market:
- S&P 500 up 1.0%
- Gold fell by $13 to $4060
- WTI crude oil fell $1.03 to $57.97
- US 10-year yields fell 3.9 bps to 4.065%
- Bitcoin fell 2.6% to $84,926
- JPY is ahead, CHF is behind
The mood darkened on Friday as stock futures fell and Bitcoin fell to a low of $80,555. The change initially came over comments from NY Fed Chair Williams, who indicated he was willing to support another rate cut in December. Williams is at the core of the Fed and is unlikely to move against Powell, so the thinking was that this was a deliberately soft message and the market was pricing in a cut from about a 30% chance of a cut to 60%. The Fed blackout begins at midnight next Friday, so it’s going to be an interesting week including ADP employment.
Despite that change, optimism initially did not last. Stock markets gave back early gains and fell into negative territory, although it was extremely volatile.
The second boost came when the White House once again planned to sell Nvidia chips to China. This added some big bids to the equity and helped Nvidia reduce losses. At one point, stocks were significantly higher by the close, but there was some selling in the last two hours, likely in part due to skepticism about this report and concerns about an AI bubble. This heralds the beginning of another lively week next week.
In FX, the message remains one of little concern about the economy. The Gap and Ross Stores reports included favorable comments from consumers and both shares rose 8% to lead the way. This continues the message from WMT earnings from the day before. On net, activity in FX this week was mostly unremarkable with some mild EUR weakness and USD strength.
The exception is the yen, which continued to take a beating this week and hit a record low against the euro and a long-term low against the pound. USD/JPY intervention talks have begun and a BOJ official made some sharp comments today. This helped reverse today’s rally and the pair fell completely.
After being the market darling for several weeks, gold remains strong around $4100 but remains volatile within its range. More bearish, oil fell significantly as Trump pushed forward a new peace plan for Ukraine with a ‘deadline’ set for next Thursday.
Have a great weekend. I’ll be in London next week at the Finance Magnates London Summit. If you’re in the neighborhood stop by and shout out.
