With the holiday season approaching, the newsletter will become a bit sporadic over the coming weeks and we will be taking a couple of weeks break at the end of the year.
Chart of the Day
OPEC said yesterday that it will stick to its plan to raise production in the new year, even though oil prices have fallen sharply in the past few weeks. Despite this news, oil prices rose on the day, as OPEC also said it was willing to backstop the market if needed. Traders appear to be betting that the current level of prices is close to the likely floor, given supply will be cut to match any further decreases in demand. Could we therefore be in for a bounce in crude in the coming days?
Macro
All eyes today on US non-farm payrolls today – the ADP employment report on Wednesday showed an increase of 534,000, in line with expectations.
Less positive news was a fresh rise in initial jobless claims last week.
The data on Wednesday showed the prices paid component of the manufacturing ISM fell in November and suggests inflation will soon slow.
In the US, mortgage applications have jumped in recent weeks.
US construction spending growth fell to 5.8% YoY in October. Residential spending growth stands at 16.4% while non-residential growth is at 2.0%.
Markets
The weekly EIA report showed that US crude production rose by 0.1 mn barrels last week, a potentially bearish sign for prices.
Gold has slumped again since Powell delivered his hawkish comments earlier in the week.
Those comments have caused real 5-year yields to jump – though 10-year yields have moved very little.
The Nasdaq enjoyed a bounce yesterday despite the further rise in real yields.
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