Yesterday, yields moved higher and stocks moved lower. Today was more mixed as yields moved lower, but stocks moved lower again. Crude oil followed the stock market to the downside. In the forex market, the USD was mixed which is perhaps congruent with the other markets today.
The move lower in yields came despite 3Q GDP coming in higher than expected at 4.9% vs 4.3% and stronger durable goods data as well with a gain of 4.7% vs 1.7%. Continuing claims were higher than expected and are showing a more positive trend over the last few months.
The explanation could be that the economy can’t possibly be stronger in the current quarter after 4.9% growth. Consumer spending rose 4.0% this quarter. That is pretty hefty to. With headwinds from higher energy, and credit card delinquencies going higher, it will be a stretch to equal that growth.
Looking at the yield curve, the end-of-day levels are showing:
- 2-year yield 5.045%, -7.5 basis points.
- 5 year yield 4.798% -11.7 basis points
- 10 year yield 4.848% -10.4 basis points
- 30 year yield 4.991% -10.0 basis points
Meanwhile, over in the stock market, the selling of the major indices continued with the NASDAQ index leading the way (again). Recall yesterday the NASDAQ index fell -2.43%. That was good enough for the the 2nd largest fall this year. Today the index tacked on another -1.76%.
For the week the NASDAQ index is now down -2.99%. That comes after a fall of -3.16% last week. For the month of October, the NASDAQ is down -4.72%. In September the index fell -5.81%. Those are not good numbers. Looking at the broad S&P index, it fell -1.18%. The Dow industrial average was down -0.76%.
In the forex, the NZD is ending as the strongest of the major currencies. The CHF is the weakest. The US dollar is sitting in the middle of the strongest to the weakest table with nearly equal gains vs losses vs the major currencies. The USDCHF was the biggest dollar mover to the upside with a gain of 0.29%. The AUDUSD moved 0.33% in favor of the AUD
The ECB today Rates unchanged as expected at 5.0%. Following the rate decision, ECB President Lagarde addressed several key points. Firstly, the ECB refrained from stating that it had reached peak rates, indicating a degree of flexibility in its monetary policy approach. The decision was unanimous among policymakers. Lagarde acknowledged that economic growth had weakened, highlighting that PMI indicators did not reflect substantial vigor. Importantly, she emphasized that maintaining current rates did not signify a long-term commitment to no rate hikes, keeping the door open for future adjustments. Lagarde also stressed that, at present, forward guidance was not appropriate, and the debate on rate cuts was considered premature. She noted the broadening impact of higher rates and the likelihood of continued economic weakness in the near term, although improvements were anticipated in the coming years. The labor market was viewed as a supporting factor, but signs of weakening were observed, and the energy price outlook remained uncertain due to recent conflicts. Eurozone growth risks continued to tilt toward the downside.
The EURUSD moved lower in the Asian session but found support buyers near the low of a swing area at 1.0522. On the topside, the 1.0561 to 1.0565 will be resistance going into the new trading day. For a look at the technicals driving the pair click here.
For other videos on the technicals driving the currency markets go to our technical link.
Good fortune with your trading, and wishing all our APAC friends a great weekend.