Finance AM

29Nov22 by Westpac Bank

Equity markets remained defensive ahead of Fed Chair Powell’s speech tonight, the S&P500 down 0.5%. Bond yields are higher, while the US dollar is little changed.

Sentiment was subdued amid China’s rising Covid cases and holiday-thinned US markets. The S&P500 closed unchanged, the US dollar firmed slightly, and bond yields were volatile but little changed.

The AUD and NZD rose slightly further in a US-holiday thinned overnight session, the US dollar weighed down by expectations the Fed will slow the pace of rate hikes.

Bond yields and the US dollar fell after some weak US activity data. The S&P500 is up 0.6%.

Risk sentiment improved as bond yields receded, the S&P500 up 1.0%. The US dollar fell. There was little fresh news of note.

Risk sentiment weakened on China’s Covid wave, the S&P500 down 0.5%. That, and slightly higher bond yields, boosted the US dollar.

Bond yields and the US dollar rose after more hawkish Fedspeak, although equities were resilient, the S&P500 closing up 0.5%.

Bond yields and the US dollar rose after some hawkish Fedspeak, while equities softened slightly, the S&P500 down 0.3%.

Equity sentiment soured slightly following some strong US retail sales data and hawkish Fedspeak, the S&P500 currently down 0.7%. That helped cap the AUD and NZD, while long maturity bond yields fell on expectations the Fed would slow the US economy further.

In a volatile session, the US dollar initially fell further following softer producer inflation data, although mixed Fedspeak and news of missiles reaching Poland caused a retracement. The S&P500 is currently up 0.8%.

Markets were mostly contained in the absence of major news. The S&P500 is up 0.1%, and the AUD. NZD, and bond yields are little changed. Fed VC Brainard’s comments help cap interest rates.

Sentiment remained upbeat, the US dollar lower and the S&P500 up 0.9% during the partial US market holiday. Minor changes to China’s Covid restrictions were announced on Friday, with later reports of a major support package for its property sector.

US inflation data was not as strong as feared, causing equities to rise (S^P500 +4.4%) and bond yields and the US dollar to fall sharply.

The US dollar broke a three-day losing streak after early US mid-term election results did not produce the major changes expected. Bond yields were mixed, and the S&P500 is down 1.7%.

The US dollar fell further ahead of the US mid-term election results, bond yields also falling. The S&P500 was up around 1% for much of the session, but has fallen to flat on the day.

The US dollar fell further amid continuing speculation that China will relax its Covid policies. Bond yields rose, while the S&P500 is up 0.4%.

The US dollar fell sharply in the wake of a mixed US jobs report and further speculation that China would relax its Covid policies. The S&P500 closed up 1.4%, commodities rose sharply, and short-term bond yields fell slightly.

The Bank of England delivered a dovish hike, capping bond yields and helping lift the US dollar further. The S&P500 is down 0.4%.

The Fed hiked by 75bp, as was widely expected, the statement hinting at a slower pace ahead, but Powell’s press conference more hawkish. Bond yields and the US dollar fell and rose in response, while equities appeared disappointed with Powell’s tone, the S&P500 down 0.8%.

Bond yields and the US dollar bounced sharply following strong US economic data, reversing Asian session declines. The S&P500 is down 0.4%.

Bond yields rose further ahead of this week’s important Fed meeting, with stronger inflation data in the Eurozone contributing. The US dollar also rose, while equities fell, the S&P500 down 0.5%.

Asset classes were mixed. Equities were helped by company earnings, the S&P500 closing up 2.5%. Bond yields rose amid elevated readings for US inflation indicators. The US dollar rose slightly.

Bond yields fell after the ECB accompanied its 75bp rate hike with less hawkish guidance. That, and some solid US GDP data, lifted the US dollar. The S&P500 is down 0.4%.

Bond yields and the US dollar fell amid continued speculation that the Fed will slow its tightening pace, encouraged by the Bank of Canada’s decision to hike by a smaller than expected 50bp increment. Equities are lower, though, the S&P500 down 0.8%.