US yields rise as Fed unwinds bets: Markets Wrap – Yahoo Finance

(Bloomberg) — Treasury yields rose after data showed another rise in consumer inflation expectations for the year ahead and some traders took profits on dovish bets from the Federal Reserve.

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In a weak trading session before the Thanksgiving holiday, two-year U.S. yields topped 4.9%. The S&P 500 rose slightly. Amazon.com Inc. rose ahead of Black Friday and Cyber ​​Monday sales. Microsoft Corp. benefits from the news that Sam Altman will return as head of OpenAI. Nvidia Corp. fell according to his results. The dollar rose. Oil slipped.

Americans expect inflation to rise at an annual rate of 4.5% next year, up from the 4.4% expected earlier this month, according to final November figures from the University of Michigan. They expect costs to rise 3.2% over the next five to 10 years, data showed Wednesday.

“This isn’t good news for a data-dependent Fed as they don’t want consumers’ inflation expectations to dissipate, as historically it has become increasingly difficult to shift consumer psychology to a lower inflation environment,” said Quincy Krosby, chief global strategist for LPL Financial.

In other economic news, U.S. jobless claims fell last week after a series of increases, providing a slight reprieve 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.

The standout theme in the SOFR options market on Wednesday was the unwinding of dovish hedges – which has increased, a sign that traders are taking profits on dovish Fed bets made back in September.

The story goes on

Stocks extended their November gains. 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.

Elsewhere, oil prices slumped as the OPEC+ meeting scheduled for the weekend was postponed, dampening traders’ expectations that the cartel will intervene to tighten supplies.

Read: LME base metals markets show signs of surplus

Company highlights:

  • Boeing Co.’s largest 737 Max variant received so-called type inspection approval from the Federal Aviation Administration, paving the way for the next phase of flight testing of the long-delayed model.

  • Broadcom Inc. completed its acquisition of software maker VMware Inc. after an unexpectedly long 18-month process that culminated in approval of the deal in China.

  • 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% as of 2:46 p.m. New York time

  • The Nasdaq 100 rose 0.3%

  • The Dow Jones Industrial Average rose 0.4%

  • The MSCI World Index has hardly changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%

  • The euro fell 0.3% to $1.0881

  • The British pound fell 0.4% to $1.2486

  • The Japanese yen fell 0.8% to 149.63 per dollar

Cryptocurrencies

  • Bitcoin rose 1% to $37,211.9

  • Ether rose 4.2% to $2,069.05

Tie up

  • The 10-year Treasury yield rose three basis points to 4.42%

  • The yield on 10-year German government bonds has hardly changed at 2.56%

  • The 10-year UK government bond yield rose five basis points to 4.15%

raw materials

  • West Texas Intermediate crude fell 1.2% to $76.86 a barrel

  • Spot gold fell 0.4% to $1,990.49 an ounce

This story was produced with support from Bloomberg Automation.

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

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©2023 Bloomberg LP


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