Making Sense

US equities posted a fresh high of 4908 which is the AB=CD completion target ( refer to post from yesterday ) as the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) continue to pull S&P to fresh record highs and Netflix added 13.10 net new paid subscribers. After the PBoC CRR cut , Risk sentiment improved and U.S Yields were broadly lower. However, post the release of the U.S PMI numbers , US yields surged. The Fed fund pricing moved by 2 bp s with cumulative December rate cuts seen at 135 bps from 137 bps yesterday.  Flash US PMI Composite Output Index at 52.3 prior 50.9 -  7-month high Flash US Services Business Activity Index at 52.9, prior 51.4 -  7-month high Flash US Manufacturing Output Index at 48.7 prior 48.1 -  2-month high Flash US Manufacturing PMI at 50.3 Prior 47.9 -  15-month high Yields High Low Close DoD ▲ US 2Y      ...

Interest Rate Pricing off Fed Fund Futures pared back 36 bps of cuts this week as Comments from Federal Reserve’s Christopher Waller reinforced what markets were thinking – sharp deviation in Futures pricing from Fed Projections without a corresponding deterioration in Economic Data. UST bears were emboldened and the data release supported the Soft-Landing Narrative. S&P 500 closed at all time highs.   USD did not participate in Tsy rally at close of last week. USTs caught up to the USD bearishness. USD index closed the week higher by 0.80%. Atlanta Fed GDPNOW Final Est for Q4 GDP are at 2.4%, Control Group Retail Sales rose 0.80% (est 0.20%, prior revised higher to 0.50%), Initial Jobless Claims fell to Sep 22 lows and Continuing Jobless Claims fell to levels seen in Oct 2023. So far we have not seen the trends in employment numbers as were seen in   the sharp dip in Employment component of the ISM Non-Mfg. This week’s release of the S&P PMI numbers would be close...