Welcome to December. November was the inverse of October. October marked the third consecutive decline and the longest losing streak since March 2020. On November 1 mega size techs were getting crushed with the NASDAQ 100 declining over 12% from its July apex. Treasuries were decimated.
November on the other hand was the opposite. Both Treasuries and mega size techs soared.
According to Bloomberg, during November approximately $3 trillion was added to the S & P 500. It is the gauge’s best month since July 2022. Treasuries had their best month since December 2008.
Commenting on yesterday’s markets, equities struggled even as the data offered evidence that the overnight rate may be at its cycle high.
Can it be suggested that the proverbial buy on rumor and sell on fact is unfolding? An accurate statement to make is that the data has only stabilized but is still considerably higher than the Federal Reserve’s mandated levels. It is the rate of change that has slowed.
There are signs of buyer exhaustion, perhaps the most acute in the Treasury market. Speculation is rising that the market has moved too far in projecting rate cuts.
The velocity of change is frightening, a velocity perhaps influenced by the massive proliferation of zero dated options where the impact or influence of such is not yet fully understood.
It is now widely accepted markets have been entirely co opted by algorithmic or technology-based trading. Liquidity is challenged.
Will the advance continue in December, generally regarded as one of the strongest months of the year?
It will depend upon the data, specifically inflation data, that may greatly impact Treasury prices that have fully discounted a change in monetary policy by mid spring.
What will happen today? Will FRB Chair challenge the interest rate narrative in today’s public comments?
Last night the foreign markets were mixed. London was up 0.75%, Paris up 0.70% and Frankfurt up 0.43%. China was up 0.06%, down 0.17% Japan and Hang Seng down 1.25%.
Dow and NASDAQ futures are up 0.20% and down 0.25%, respectively. The 10-year is off 2/32 to yield 4.34%.
