On Thursday (November 2nd), a day after the Federal Reserve hinted at the possibility of ending the interest rate hike cycle, the US stock market rose as traders waited for Friday's employment report. Apple has released its latest quarterly financial report that exceeded expectations.
Driven by oversold conditions and positioning, the S&P 500 index rose nearly 2%, its best performance since April. The Wall Street 'Fear Index' VIX fell below 16 and broke through key technical levels. Long term treasury bond bonds outperformed the market, and the yield of 30-year US treasury bond bonds fell 13 basis points to 4.8%. The US dollar index fell. The pound rose as the Bank of England declined interest rate cuts. The oil price has exceeded $82.
Prior to the release of employment data, a report showed the largest increase in labor productivity in the United States in three years, which helped alleviate the inflationary impact of recent wage increases. The number of people applying for unemployment benefits has risen for the sixth consecutive week, indicating that the unemployed are finding it harder to find new jobs. Economists predict that following the 336000 increase in non farm employment in September, the number of non farm employment will increase by 180000 in October.
Priya Misra, portfolio manager at JPMorgan Asset Management, said: "Friday's employment data is crucial. If we receive a weak report, interest rates will continue to fall, but financial conditions may not ease further as the economic recession may seem even closer. If the report is good, the market will be nervously watching the Fed's reaction
A survey conducted by 22V Research showed that 52% of investors expect Friday's data to be 'risk biased', while only 14% believe it is' risk averse '. This is the most optimistic investor since the company began investigating a year ago. In addition, 41% of respondents believe that average hourly salary will be the most important indicator, followed by employment numbers.
Although the Federal Open Market Committee is open to taking additional policy actions to promote strong economic growth, Federal Reserve Chairman Powell speculates that a high level of treasury bond bond yields may instead help the central bank to maintain restrictive monetary conditions to eliminate excessive inflation in this business cycle.
Spencer Hakimian, an analyst at Tolou Capital Management, said: "From our perspective, the Federal Open Market Committee (FOMC) of the Federal Reserve has signaled the end of the interest rate hike cycle. In addition to the data in the quarterly tax rebate announcement (QRA) of the US Treasury Department, which exceeded expectations, we believe that by the end of the year, there are favorable factors on the yield curve of US treasury bond bonds."
Interactive Brokers analyst Jose Torres said that although Powell stated that there is currently no discussion on easing policy, market participants are betting that the Federal Reserve will complete tightening policy, so interest rates may be lowered in the near future.
In fact, more and more analysts are warning against prematurely announcing that the vicious decline in the US bond market has ended.
Hedge fund K2 Asset Management predicts that the benchmark 10-year yield of US treasury bond bonds may rise to 5%, while Franklin Templeton said that this level may reach 5.25%, the highest level since 2007. Michael de Pass, head of global interest rate trading at Citadel Securities, said that the US treasury bond bond market is still very dependent on data, which means that the happy atmosphere of the market may change. Stephen Dainton, co head of global markets at Barclays Bank, stated that the possibility of the Federal Reserve ending monetary policy tightening is very low.
Win Thin, head of global monetary strategy at Brown Brothers Harriman&Co, said, "The Fed's stance is mostly hawkish, but it is also sufficiently dovish to limit future tightening expectations. Regardless of the market's perception of the Fed, the final outcome will still depend on the data, which makes Friday's business data even more important. We still believe that the US economy remains strong and further policy tightening is needed
Friday trading day focus and wind vane:
① 15:00 German September quarter adjusted trade account
② 15:45 Monthly rate of industrial output in France in September
③ 17:30 UK October Service Industry PMI
④ 18:00 Eurozone September unemployment rate
⑤ 20:00 Federal Reserve Governor Barr delivers a speech
⑥ 20:30 Canada's October employment figures, US October unemployment rate, US October quarter adjusted non farm employment figures
⑦ 21:45 Markit Service Industry PMI Final Value for October in the United States
⑧ 22:00 US October ISM Non Manufacturing PMI
⑨ The next day at 00:45, the Federal Reserve's Kashkari delivered a speech
⑩ The total number of oil drilling operations for the week from 01:00 the next day to November 3rd in the United States
Analysis of Major Currency Trends:
EUR: EUR/USD up, closing at 1.0621, up 0.49%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.0670, the further resistance is at 1.0722, and the key resistance is at 1.0776; The initial support for the downward trend of the exchange rate is at 1.0564, further support is at 1.0510, and more critical support is at 1.0458.
GBP: GBP/USD up, closing at 1.2202, up 0.43%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.2241, the further resistance is at 1.2279, and the key resistance is at 1.2333; The initial support for the downward trend of the exchange rate is at 1.2149, further support is at 1.2095, and more critical support is at 1.2058.
JPY: USD/JPY fell, closing at 150.397, a decrease of 0.37%. Technically, the initial resistance to the upward trend of the exchange rate is at 150.941, the further resistance is at 151.495, and the key resistance is at 152.043; The initial support for the downward trend of the exchange rate is at 149.839, further support is at 149.291, and more critical support is at 148.737.
