.8% forecasts
- Japan's consumer sentiment index indicated 36.7 versus 35.6 forecast and 35.7 previously. Building permits fell at a lower-than-expected pace, by -6.2% y/y vs. 7% forecasts of -6.8% previously.
- Nakamura of the Bank of Japan indicated that the bank could not be sure of reaching the target and more time is needed to change policy, including the YCC and lower interest rates. In his view, the country's economic expansion is proceeding in a 'moderate manner' and stimulus policies are still basic option. He stressed that policy easing should be 'patiently maintained'. USDJPY is trading down a modest 0.10% today
- According to sources in Qatar, which serves as the main mediator between Hamas and Israel, both sides in the conflict have agreed to extend the truce by at least one day. According to the WSJ, the United States and Israel are discussing a scenario of capturing Hamas fighters and returning them from Gaza, in order to hasten the end of the war
- Home loans in Australia rose 0.4% vs. 0.4% previously. Building permits rose a surprising 7.5% vs. 1.5% forecast and -4.6% previously. The 'Aussie' strengthens significantly against the dollar, with AUDUSD posting near 0.5% gains
- Index contracts in Europe point to a higher opening of the session on the Old Continent. Dutch retail sales came in at 3.9% vs. 3.5% previously
- USDIDX dollar index contracts are losing ground and have retreated below 1.07, at a time when the EURUSD is gaining 0.1% and holding near 1,098.
- Bitcoin's price remains below $38,000, and cryptocurrencies traded in mostly mixed sentiment today.
- Fitch Ratings says the total debt service-to-income ratio of U.S. households could rise to 11.7% by 2025 from 9.9% in 2022, a 'relatively modest increase despite a sharp rise in market interest rates on new household loans.' Rating agency estimates that consumer debt service on non-mortgage loans will rise to 7.3% in 2025 from 5.9% in 2022. Fitch expects lower consumption in the U.S., next year due to an increase in credit card interest rates and the resumption of student loan repayments, which 'will drive household non-mortgage debt service to historic highs in 2024;
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