The post-Thanksgiving market was quiet as expected, with Germany announcing a suspension of debt limits in its latest budget, leading to weakness in European and UK fixed income, dragging down US Treasuries into a steep bearish trend, and market price movements were generally flat, with trading volumes only 50% of the usual, and most markets closing early at noon.
In the past few weeks, the number of people continuing to apply for unemployment benefits has slowly increased, and the unemployment rate has gradually moved higher, indicating that the economy has finally begun to slow down due to high interest rates. The Federal Reserve's meeting minutes also reiterated the narrative that interest rates have peaked, while downward inflationary pressures pave the way for interest rate cuts starting in March-April 2024.
The core PCE data for October will be released this Thursday. The market generally believes that it will grow moderately by about 0.16% month-on-month, which will further support the Fed's decision not to raise interest rates in this cycle. In addition, there will be data such as new home sales, Case-Shiller house price index and ISM manufacturing index this week. Powell will also participate in a "fireside chat" and is expected to reiterate his current views.
Funds flowed from U.S. Treasuries into investment-grade corporate bonds and junk bonds last week as extreme optimism in risk sentiment pushed investors further into risk assets. Stock and currency markets also saw significant inflows. Weak inflation and employment data made the Investors have good reasons to maintain risk-on positions through the end of the year.
The just-released Black Friday week spending data confirmed the market's strong expectations. According to Adobe data, Thanksgiving consumer spending on Thursday reached $9.8 billion, a year-on-year increase of 7.5%. Salesforce's report also pointed out that Black Friday continued with strong consumer spending, with online sales reaching $16.4 billion, a year-on-year increase of 9%, setting a new record. American consumers once again proved that they are not holding back in spending.
Cryptocurrency prices remained robust after Binance reached a settlement. The Binance exchange and BNB Smart Chain have basically eliminated the risk of systemic collapse. TradFi analysts almost unanimously agreed that this incident was a positive event for the cryptocurrency field. Binance's spot market share fell from 62% in February last year to 38% in November. Now that the possibility of the exchange operating in the United States for a long time has emerged, institutional users may increase their willingness to use it, and its market share has a chance to rebound.
Institutional funds are still flowing into Bitcoin through CME futures, and ETF inflows have also rebounded to their highest level since the Luna crash in the first quarter of 2022; in addition, following Victory Securities, Interactive Brokers has also obtained approval from the Securities and Futures Commission to provide cryptocurrency trading services to retail customers in Hong Kong, continuing the city’s efforts to develop Hong Kong into an important digital asset center and open cryptocurrencies to the public.
