Two-year US yield hits 4.9% after economic data: Markets Wrap

(Bloomberg) — Treasury yields rose as investors weighed a range of economic data for clues about the prospects for the Federal Reserve’s next moves.

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Two-year yields reached 4.9% after data showed short-term U.S. inflation expectations climbed to an eight-month high in November. The S&P 500 gave up its gains. Microsoft Corp. made progress on news: Sam Altman will return to lead OpenAI. Nvidia Corp. fell according to his results. Oil prices plunged after OPEC+ postponed this weekend’s meeting as production talks ran into trouble.

U.S. jobless claims fell last week after a series of increases, providing slight relief in an otherwise gradually cooling labor market. Durable goods orders fell more than expected in October as bookings for commercial aircraft fell and demand for business equipment weakened.

Stocks have rallied this month as investors bet the Fed is finally done raising interest rates. Minutes from the Fed’s latest meeting showed that policymakers agreed on the strategy to “take a cautious approach” to future interest rate moves and to base any tightening on progress toward their inflation target.

According to Lori Calvasina of RBC Capital Markets, the S&P 500 will rise to a record high next year, supported by positive sentiment and robust valuations.

“Sentiment is constructive for now,” Calvasina wrote in a note, saying one indicator of investor appetite that has proven reliable in 2023 is in a range typically associated with a 10% rise in the S&P 500 above 12 months follows. “Valuations may remain higher than many investors realize” as cooling inflation is expected to support price-earnings ratios, she wrote.

The story goes on

Company highlights:

  • Deere & Co. forecast lower-than-expected profit next year as slowing equipment demand from farmers begins to weigh on the world’s largest tractor maker.

  • Autodesk Inc. was downgraded by Piper Sandler due to the company’s subdued growth rate and subdued margin expectations.

  • Guess? Inc., an apparel company, reported net sales that fell short of estimates.

  • Nordstrom Inc., a department store chain, reported total sales that fell short of estimates.

  • Urban Outfitters Inc., a clothing retailer, reported comparable sales for its namesake banner that fell short of estimates.

  • Virgin Galactic Holdings Inc. was downgraded by Morgan Stanley as the rocket company plans no revenue-generating flights from mid-2024 to 2026.

Some of the key moves in the markets:

Shares

  • The S&P 500 rose 0.2% at 10:02 a.m. New York time

  • The Nasdaq 100 rose 0.3%

  • The Dow Jones Industrial Average rose 0.2%

  • The Stoxx Europe 600 rose 0.2%

  • The MSCI World Index has hardly changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.5%

  • The euro fell 0.5% to $1.0861

  • The British pound fell 0.6% to $1.2469

  • The Japanese yen fell 0.8% to 149.52 per dollar

Cryptocurrencies

  • Bitcoin fell 1.4% to $36,325.52

  • Ether rose 1.8% to $2,021.91

Tie up

  • The 10-year Treasury yield rose one basis point to 4.40%

  • The 10-year German government bond yield fell two basis points to 2.54%

  • The 10-year UK government bond yield rose three basis points to 4.13%

raw materials

This story was produced with support from Bloomberg Automation.

– With support from Rob Verdonck, Tassia Sipahutar, Robert Brand and Sagarika Jaisinghani.

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©2023 Bloomberg LP


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