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  • Writer's pictureThe San Juan Daily Star

Marketmind: Rates Buzz Sustained Before Fed Loan Data

A look at the day ahead in U.S. and global markets from Mike Dolan


After its best week of 2023 on optimism about peaking interest rates, Wall Street’s S&P500 looks set to record its longest winning streak since June as a key Federal Reserve loan report may well sustain the rates buzz.


A below-forecast national payroll gain last month, a tick higher in the unemployment rate and moderating wage growth all catapulted stocks and bonds higher on Friday after a week brimming with hope the rate hiking campaign of the major central banks is over at last and a relatively soft landing beckons.


A look at the day ahead in U.S. and global markets from Mike Dolan


After its best week of 2023 on optimism about peaking interest rates, Wall Street’s S&P500 looks set to record its longest winning streak since June as a key Federal Reserve loan report may well sustain the rates buzz.


A below-forecast national payroll gain last month, a tick higher in the unemployment rate and moderating wage growth all catapulted stocks and bonds higher on Friday after a week brimming with hope the rate hiking campaign of the major central banks is over at last and a relatively soft landing beckons.


The VIX volatility gauge, which on Friday fell below 15 for the first since September, tried to get a toehold back above that level today.


Undermined by the retreat in Treasury yields, the dollar slipped back to the lowest since Sept 20.


The backdrop of an easier dollar and Treasury yields provides significant relief for emerging markets, with MSCI’s emerging market stock index hitting its highest since Sept 20 too.


Ahead of a full slate of Chinese economic updates later in the week, the offshore yuan also hit its highest in more than six weeks.


However, China recorded its first-ever quarterly deficit in foreign direct investment, according to balance of payments data out on Monday, underscoring Beijing’s challenge in wooing overseas firms amid “de-risking” moves by Western governments.


U.S. Treasury Secretary Janet Yellen will meet with Chinese Vice Premier He Lifeng in San Francisco this week to try to deepen a fledgling economic dialogue between the world’s two largest economies ahead of a summit of Pacific Rim leaders.


But it was South Korean shares that outperformed all Asia markets. Seoul’s Kospi index surged 5.6% after a weekend decision by regulators to re-impose a ban on short-selling shares at least until June - ostensibly to promote a “level playing field” for retail and institutional investors.


In Europe, stock indexes gave back a little of last week’s rally - but Ryanair soared 6% after Europe’s largest airline by passenger numbers forecast a record annual profit and promised a regular dividend payout.


Key developments that should provide more direction to U.S. markets later on Monday:


* Federal Reserve’s Senior Loan Officer Opinion Survey on bank lending (SLOOS), U.S. Oct employment trends


* U.S. corporate earnings: TripAdvisor, Goodyear Tire & Rubber, Vimeo, Aspen, Telesat, Realty Income, Conterra Energy, Constellation Energy, Diamondback Energy, Celanese, Vertex Pharmaceuticals, NXP Semiconductors, International Flavors & Fragrances, etc


* Federal Reserve Board Governor Lisa Cook speaks; Bank of England Chief Economist Huw Pill speaks

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