Hey folks a few strong weeks of upside market action does not make a market but it goes a long way to flushing out a lot of Shorts while calming the markets some. We did see the US got a Negative credit watch from Moody’s after markets closed this past Friday so we will have to see how that plays into the overall market sentiment as we round out the remainder of 2023. Get my take in this week’s market round-up below:
WEEKLY SOUND BITES:
US indexes finished mixed for the week, but not before the S&P 500 came close to matching its longest winning streak in nearly two decades—on Wednesday, the S&P 500 notched its eighth straight gain, while the Nasdaq marked its ninth. It was one of the final weeks of major Q3 Earnings, and upside surprises from some technology-oriented firms appeared to provide support to the growth indexes. In fact, the only sector that finished in the green this week was Technology, with all other S&P Sectors in the red.
U.S. Treasury debt auctions during the week seemed to play an uncommonly large role in driving sentiment in both the equity and bond markets. Thursday’s USD 24 billion auction of 30-year U.S. Treasury bonds, was met with the weakest demand in two years which helped drive US Equities lower and interest rates higher. Also, the University of Michigan’s release on Friday of its preliminary gauge of consumer sentiment, which fell unexpectedly to its lowest level in six months.
Traders may have also reacted to comments from Fed Chair Jerome “Power Ranger Boom Boom” Powell, who told a gathering of the International Monetary Fund that policymakers were “not confident” that they had achieved “a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time.”
In the U.K. the BoE Governor Andrew Bailey said at a central bank conference in Ireland that it was “really too early” to talk about cutting interest rates. Meanwhile, UK GDP in Q3 matched the BoE’s forecast for zero growth, after expanding by 0.2% in the prior three months. In the European Union, the latest statistics continued to point to a weak economy. Retail sales in the eurozone fell 0.3% in September, after declining 0.7% in August. In Germany, industrial production in September fell 1.4% sequentially, after flatlining in August, while manufacturing orders increased 0.2%—well below the 1.9% registered in the previous month.
Over in Japan, the BoJ Governor Kazuo Ueda warned that normalizing short-term interest rates will be a serious challenge, due to the potential impact on financial institutions, borrowers, and aggregate demand. The yield on the 10-year Japanese government bond (JGB) fell to 0.85%, from 0.91% at the end of the previous week. Japan’s cabinet approved an extra budget to support Prime Minister Fumio Kishida’s latest economic stimulus package, which is worth more than USD 110 billion.
Chinese equities rose as investors remained broadly unmoved by data showing that consumer prices slipped back into contraction, reviving the specter of deflation hanging over the economy. The CPI fell 0.2% in October from the prior-year period while the PPI dropped 2.6% from a year ago, marking the 13th consecutive month of decline. Overseas exports declined 6.4% in October from a year earlier, surpassing the 6.2% fall in September, amid weaker global demand. However, imports unexpectedly rose by 3%, reversing the 6.2% contraction in September and marking the first year-on-year growth since September 2022.
Enjoy this week’s round-up;
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