US yields rise amid Fed dovish bets decline: Markets wrap

(Bloomberg) — Treasury yields rose after data showed another increase in consumer inflation expectations next year, with some traders taking profits on the Federal Reserve’s dovish bets.

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In a thin trading session before the Thanksgiving holiday, two-year US bond yields hovered near 4.9%. The S&P 500 rose. Amazon.com shares rose ahead of Black Friday and Cyber ​​Monday sales. Microsoft gained on news that Sam Altman will return to lead OpenAI. Nvidia Corp fell after its results. The dollar advanced. Oil fell.

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

“For the data-driven Fed, this is not good news because they do not want to see consumer inflation expectations become unstable, because historically it has become increasingly difficult to reset consumer psychology toward a lower inflationary environment,” said Quincy Crosby, chief global strategist. . For LPL Financial Company.

In other economic news, US jobless claims fell last week after a series of increases, representing a slight respite in what would otherwise be a gradually slowing job market. Durable goods orders fell more than expected in October as commercial aircraft bookings fell and demand for business equipment weakened.

A prominent theme in the SOFR options market on Wednesday was the unwinding of dovish hedges — which emerged in a sign that traders are taking profits from dovish Fed bets dating back to September.

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Stocks extended their gains for November. The S&P 500 will rise to a record high next year, buoyed by positive sentiment and resilient valuations, according to Lori Calvasina of RBC Capital Markets.

“Sentiment is constructive at the moment,” Calvasina wrote in a note, saying the indicator of investor appetite that has proven reliable in 2023 is in a range typically followed by a 10% gain in the S&P 500 over a 12-month period. “Valuations could remain higher than many investors realize,” she wrote, because muted inflation should support price-to-earnings multiples.

Elsewhere, oil fell as the OPEC+ meeting scheduled for the weekend was postponed, dampening traders’ expectations that the organization would intervene to tighten supplies.

Read: LME base metals markets show signs of surplus

The most prominent features of the company:

• The largest version of Boeing’s 737 MAX has received a so-called type inspection clearance from the Federal Aviation Administration, which paves the way for the next phase of flight testing of the long-awaited model.

• Broadcom Inc. has completed Its acquisition of software maker VMware Inc. After an unexpectedly long process that lasted 18 months and culminated in the deal being approved in China.

• Deere & Co. expects lower-than-expected profits next year, as slowing demand for equipment from farmers begins to impact the world’s largest tractor maker.

• Autodesk Inc. has been downgraded. By Piper Sandler following the company’s tepid growth rate and declining margin expectations.

• Guess? Clothing company Inc. announced Net revenues exceeded estimates.

• Nordstrom, a department store chain, reported total revenue that beat estimates.

• Urban Outfitters Inc., an apparel retailer, reported comparable sales for its namesake logo that beat estimates.

• Virgin Galactic Holdings Inc. has been downgraded. By Morgan Stanley, which noted that the rocket company has no revenue-generating flights planned for mid-2024 to 2026.

Some key movements in the markets:

Stores

• The S&P 500 rose 0.4% as of 4pm New York time

• Nasdaq 100 index rises 0.4%

• The Dow Jones Industrial Average rose 0.5%

• MSCI World Index rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%.

• The euro fell 0.2 percent to $1.0887

• The British pound fell 0.4 percent to $1.2495

• The Japanese yen fell 0.8 percent to 149.59 yen to the dollar

Digital currencies

• Bitcoin rose 2.1% to $37,598.9

• Ethereum rose 4.5% to $2,074.67

Bonds

• The yield on 10-year Treasury bonds rose two basis points to 4.41%.

• There was little change in the yield on German bonds for 10 years at 2.56%.

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

Goods

• West Texas Intermediate crude fell 1.3% to $76.73 a barrel

• Gold in spot transactions fell 0.4 percent to $1,989.81 per ounce

This story was produced with assistance from Bloomberg Automation.

-With assistance from Rob Verdonk, Tasya Sipahutar, Robert Brand, Sagarika Jaisinghani, and Edward Bolingbroke.

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