Stocks advanced and the dollar fell as weak US consumer data and the emergence of a pro-rate-cut official as the potential head of the Federal Reserve pushed markets to price in an almost-certain reduction in borrowing costs. The MSCI’s All Country World Index extended its rally to a fourth day, trimming the gauge’s losses from this month’s selloff to 1.3%. Asian shares jumped 1.4% on the back of advances on Wall Street. The momentum looked set to continue, with futures for the S&P 500 and European equities pointing to further gains. Treasuries pared some of their gains from the prior session, when news that White House National Economic Council Director Kevin Hassett had emerged as the frontrunner to be the next Fed chair helped lift bonds. The dollar weakened against most of its Group-of-10 peers, with New Zealand’s currency gaining more than 1%. Gold, which typically benefits when rates are cut, climbed 0.9% to $4,166 an ounce. The pound strengthened ahead of UK Chancellor of the Exchequer Rachel Reeves’ budget. The return of momentum in global stocks comes after worries about frothy valuations in the artificial intelligence sector prompted investors to sell shares earlier in November and pull back from riskier parts of the market. Sentiment is now improving as delayed economic data pointed to some softness in the US economy, while more Fed officials signaled support for a rate cut. Heading into the October Fed policy meeting, investors saw a December rate cut as a sure thing. Odds plunged following the outburst of hawkish sentiment, briefly falling below 30%, according to pricing in federal funds futures. Traders now see over a 90% chance that the US central bank will cut rates next month. It’s normal for Fed officials to guide Wall Street toward their ultimate decision ahead of the meetings to avoid surprises. Only three times in more than two years — covering a total of 20 Fed meetings — have traders not fully priced in an outcome this close to a policy decision. As bets on a rate cut increased, the yield on the benchmark US 10-year slipped to below 4% on Tuesday for the first time in almost a month. US consumer confidence in November saw its steepest drop since April, and retail sales rose modestly in September, suggesting consumer spending is cooling after months of strong demand. The delayed economic reports out of the US further cemented bets for a Fed cut in December, even after Chair Jerome Powell warned last month that a reduction isn’t a foregone conclusion. The latest US economic reports have taken on added weight ahead of the Fed’s December meeting, given the lack of fresh data. Governor Stephen Miran underscored that outlook by reaffirming his belief that the US economy requires substantial rate reductions. While the Fed typically adjusts rates in 25‑basis‑point increments, it has on occasion moved by 50 basis points or more. With the US government shutdown disrupting economic releases, “the market is effectively flying half-blind,” wrote Dilin Wu, a strategist at Pepperstone Group Ltd. The sustainability of the rebound “ultimately hinges on whether upcoming data confirm the soft-landing narrative.” The Bloomberg Dollar Spot Index dropped 0.2% Wednesday after a 0.3% slide in the prior session.
The key risk event in Europe is the budget in the UK. Reeves needs to announce measures that will both placate the MPs who’ve put Prime Minister Keir Starmer on notice and the gilt holders who’ve been demanding a premium on UK debt relative to the likes of the US, Germany and Japan. Meanwhile, the Reserve Bank of New Zealand cut interest rates to a fresh three-year low to support a nascent economic recovery, while the currency gained on bets the easing cycle is approaching an end. Separately, South Korea’s finance minister said authorities are closely monitoring any speculative, one-sided currency moves, underscoring the country’s readiness to act as the won trades near a seven-month low. Elsewhere in commodities, oil steadied after closing at the lowest in a month on signs of progress toward a peace deal in Ukraine.
Nikkei +1.85% Hang Seng +0.37% CSI +0.65% Shanghai -0.13% Shenzen +0.30%
Eur$ 1.1586 CNH 7.0781 CNY 7.0814 JPY 156.13 GBP 1.3188 CHF 0.8055 RUB 78.8020 TRY 42.4690 WTI$ 58.15 +0.33% Gold 4,164 +0.81% BTC 87,540 +0.60% ETH 2,942 +0.45% SOL 138.76 +1.15%
S&P +0.35% Nasdaq +0.51% EuroStoxx +0.72% FTSE +0.26% Dax +0.63% SMI +0.32%
Macro :
- Witkoff Advised Russia on How to Pitch Ukraine Plan to Trump
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