- US October PCE core inflation +5.0% vs +5.0% expected
- November US ISM manufacturing index 49.0 vs 49.8 expected
- Fed's Williams: Inflation is still far too high
- Fed's Barr says now is the time to pay more attention to terminal rate
- The Biden admin seeks to stop planned 2024-27 sales from the SPR
- Dallas Fed October trimmed mean PCE price index +3.4% vs +4.3% prior
- Chicago Fed hires Austan Goolsbee as new president
- US construction spending for October -0.3% vs -0.3% estimate
- November final US manufacturing PMI from S&P Global 47.7 vs 47.6 prelim
- Fed's Bowman: It is appropriate for us to slow the pace of increases
- US initial jobless claims 225K versus 235K expected
- US November Challenger layoffs 76.84k vs 33.84k prior
Markets:
- Gold up $34 to $1802
- US 10-year yields down 19 bps to 3.51%
- WTI crude oil up 62 cents to $81.28
- S&P 500 down 3 points to 4076
- JPY leads, USD lags
This was a concerning day. The economic data didn't contain any big surprises with PCE core m/m a touch low and ISM manufacturing slightly off but nothing that should have been a game changer. Yet the US dollar crumbled and bonds found an enormous bid midway through US trading.
Some have pointed to Blackrock throttling redemptions from a real estate fund as a sign of a scramble for liquidity so that's worth watching. It could also be follow-through from Powell yesterday or jitters ahead of non-farm payrolls.
In any case, answers were in shorts supply and USD/JPY broke down in a 200-pip run on stops after a fall through the Nov low near 137.50.
The pound also had a strong day, gaining nearly 200 pips including a flurry of buying in early US trading. The euro went along for the ride as well, rising above 1.0500.
NZD also made impressive gains while CAD and AUD were much more subdued.
These are some material moves and lend weight to the idea that the US dollar has topped but the aggressiveness of the bond bid is worrisome. I can see the case for a hard landing but it's not like there's been something new.
In any case, with the yen continuing to surge and the results of the World Cup today, Japan certainly has reason to celebrate.
