• US October non-farm payrolls +150K vs +180K expected
• US October ISM services 51.8 vs 53.0 expected
• Canada October employment +17.5K vs +22.5K expected
• Fed’s Bostic: Policy is likely in the right place given the economic outlook
• Baker Hughes US oil rig count 496 vs 504 prior
• BOE’s Haskel: Estimate of 6% equilibrium is the upper limit for me
• Fed’s Barkin: It was welcome to see lessening pressure in the jobs data
• US October S&P Global final services PMI 50.6 vs 50.9 prelim
• Canadian October S&P Global services PMI 46.6 vs 47.8 prior
• Hezbollah leader: Gaza operation was 100% planned in Gaza
• BOE’s Pill: We held rates because economic restraint needs to be maintained

Markets:

• Gold up $7 to $1992
• US 10-year yields down 9.3 bps to 4.57%
• WTI crude oil down $1.64 to $80.83
• S&P 500 up 1.0%
• NZD leads, USD lags

This week marked a turn of the calendar and a turn in markets. Treasury yields plunged and the dollar sank along with them. Meanwhile, it was the best week for equities in a year.

Non-farm payrolls and ISM services were both on the weak side and that helped the trend to extend, leading to one-month highs in cable, EUR/USD and AUD/USD. The moves were limited to around 40 pips immediately after non-farm payrolls but later extended as revisions in the report and other details led the market to price in 100 bps in Fed cuts next year.

Clearly momentum was part of the equation as USD/JPY fell through 150.00 and continued to 149.17, finishing near the lows.

CAD lagged somewhat along with the US dollar as Canadian employment softened and oil prices cooled. Hezbollah’s leaders spoke for the first time and indicated there won’t be a second front in the war, taking the geopolitical premium out of oil. Still it was the second day of sharp decline in USD/CAD.

Overall, it was a lively week and it’s now a good time to take two days and reflect. Remember that US clocks go back an hour on the weekend.

This article was written by Adam Button at www.forexlive.com.

Closing changes on the day:

• S&P 500 up +1.00%
• DJIA +0.7%
• Russell 2000 +2.7%
• Nasdaq Comp +1.4%
• Toronto TSX Comp +1.0%

On the week:

• S&P 500 up 5.9% — best since Nov 2022
• DJIA +5.1%
• Russell 2000 +7.6% — best since Feb 2021
• Nasdaq Comp +6.6%
• Toronto TSX Comp +5.8%

The chart above shows a great recovery from the prior two weeks of gains but it needs to get over those recent highs to be truly convincing. I think we’ll have some follow-through in the week ahead because there is some FOMO out there but it will be tested because I don’t think there’s an appetite to take 10-year yields below 4.50% just yet.

This article was written by Adam Button at www.forexlive.com.

• Pleased with jobs number, it’s consistent with the outlook
• Hoping for minimal pain for the economy
• Fed has time to watch and be patient with data
• Credit is definitely tight and more will happen on that front
• I do think we can get to 2% inflation without seeing a recession

The Fed blackout ended today and the usual suspects haven’t made us wait for long. Bostic and Kashkari are in a tight race to become the new Bullard.

This article was written by Adam Button at www.forexlive.com.

The old adage is that magazine covers are a jinx. That’s particularly true with The Economist but Barron’s has had some doozies, including making the case for Pfizer earlier this year (it’s down 40% since).

The cover this week certainly raised alarm bells but it may prove to be one of the better-timed calls in the magazine’s history.

US 10-year yields are down to 4.56% from a high of 5.02% on October 23 and 4.92% at the start of the week.

There are a few reasons to think this top in yields (and bottom in bonds will last).

1) The wave of buying

The FOMO that hit the bond market this week showed just how much money was waiting on the sidelines waiting to buy Treasuries and Treasury-proxies. Everyone was waiting for the BOJ, Fed, quarterly refunding and non-farm payrolls. When all those events were benign, the buying hit. Now there might have been some derivative squeezes in there or short covering, but I think that by-and-large, it was real money. There is much more behind that and if we get back close to 5%, it will be there.

2) The psychology was a tell

A couple weeks ago, people were talking about a rise to 6 or 7% yields. That kind of talk is always a dead-giveaway about a market that’s gotten ahead of itself. It was the same thing when people were talking about $100,000 bitcoin, $200 oil or dozens of other big trends. Whenever the hyperbole starts, the move usually ends.

3) The economy is slowing down

The data is beginning to show what the Fed wants to see. It’s tough to say right now whether inflation will get stuck at 3.5% or fall all the way to 2.0% but it’s not-reaccelerating. Ultimately, we will go where the data takes us but with non-farm payrolls and ISM services slowing, it’s a good bet that more weakness is coming.

The big hurdle in the week ahead will be another 10-year Treasury auction. I expect yields to range in the 4.50-4.75% area for a time and we will see if buyers show up near the top of that range. If so, it will confirm the top.

This article was written by Adam Button at www.forexlive.com.

There are reports of an earthquake being felt in New Delhi, with buildings shaking. A related report cites a 6.2 magnitude earthquake in the Nepal region, however the USGS classifies it at 5.6.

It’s 11:45 pm local time in New Delhi so people would be indoors. The duration was a reported 40-50 seconds.

New Delhi is in northern India, near Nepal and the fault lines that run near the border. Given the 33 million people that live in the city and the quality of infrastructure, even a small earthquake could be a major tragedy.

Notable earthquakes have hit the area in history but it’s certainly not known for them. The later two in 1956 and 1960 only caused injuries but there is fear that the city could eventually be hit by a large earthquake, one of which was recorded in 1720.

This one appears to be some distance away so the shaking in the city would have been much less than near the epicenter and given preliminary reports, it’s unlikely there is notable damage.

This article was written by Adam Button at www.forexlive.com.