10Y yields fell, Gold up 0.7%; Bitcoin records
Dollar Spot Down; U.S. markets hit records as S&P 500 gained 0.6%, 10Y yields fell to 4.24%. gold +0.7%, Bitcoin +3.1%. Tariff risks loom.
U.S. Markets, Economic Indicators and the Dollar
The U.S. economy showed mixed signals, with inflation and tariffs dominating the economic narrative. The S&P 500 climbed 0.6%, reaching a record high above 6,000, while Treasury yields eased; the 10-year yield fell six basis points to 4.24%. Despite trade-related jitters, consumer confidence rose, and Q3 GDP was revised to a 2.8% annualized growth rate. October’s core PCE inflation gauge is expected to rise to 2.8%, with headline inflation at 2.3%. Weekly jobless claims remained stable at historically low levels.
The Federal Reserve hinted at potential adjustments to the overnight reverse repurchase agreement rate, currently at 4.55%, amid debates on the future path of interest rates. The Bloomberg Dollar Spot Index dropped 0.6%, as the dollar weakened against major currencies, including the yen, which rose 1.3% to ¥151.05 per dollar.
Corporate earnings brought varied outcomes: Dell and HP flagged a stalling PC market, while Urban Outfitters and Nordstrom reported stronger-than-expected sales. Meanwhile, lawsuits targeting investment giants like BlackRock for alleged antitrust violations highlighted ongoing scrutiny of ESG practices.
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European Markets and Data
European equities struggled, with the Stoxx Europe 600 falling 0.4%. The DAX in Germany dropped 0.5%, while France’s CAC 40 declined 1.2% amid domestic political uncertainty. French government borrowing costs spiked, and auto stocks slid for a second consecutive day, impacted by trade and fiscal policy concerns. Societe Generale and BNP Paribas shares fell 2% each as fiscal tensions deepened.
Germany’s 10-year bond yield dipped three basis points to 2.16%, reflecting investor caution. The euro strengthened 0.7% to $1.0558, buoyed by relatively resilient consumer confidence data.
Asian Markets vs the Dollar
Asian markets showed a mixed performance. China’s and Hong Kong’s stocks led gains, supported by improving industrial profit data and expectations of further economic stimulus. In contrast, Japan’s Nikkei dropped 0.8% to 38,134.97 as the yen surged 1.3% against the dollar, signaling safe-haven demand. Tariff tensions and U.S. trade policy uncertainties weighed on investor sentiment.
BYD, a major Chinese EV maker, prepared for intensified competition by seeking supplier price reductions. However, worries over potential U.S. tariff hikes on Chinese imports remain a critical risk for the region.
Commodities and Cryptocurrencies vs the Dollar
Oil prices edged lower, with West Texas Intermediate crude dipping 0.2% to $68.63 per barrel. Gold advanced 0.7% to $2,651.54 an ounce, benefiting from dollar weakness and safe-haven demand.
Cryptocurrencies rallied sharply: Bitcoin rose 3.1% to $94,493.11, while Ether gained 5% to $3,489.46. This upswing reflected increased risk appetite despite broader economic uncertainties.
Global Trade and Tariff Concerns
President-elect Trump’s proposed 25% tariffs on imports from Canada, Mexico, and China sparked volatility. These countries, comprising over 43% of U.S. imports, face potentially significant economic disruption. Goldman Sachs estimated such tariffs would boost the U.S. effective tariff rate by 8.6%, raising core inflation by 0.9% and generating government revenue of 1% of GDP.
Mexico’s peso and Canada’s dollar declined, with related equity markets also impacted. Analysts warned of broader ripple effects on global trade, especially in Europe and Asia, as these regions brace for fallout.
Key Market Moves
Stocks: S&P 500 fell 0.1%; Nasdaq 100 down 0.4%; Dow Jones little changed; Nikkei fell 0.8%.
Currencies: Euro rose 0.7% to $1.0558; yen gained 1.3% to ¥151.05 per dollar.
Bonds: U.S. 10-year yield fell to 4.24%; German 10-year yield at 2.16%.
Commodities: Oil dipped 0.2%; gold rose 0.7%.
Cryptocurrencies: Bitcoin up 3.1%; Ether up 5%.
This week’s key events include U.S. PCE inflation data, Eurozone CPI, and the ECB’s consumer expectations survey.
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