Treasuries Yields Increase as Market Rethinks Federal Reserve’s Mild Stance: Financial Overview

Amid discussions on production levels, the OPEC+ meeting was postponed. Following reports indicating an increase in the expected consumer inflation rate for the next year, Treasury yields saw a rise. This led to some investors cashing in on their earlier mild Federal Reserve bets.

Just before the Thanksgiving break, the two-year US Treasury yields surpassed 4.9%. There was a slight uptick in the S&P 500 AMZN  saw a rise in anticipation of the Black Friday and Cyber Monday sales MSFT witnessed gains following the announcement of Sam Altman’s return to OpenAI. Conversely, NVDA experienced a decline post-earnings report. The dollar appreciated in value, while oil prices decreased. According to the University of Michigan’s final November survey, Americans now anticipate a 4.5% annual inflation rate over the coming year, an increase from the previously expected 4.4%. The survey also indicated expectations of a 3.2% rise in costs over the next five to ten years.

 In other economic updates, there was a decrease in applications for US unemployment benefits last week, providing a brief respite in the cooling labor market. Orders for durable goods dropped in October, more than expected, as demand for commercial aircraft and business equipment weakened.

In the SOFR options market, a notable trend was the unwinding of mild hedges, indicating that traders are reaping profits from mild Federal Reserve bets made as early as September.

Stocks continued their upward trend in November. Analyst Lori Calvasina from RBC Capital Markets predicts that the S&P 500 will reach a new record high next year, driven by positive sentiment and strong valuations. In other news, oil prices dropped as the anticipated OPEC+ meeting was postponed, reducing expectations of the group’s intervention to limit supplies.

Corporate Updates:

• BA  737 Max’s largest variant received authorization from the Federal Aviation Administration, advancing to the next stage of flight tests.
• AVGO finalized its acquisition of VMware Inc., concluding an 18-month process that ended with approval from China.
• DE projected lower-than-expected profits for the coming year due to reduced demand for equipment from farmers.
• ADSK faced a downgrade from Piper Sandler due to its modest growth rate and conservative margin forecasts.
• GES, JWN, and URBN reported revenues below estimates.
• Morgan Stanley downgraded SPCE, citing a lack of planned revenue-generating flights between mid-2024 and 2026.

Key Market Movements:

Stocks

• The S&P 500 increased by 0.2%
• The Nasdaq 100 rose by 0.3%
• The Dow Jones Industrial Average went up by 0.4%
• The MSCI World index remained relatively stable

Currencies

• The Bloomberg Dollar Spot Index increased by 0.3%
• The euro dropped by 0.3% to $1.0881
• The British pound declined by 0.4% to $1.2486
• The Japanese yen fell by 0.8% to 149.63 per dollar

Cryptocurrencies

• Bitcoin rose by 1% to $37,211.9
• Ether increased by 4.2% to $2,069.05

Bonds

• The yield on 10-year Treasuries went up three basis points to 4.42%
• Germany’s 10-year yield remained steady at 2.56%
• Britain’s 10-year yield rose by five basis points to 4.15%

Commodities

• West Texas Intermediate crude oil decreased by 1.2% to $76.86 a barrel
• Spot gold dropped by 0.4% to $1,990.49 an ounce