2023-11-09 22:20:03
– No 10th session of increase in the Nasdaq: the tide reversed around 7 p.m. (i.e. mid-session) and the index really sank into the red to finish at the lowest of the day, in decline of -0.94%, the S&P500 dropping -0.81%.
Prices began to drop when Jerome Powell spoke and questioned the medium-term effectiveness of the measures taken against inflation to bring it back to the 2% objective… and ‘he doesn’t’ “I’m not sure that this will be the case, if inflation does not slow down and if the labor market does not relax.”
For his part, Thomas Barkin, president of the Richmond Fed, declared that ‘the decline in inflation takes a ‘bumpy path’ and that focusing too much on the evolution of long-term rates is not a relevant strategy for manage monetary policy.
This implies that the FED will really take its time before considering ‘pivoting’ and does not rule out the possibility of a new episode of price increases.
But the fate of the session also changed for a more ‘technical’ reason: an issue of 30-year Treasury bonds ($24 billion) went badly, with weak demand that the ‘SVTs’ were forced to to compensate by collecting the ‘paper’ left behind by foreigners (mainly).
The ‘SVTs’ were forced to buy the equivalent of twice their usual quota.
Rates rose sharply: the ’10-year’ saw its yield jump by +15 points to 4.64% compared to 4.49% the day before.
The ‘2 years’ went from 4.93% to 5.035% in a few minutes… and the ’30 years’, starting from 4.65%, crossed 4.80% again.
The rise in rates traditionally penalizes the Nasdaq: this was again verified with the sharp decline of Tesla -5.5%, Lucid -4.9%, First Solar -3.8%, On-Semiconductors -2.9 %, Illumina -3.4%, Comcast -1.5%, Alphabet -1.2%, Amazon -1%.
The sector that finishes at the bottom is that of cruise lines, the penultimate is that of health (Biotechs and Pharma) with Eli & Lilly -4.5%, Gilead -3.8%, Amgen -3.4%, Regeneron – 2.8%, Moderna -2.6%, Pfizer -2.4%.
Few ‘macro’ figures this Thursday: weekly unemployment claims in the United States stood at 217,000, a drop of 3,000 compared to the revised level of the previous week, according to the Department of Labor: this is a modest decline then that the cast is in the midst of pre-Thanksgiving recruiting.
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