Where We Stand
Yesterday’s market was about as exciting as watching paint dry – no big catalysts, just a steady walk down the path of least resistance. The U.S. dollar was on a tear, climbing past the 104‑point mark and setting fresh highs since late‑July. Investors are treating the dollar like a bad boyfriend: it’s sticking around, flirting with higher rates, and refusing to quit.
Foreign‑Exchange Highlights
- Euro slipped below the 1.08 level for the first time in almost three months.
- British Pound dipped under 1.2950.
- Japanese Yen is the real headline grabber – USD/JPY jumped above 153, breaking the 200‑day moving average and reaching its highest value since late‑July.
With the upcoming U.S. election spoiling the political vibe, traders are shuffling in, hoping to ride that momentum, especially after the 200‑day break. Technically, you’ll have to break the 155 mark to find real resistance.
Why the Treasury Curve is Falling Apart
The yield curve is on a straight‑up steepening roller coaster, spiking for the third day in a row. Even with no obvious trigger, this is probably a sign that optimism about the U.S. economy is spilling over. Yields are too good to ignore: 10‑year notes now trading above 4.25%, and 30‑year bonds top 4.50%.
While the market’s risk appetite may be feeling the heat, don’t forget that the Fed is still loosening policy—if only for a while, investors may still want to lock in these yields before anything changes.
Market Sentiment and the Big Picture
Stocks didn’t sit still – the S&P 500 slid for a third day in a row, the Nasdaq tumbled up to 2% in one day, marking the steepest fall since early‑September. The pre‑election de‑risking spree is blame‑worthy. But the long‑term road still points to growth, solid earnings, and a “Fed put” backing that assures folks that the Fed’s policy will stay supportive.
This “Fed put” is more of a global policy put now, as G10 central banks are aligning their moves. Take the Bank of Canada’s surprise 50‑bp rate cut; it was on the dot, showing that the global combo of policy normalisation will keep supporting risk sentiment once the election is over.
Gold – The Roller‑Coaster of a Metal
Gold hit a record high for the fifth straight day, then came down over 1%, closer to the $2,700/oz line. While a single dip isn’t a sign the rally is over, some gold believers are starting to worry that the climb might hit a top soon. I’d need more clear evidence of a top before I start thinking about shorting gold.
Tomorrow’s Data Landscape
Flash PMI numbers are back on the calendar. They’re mostly going to confirm what we already expect: the eurozone is still contracting and the UK is growing a little. The U.S. will look to outpace its peers, especially in services; the next big reading from the ISM PMI will arrive in a couple of weeks.
US jobless claims are due today, with continuing claims expected around 1.875 million. They’ll provide a running commentary for the upcoming October jobs report, which will come next Friday. Though the report might be muddy because of Hurricanes Helene and Milton, the data should still give us a clearer picture.
Central‑Bank Talk
- ECB Chief Economist Lane will be on the mic – he’s never been shy.
- Bank of England Governor Bailey – third day running – we’re practically spoiled to hear him.
Earnings Spotlight
Today’s earning season will feature airlines, with American Airlines and Southwest Airlines giving us the first look ahead of the market open.
We’re now set to scan what tomorrow will bring – let’s stay alert for those flash PMIs, the twisty Treasury curve, and any news that could tilt the markets.
