Fitch and S&P have already downgraded the US and now Moody’s has taken a step in that direction. The credit ratings agency maintained the USA’s top Aaa rating but changed its outlook to ’negative‘.

• Downside risks to the US‘ fiscal strengths have increased and may no longer be fully offset by the sovereign unique credit strengths
• Expects that the US‘ fiscal deficits will remain very larger, significantly weakening debt affordability
• Sees US debt affordability to decline further, steadily and significantly, to very weak levels vs other highly-rated sovereigns
• Political polarization in Congres raises risk successive govt not able to reach consensus on plan to slow decline in debt affordability
• US can carry a higher debt burden than other countries

The current US funding package goes until November 17 (next Friday) and I strongly suspect that will underscore some of the concerns from Moody’s.

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

• US November prelim UMich consumer sentiment 60.4 vs 63.7 expected
• Fed’s Daly: Policy is in a very good place
• Yellen: We have not seen an impact on the Treasury market from the ICBC attack
• Yellen-He meeting readout: US seeks healthy economic relationship with China
• From earlier: Lagarde says rates cuts not coming for at least “the next couple of quarters
• Biden and Xi to meet next week, engage in ‚in-depth discussions‘
• Fed’s Bostic: There’s still more work to be done on inflation

Markets:

• Gold down $21 to $1936
• US 10-year yields up 2.2 bps to 4.65%
• WTI crude oil up $1.64 to $77.38
• S&P 500 up 1.4%
• EUR leads, JPY lags

There was a stark contrast to what was happening in the stock market and elsewhere. The finishing FX moves on the day were limited with modest volatility throughout. USD/JPY tracked up towards the top end of the range and that will be something to watch next week but there was no real threat of breaking the recent high of 151.74.

However equity markets roared higher in non-stop bidding after the first hour of trading. There was no indication of what was to come in the futures market as it was only fractionally higher as New York woke up. One powerful story may have been Nvidia’s end-around on the Chinese chip blockade as all chip companies surged but, ultimately, the rally was much broader than that.

Interestingly though, European markets didn’t take part and there was no help from Treasury yields, which were higher led by the front end.

Some support for the US dollar came from the UMich consumer sentiment report, which included hot inflation metrics. That, and some buying of USD into the fix, sent the dollar to the daily extremes on a few pairs but the bump was limited to 20 pips and faded later.

CAD did get some independent support as oil prices rebouned and the risk trade improved but that was only enough to erased earlier declines.

Have a great weekend. Next week features US CPI and retail sales, which will certainly be market movers.

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

The major stock indices are closing near session highs with the NASDAQ index leading the way. All 3 major indices are closing above their 100-day moving averages (bullish). All 3 indices are closing higher for the week.

A snapshot of closing levels shows:

• Dow industrial average +391.16 points or 1.15% at 34283.09. Its 100-day moving average is at 34266.16
• S&P index up 67.87 points or 1.56% at 4415.23. Its 100-day moving average is at 4402.54
• NASDAQ index up 276.65 points or 2.05% at 13798.10. It’s 100-day moving averages at 13618.08.

For the week, each of the major indices close higher for the 2nd consecutive week:

• Dow Industrial Average rose 0.65%
• S&P index rose 1.31%
• NASDAQ index rose 2.37%

Big gainers this week included:

• Roblox, 10.06%
• Broadcom, 8.48%
• Lam Research +8.10%
• Uber, 8.02%
• Nvidia, +7.4%
• Snowflake, +7.01%
• Intuit, +6.09%
• Adobe, +5.95%

Looking at the Dow 30 for the week:

• Apple rose 5.52%
• Microsoft rose 4.78%
• Disney rose 3.75%
• Salesforce rose 2.98%
• JP Morgan rose 2.41%

Loser in the Dow 30 were:

• Walgreens, -6.11%
• Chevron, -3.15%
• J&J -2.70%
• Merck, -1.89%
• HomeDepot -1.38%

This article was written by Greg Michalowski at www.forexlive.com.

Here is a great chart snapshot from BMO showing how Fed pricing has changed in the past year. Most of 2023 involved the market buying into the idea of higher-for-longer Fed funds but since October 18, there has been a fresh attempt to price in rate cuts, despite ongoing hawkish Fed rhetoric. That came after a series of softer US economic data points, including the ISM survey and non-farm payrolls.

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

Yesterday’s poor 30-year Treasury auction reverberated through the market but later in the day, many people were arguing that it should be ignored because a ransomware attack kept China’s largest bank — ICBC — out of bidding.

Yellen now says there was no impact on the Treasury market from the attack. Could she mean that there’s been no direct impact?

Whatever happened, US 30-year yields are back to where they were before the sale.

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