© Archyde.com U.S. stocks end five-day losing streak, U.S. bond yields rebound!Markets focus on US PPI data tonight
News from the Financial Associated Press on December 9 (edited by Xiaoxiang)U.S. stocks rose on Thursday, snapping a five-session losing streak, with market traders temporarily pausing their selling ahead of upcoming U.S. inflation data and next week’s Federal Reserve decision. As the tension in the market eased, the yields of U.S. bonds of various maturities generally rebounded overnight, temporarily stopping the recent downward trend.
Market data showed that the three major U.S. stock indexes recovered some of this week’s losses overnight. As of the close of the day, the S & P 500 index rose 29.59 points, or 0.8%, to 3963.51 points. Up 183.56 points, or 0.5%, to 33781.48. Up 123.45 points, or 1.1%, to 11082.00.
Before Thursday, the S&P 500 had posted its fifth straight session of losses, after falling for eight of the previous nine sessions. Comments from top bank executives warning of an imminent recession and layoffs at companies including Morgan Stanley and PepsiCo have weighed on sentiment in recent days.
While stocks moved higher on Thursday, the recent gains in U.S. Treasuries have slowed, with yields mostly rebounding across maturities overnight. Among them, the U.S. bond yield rose 5.1 basis points to 4.324%, the U.S. bond yield rose 7.9 basis points to 3.713%, and the U.S. bond yield rose 5.9 basis points to 3.486%. However, U.S. bond yields still edged down 0.7 basis points to 3.434%.
The inversion between the 2-year and 10-year U.S. bond yields, which has been closely watched by the market, finally did not expand further overnight – it narrowed slightly to -83 basis points, and had expanded to -85.2 basis points on Wednesday. An inversion of the yield curve is often a precursor to a recession. Some analysts believe that the recent decline and sharp inversion in yields appears overdone.
“At the end of the day, people’s concerns about economic growth are a bit overblown at this point. We think the economy will grow below potential next year, but not outright, and we’re seeing some encouraging signs on the consumer front, and we also think The Fed is not going to raise policy rates as much as the market is expecting. So the risk of a policy-driven recession is overstated and you can see that on the curve,” said Zachary Griffiths, senior investment grade strategist at CreditSights in New York.
Vital Knowledge founder Adam Crisafulli pointed out, “U.S. stocks are trying to find a footing, and U.S. Treasuries are showing some signs of profit-taking. But market sentiment remains subdued. The problem is that the U.S. stock market lacks domestic stimulus. Two important inflation data – PPI and University of Michigan inflation expectations will not be released until Friday, and the real highlight (CPI and Fed decision) will be staged next week.”
Data released on Thursday showed that the number of Americans filing new claims for unemployment benefits edged up to 230,000 last week, in line with market expectations. But continuing claims jumped to 1.671 million, a 10-month high, suggesting the labor market is deteriorating.
Markets focus on US data tonight
Fed Chairman Jerome Powell last week suggested the central bank could slow its aggressive pace of rate hikes in December, but he also warned the central bank still has a long way to go in fighting inflation. At present, the market expects that the Federal Reserve is bound to announce a 50 basis point rate hike at its December interest rate meeting next week, which will end the momentum of raising interest rates by 75 basis points in four consecutive meetings.
Futures markets suggest the vast majority of investors have priced in the move, but sentiment on Wall Street remains shaky ahead of the November inflation report and the Federal Reserve’s final meeting of the year next week.
Judging from the financial calendar, investors will undoubtedly face several key tests tonight. One of the indicators to watch is the November Producer Price Index (PPI). As one of the leading indicators of inflation, the trend of PPI is expected to further confirm the view that inflation has peaked. Considering that the supply chain situation has improved recently and the product supply and demand environment is gradually balanced,The agency predicts that the PPI growth rate in November will drop from the previous 8.0% to 7.2%, and will also fall back to 5.9%.
In addition, this year’s University of Michigan’s one-year inflation rate expectations indicator is also worthy of investors’ attention.
Some analysts said that the rise in U.S. bond yields on Thursday may be just an episode in the downward trend. U.S. November PPI will be released on Friday, CPI will be released next Tuesday, and the Fed will announce its December policy decision just a day later.
The two headline inflation data ahead of the meeting will be scrutinized for clues about how high the federal funds rate may rise. The interest rate pricing that the market has priced in on Thursday shows that the Fed’s benchmark interest rate will reach a peak of 4.94% in May next year.
Mike Loewengart, a strategist at Morgan Stanley’s Global Investment Office, said, “Investors will have a lot to digest in the coming days as they get a clearer picture of where we stand in the fight against inflation ahead of the Fed’s decision next week.Markets are largely expecting a slowdown in rate hikes starting next week, but whether the adjustment will be enough to guide the economy to a soft landing remains a question. “