Headlines:
- Falling Treasury yields may be hiding a darker story about the AI boom
- Crude oil extends gains as Saudi-Houthi conflict and concerns of US-Iran attacks keep the market supported
- Gold gets caught in market liquidation despite falling real yields supporting higher prices
- France October PMI slumps back into contraction as political uncertainty weighs on demand
- Germany October flash manufacturing PMI 54.2 vs 53.5 expected
- Eurozone October PMI misses estimates as growth slows, keeping ECB rate hike dilemma alive
- UK October flash services PMI 53.1 vs 51.8 expected
- UK retail sales fall more than expected in September, complicating BOE rate hike outlook
Markets:
- 10-year Treasury yields up 5 bps to 5.00%
- USD and CAD lead, CHF lags on the day
- WTI crude oil up 1.6% to $101.07
- Gold up 0.1% to $4,029
- European stocks lower; S&P 500 futures -0.2%
It was a much calmer session today in Europe as markets are taking a breather ater the more hectic risk-off wave in trading yesterday.
The strong bid in Treasuries looks to abate for now, with 10-year yields bouncing back to the 5% mark. In turn, that is giving the dollar some comfort with EUR/USD easing back towards 1.1200 and USD/JPY pushing closer towards the 157.00 mark on the day.
And this is coming despite oil prices pushing higher once again. Brent crude briefly touched $115 earlier in the day while WTI crude is up over 1% to around $111 currently, as worries surrounding the Middle East conflict and geopolitical tensions continue to persist. That is keeping inflation concerns in the picture as investors sit on edge on how that will continue to feed into borrowing costs and the outlook for major central banks.
In Europe, we did get a slew of PMI data today which painted a more mixed picture. The growth momentum has slowed, largely thanks to France, while price pressures are still keeping up as we get into the final quarter of the year. While that might not change the equation for the ECB next week, it still means December is a toss up for now.
Regional equities continue to be pinned down by France’s fiscal worries, with the overall risk mood still rather dour as the selloff from yesterday carries over. US futures are reflecting the same picture with S&P 500 futures down 0.2% and Nasdaq futures down 0.1%.
In other markets, gold is at least bouncing back a little after briefly testing waters below $4,000 for the first time in three months earlier today. It’s still a poor week for the precious metal, poised to end over 3% lower despite having seen Treasury yields fall as well during the week.
This article was written by Justin Low at investinglive.com.