Hey, Risers!
Volatility surges.
Bulls saw victory, rooted in a 'things are so bad, they're good' scenario. A surge in Treasuries offered some relief to equities, leading to a significant stock market rally. Nevertheless, the driving force behind the Treasury surge is predominantly negative, with various data points indicating a clear slowdown in global growth momentum. It was a big earnings week as well, which ran the gamut from amazement to disappointment. We will, as always, stick to our knitting and rely on a disciplined approach.
Economy & Markets
Fed Up.
No More Hikes
The Fed kept rates unchanged and signaled that the risks of tightening versus not were described as ‘two-sided.’ Chair Powell did say that the Fed isn’t yet confident that policy is at a stance required to get inflation back to 2%.
Our take: Full effects of ‘restrictive’ actions haven’t yet been felt.
Contraction
The manufacturing ISM for October clocked 46.7, down more than 2 points from 49 in September and below the Street’s forecast of 49. New orders tumbled to 45.5, down from 49.2.
Our take: Not so rosy.
Not Working
ADP jobs number for October came in at 113,000 versus the Street at 150,000. Initial jobless claims stayed flat at 210,000 from the week prior. Forecasts were for initial claims of 217,000. The unemployment rate inched up to 3.9% with non-farm payrolls cooling at 150,000 versus Street at 180,000.
Our take: Is the jobs market starting to crack?
Learning Block: FX USD Swaps
Liquidity providers.
The Foreign Exchange (FX) U.S. dollar (USD) swap market is a vital component of the global financial system, where participants exchange one currency for another, with an agreement to reverse the exchange at a later date. This market is substantial, with a daily trading volume in the global foreign exchange market, which includes FX swaps, estimated to be around $6.6 trillion according to the Bank for International Settlements (BIS) Triennial Central Bank Survey. Within this vast market, the USD is the most traded currency, involved in approximately 88% of all daily forex trading activity.
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