• Shows continued weak consumer demand and keeps deflation concerns active. China faced deflation for four months at the end of 2023.

On the PPI:

• Factory-gate prices -2.9% in October, falling from September’s -2.8% and much worse than economists‘ median expectations of -2.5%
• the deflationary trend in wholesale prices has continued since late 2022

Government Response:

• Lawmakers announced a plan to address local government debt on Friday: China’s top lawmakers approve plan to swap local government debt
• Markets were not pleased (as usual): Chinese yuan falls as NPC announcement lacks oomph so far
• More broadly: The optimism in the Chinese market yesterday was baffling
• Earlier measures in September included:
  • Interest rate cuts
  • Relaxed home purchasing restrictions
• Premier Li Qiang expressed confidence in meeting 5% growth target for 2024

The background to all this are the economic challenges the country faces:

• Property crisis persisting, and persisting. This is impacting consumer confidence
• Slowest economic expansion in 18 months during Q3
• Potential future concerns about U.S. tariffs under possible Trump presidency
• There are suggestions, which seem well-founded, that there is need for more consumer-focused stimulus measures. Botyh to boost domestic demand and avoid adding to industry overcapacity pressure, which is contributing to deflaton pressure.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Canada October employment change +14.5K vs +25.0K expected
• UMich November prelim consumer sentiment 73.0 vs 71.0 expected
• Baker Hughes oil rigs 479 unchanged on the week
• Trump asks Robert Lighthizer to run trade policy again
• BOE’s Pill: There is scope fore more rate cuts if disinflation continues

Markets:

• S&P 500 up 0.4%
• WTI crude oil down $1.88 to $70.48
• Gold down $24 to $2683
• US 10-year yields down 4 bps to 4.30%
• JPY leads, AUD lags

China set the table for US markets on Friday as the stimulus announcements disappointed, leading to a 5.5% decline in US-listed China ETFs and a slump in the Australian dollar that worsened through the day. Worries about China growth also likely weighed on oil prices and dragged yields lower on less inflationary pressure.

The long end of the yield curve has now retraced the post-election jump and that’s part of the ongoing theme in markets, something I would call „he didn’t really mean it“, in regards to tariffs, mass deportations and other inflationary policies. The market is instead focusing on an agenda that would look like Trump 1.0, whether tariffs were threatened and sometimes imposed but nothing even close to what he campaigned on. That’s understandable given that very few politicians deliver on campaign rhetoric anywhere.

The US dollar climbed (ex yen) despite the falling yields. Part of that was because the front-end moved up slightly but the euro selling was notable as it slumped to 1.0700 in US trading from 1.0775 at the start of the day, the pound also came under moderate pressure. Commodity currencies also struggled.

Overall, different markets are sorting through different themes and challenges right now. It was an historical week, so that’s understandable and it will continue next week, so rest up and have a great weekend.

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

I wrote about Paulson earlier in the week and emphasized that he’s a major gold bull. Now, I don’t know that he’s going to advocate adding to US gold reserve but he’s certainly not going to advocate for selling them.

Meanwhile, in the irony of ironies, Bessent is a George Soros acolyte and worked from him from 1991 to 2000 (a time of the famous pound bet) then returning in 2011 to spend four years as chief investment officer.

The deep state always wins, but it’s also a win for an FX guy.

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

In the videos below, I take a technical look at all the major currencies vs the USD. What is the bias and what would move the bias the other way? Support? Resistance? What are the targets?

I look at all the key technicals in play for each of the major currency pairs i the below videos.

EURUSD

GBPUSD

USDJPY:

USDCHF:

USDCAD:

AUDUSD:

NZDUSD:

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

• S&P 500 +0.4% – record close
• Nasdaq Comp +0.1%
• DJIA +0.6%
• Russell 2000 +0.7%
• Toronto TSX Comp -0.4%

Closing changes on the week:

• S&P 500 +4.7%
• Nasdaq Comp +5.7%
• Russell 2000 +8.6%
• Toronto TSX Comp +2.1%

Congratulations to everyone who held stocks through the election. The red sweep no doubt helped by I’ve argued many, many times that the trade on elections everywhere is always to buy the uncertainty, because the sun always rises the day after the vote.

The outperformance of the Russell 2000 comes down to:

1. It’s bank-heavy and the assumption is that Republicans will loosen banking regulations
2. It’s more domestic-focused and that should benefit from lower tax rates while not being hit as hard by tariffs

Notably, the Russell 2000 hasn’t hit a record and faces some resistance to get there. It will be a good spot to watch in the weeks ahead.

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