New Commercial Vehicle Registrations in Europe statistics; GfK consumer climate survey; ECB accounts of its last monetary policy discussions; U.S. Thanksgiving Day. Financial markets closed.
Stocks should open higher taking gains on Wall Street. Markets in Asia were mixed in early trading. Strong economic data strengthens dollar, euro falls against the dollar, 10-year Treasury yields fall. Oil and gold edge higher.
European stocks should open higher, taking cues from U.S. stock gains as investors shrugged off concerns about elevated inflation.
A rebound in shares of technology companies helped push the S&P 500 and Nasdaq Composite higher Wednesday.
U.S. stocks have swung between gains and losses this week as investors have digested a slew of data in a trading week shortened by the Thanksgiving holiday.
On Wednesday, new figures showed that household spending rose 1.3% in October from a month earlier, while personal income increased 0.5%. Weekly jobless claims, meanwhile, fell sharply to the lowest level in 52 years.
Meanwhile, minutes released Wednesday from the Federal Reserve's November meeting provided fresh context about how central bankers are assessing the inflation situation. The minutes signaled that while officials generally anticipate that the inflation rate will diminish significantly during 2022, some also highlighted that price increases had become more widespread.
"Many participants pointed to considerations that might suggest that elevated inflation could prove more persistent," the minutes said.
"We have had fantastic earnings; the bond market is behaving itself; inflation is up, but rates are very low. As I sit here with five to six weeks left to the year, I have a hard time not being optimistic," said Tim Holland, chief investment officer at Orion Advisor Solutions. "As long as rates are low and earnings are growing, I think it's very difficult not to lean into stocks."
Wall Street markets are closed Thursday for the Thanksgiving holiday. They reopen Friday for a shortened trading session.
The dollar strengthened broadly and the WSJ Dollar Index was trading at highs not seen since July 2020. Spectacular economic data releases are keeping the dollar supported, Karl Schamotta at Cambridge Global Payments said.
The dollar's moves today add to earlier gains this week after President Biden nominated Jerome Powell for a second term as Fed chairman and Lael Brainard to vice chairman, the chief market strategist said.
"In comments after the announcement, both officials appeared to execute a decisive pivot, emphasizing their determination to fight inflation, softening the labor-market rhetoric that has characterized policy communications since the onset of the pandemic."
Asian currencies consolidate against the dollar ahead of the U.S. Thanksgiving holiday. There's probably little to expect from financial markets today given U.S. equity and bond markets will be closed, UOB
said.However, with the dollar maintaining a strong backdrop and the euro falling to 1.12 against the dollar, Asian currencies may remain weak for today, UOB said.
EUR/GBP has "remained tied to the 0.8400 level," but it may move below this level if investors perceive the U.K. and eurozone economies are diverging, says ING.
"A decisive move below that mark [0.8400] may signal investors are starting to price in diverging contagion/growth paths for the U.K. and the eurozone, something similar to what we saw at the beginning of the vaccination program in 1Q21," it said.
Deutsche Bank expects the Fed to double the monthly reduction of asset purchases so the central bank can raise rates starting in June, from a previous forecast of July, as policy makers show more concern about inflation.
"Beyond liftoff, we continue to anticipate that the Fed will raise rates at a quarterly pace, and pause in Q3 2023 to begin passive rundown of the balance sheet," DB said, keeping its forecast for the tightening to end at 2.1% by 2024. The revision comes after Fed minutes and as the 10-year yield declines 0.021 percentage point to 1.644%.
The European Central Bank ramped up corporate bond purchases in November so far, with net purchases totaling around EUR5.5 billion, said ING's Timothy Rahill citing official data. Net purchases increased up to a little over EUR2 billion last week under the central bank's Corporate Sector Purchase Program (CSPP).
Nine new bonds were added to the CSPP and Pandemic Emergency Purchase Program holdings last week, of which nine were picked up in the primary market or as a recent issue, he said. "With another week and a half left in November, we will likely see above average monthly net purchases this month," he adds, adding that the ECB is likely front purchasing before the slowdown in activity in December.
Oil edges higher in the early Asian session amid hopes that OPEC+ may not increase its planned monthly production in December. There's growing speculation that OPEC+ may not deliver the planned 400,000 bbl a day supply increase in December, in order to offset the releases of strategic reserves by major consuming nations such as the U.S., TD Securities said.
Prior to the reserve releases, OPEC+ cautioned that it would respond to coordinated reserve releases, TD Securities noted.
Gold rose in early Asian trade amid concerns over how Europe's renewed Covid-19 measures could impact the global economic recovery.The strength of the greenback and U.S. Treasury yields will also be closely watched by investors amid recent rises. Oanda expects that the precious metal may be weighed down in the near term should yields remain firm this week.
Base metals were broadly higher amid continued signs of supply tightness across the industrial-metals complex, ANZ said. Better-than-expected U.S. economic data on consumer spending and new home sales are also supporting prices, it added.
ING said some optimism for China's recovering real-estate sector is lending support for base metals.
TODAY'S TOP HEADLINES
Fed Officials Debated Inflation Concerns, Taper Pace at November Meeting
Federal Reserve officials expressed greater concern at their meeting earlier this month about how long inflation would stay elevated and discussed whether they should prepare to raise interest rates in the first half of next year to cool off the economy.
The Fed closed a chapter on its aggressive pandemic policy response when it approved plans at the Nov. 2-3 meeting to shrink its $120-billion-a-month asset purchases by $15 billion each in November and December, a pace that would end the program by next June. They want to end the asset purchases before they lift interest rates, which they held near zero.
Bank of Korea Raises Rate, Tightens Policy to Curb Inflation
South Korea's central bank has raised its base rate for the second time in three months as it seeks to curb accelerating inflation and soaring household debt.
The Bank of Korea increased its benchmark seven-day repurchase agreements rate by 25 basis points to 1.00% on Thursday. The bank had raised the rate to 0.75% from a record-low 0.50% in August.
OPEC Weighs Shift in Oil Policy After Crude Release
Top oil producers Saudi Arabia and Russia are considering a move to pause their recent efforts to provide the world with more crude, according to people familiar with those discussions, after Washington and other countries said they would release a slug of stored oil in an effort to lower prices.
Riyadh and Moscow have led OPEC and a group of other oil-producing countries in coordinating output closely amid a demand shock last year caused by the pandemic. Other members of that cartel, including the United Arab Emirates, aren't convinced a pause is necessary, according to these people.
More Chips Will Be Made in America Amid a Global Spending Surge
SEOUL-Investment in U.S. chip production is on the rise. But so too, is semiconductor spending elsewhere.
Samsung Electronics Co.'s planned $17 billion chip factory in Texas is expected to crank out top-end semiconductors that are essential to 5G cellular networks, self-driving cars and artificial intelligence. It follows hefty bets on U.S. soil by Intel Corp., Taiwan Semiconductor Manufacturing Co. and Texas Instruments Inc.
U.S. Recovery Accelerates on Spending, Labor Market Growth
The U.S. economy showed broad-based signs of acceleration heading into the end of the year, with consumers ramping up spending, businesses stepping up investment and jobless claims falling to historic lows.
Household spending rose 1.3% in October from a month earlier, while personal income increased 0.5% last month, the Commerce Department said Wednesday. Consumers are benefiting from a strong labor market. And they are spending at a faster pace than inflation, which recently hit a three-decade high.
U.S. Jobless Claims Reach 52-Year Low
Weekly jobless claims fell sharply to the lowest level in 52 years, reflecting the labor market's tightening as the economy recovers from the effects of the pandemic.
Worker filings for initial unemployment benefits, a proxy for layoffs, dropped 71,000 to 199,000 last week, the lowest level since November 1969, the Labor Department reported Wednesday.
Big-Ticket Product Orders Fell for Second Straight Month Amid Supply Constraints
Orders for long-lasting goods such as appliances, cars and computers decreased for the second straight month in October as U.S. manufacturers continued to confront higher material and shipping costs as well as labor and parts shortages.
New orders for products meant to last at least three years decreased 0.5% to a seasonally adjusted $260.1 billion in October when compared with September, the Commerce Department said Wednesday.
Europe Health Agency, in Shift, Urges Faster Covid-19 Booster Rollout as Cases Surge
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