• US October retail sales control group -0.1% vs +0.3% expected
• US November Empire Fed manufacturing survey +31.2 vs -0.7 expected
• US October industrial production -0.3% vs -0.3% expected
• US September business inventories +0.1% vs +0.2% expected
• US October import prices YoY 0.8% vs -0.1% prior
• Canada Sept wholesale sales +0.8% vs +0.9% expected
• Fed’s Barkin: I always have expected core PCE to stay in the „high twos“
• Fed’s Goolsbee: Unless conditions change, I feel good about 12-18 month path to neutral
• Fed’s Goolsbee says personally comfortable not ‚charging‘ towards neutral
• Atlanta Fed Q4 GDPNow 2.5%
• BOC senior loan officer survey: 1.71% vs 6.85% prior
• Fed’s Collins: Won’t take a December easing off the table, doesn’t see big urgency
• ECB’s Cipollone: We can and should reduce the level of monetary policy restriction
• Putin told Scholz peace agreement should proceed from new territorial realities

Markets:

• Gold down $4 to $2562
• US 10-year yeilds up 2 bps to 4.44%
• WTI crude oil down $1.71 to $66.99
• S&P 500 down 1.3%
• JPY leads, GBP lags

There wasn’t a tidy narrative on Friday as trading started out with a ’sell everything‘ mode before bonds made something of a comeback. Still, it was a tough one for stocks, bonds and equities. In that environment you would expect to see US dollar strength but that wasn’t the case as the euro and Australian dollars held steady.

The retail sales report was the main event of the day ahead it was better than the headline looked due to a strong September revision. However others would argue that was negated by a negative August revision. Still, there isn’t much of a debate going on about the US consumer right now with most arguing that spending will be healthy and could get a post-election bump.

The big move in FX was in USD/JPY. There was some intervention talk earlier and stronger verbal intervention. I’m dubious that was the cause but there was some real selling as about half of the week gain was wiped out in a 200 pip fall. The Fed has turned less dovish, which should help but the bond market could be sniffing some economic weakness out or there could be angst about tariffs and deficits.

Cable fell for the sixth day, which if fine with me because I’ll be in London next week. The pair broke the August low and continued down to 1.2600, which is flirting with the June low in what’s been a rough ride.

The loonie has been struggling alongside the pound and fell to a fresh four-year low, which meant a rise in USD/CAD to 1.4105 at today’s peak. The move was helped along by another decline in oil prices.

There is brewing concern about China and equities there were the global laggards this week. That’s a problem for the antipodeans but on Friday they shook off the worries to finish flat.

Have a great weekend and if you’re in London, I’ll be at FMAS 2024 next week.

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

The shine of the election has run into uncertainty about tariffs and elevated P/Es. Pretty much all the gains after the open on post-election morning are now gone and the S&P 500 is now threatening the opening gap while the Nasdaq has already taken a decent bite.

Trump’s cabinet picks are leaning heavily on „promises made, promises kept“ and the market is wondering about the biggest promises: 60% tariffs on China, 10% across the board and mass deportations of 11m illegal immigrants.

Closing changes:

• S&P 500: -1.3%
• Nasdaq Comp: -2.2%
• DJIA: -0.7%
• Russell 2000: -1.5%
• Toronto TSX Comp: -0.7%

On the week:

• S&P 500: -2.1%
• Nasdaq Comp: -3.1%
• Russell 2000: -4.0%
• Toronto TSX Comp: +0.5%

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

Bitcoin is closing out a great week on a positive note. It briefly fell below $88K in US trading but has been steadily bid since and particularly in the past hour.

It’s now up 3.3% on the day to $91,200 and that’s coincided with a modest rebound in risk appetite more broadly.

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

• I hope and expect that in Q1, inflation will come down
• Pricing power is more limited
• I am still seeing progress on inflation
• We are a long way from knowing what will happen with tariffs

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

US equities are making new lows but bonds have turned around.

Ten-year Treasury yields touched the highest since May earlier today at 4.50% but have since turned around and are now down 1.6 bps on the day to 4.40%.

That’s a solid rejection but the next hurdle is yesterday’s low. A drop below that would end a series of higher lows and if it comes with more equity selling it could be part of a broader flight to safety.

USD/JPY will also key off of yields and could further retrace if this move continues.

Interestingly, the big jump in yields started after the Fed cut 50 bps and now the turn lower is coinciding with Powell saying the FOMC is in no hurry to cut rates. Other officials have taken a similar less-dovish tone.

The thinking in the bonds market is about that reaction function. When the Fed cut 50 bps it cut tail risks around a recession and added to inflation risks, particularly after waves of strong data following the cut.

In contrast, the Fed pausing now would work to squash inflation and curb growth.

So there is a bit of a dance going on here that’s worth keeping an eye on.

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