The S&P 500 Rises With Fall Of Long-Term Treasury Yields
The S&P 500 gained nearly 1.2% over its previous week's close, ending the first full trading week of November 2023 at 4409.95.
In doing so, it continued reverting toward its mean and is now about a half percent below it.
In terms of the bigger picture, the move was accompanied by the reversal of the October 2023 spike in long term U.S. Treasury yields. Since they peaked on 27 October 2023, there has only been one day where they've increased, which came on Thursday, 9 November 2023, coinciding with the only decrease in stock prices over the period.
Here's the latest update for the dividend futures-based model's alternative future chart. Compared to last week's edition, we've extended the redzone forecast range through 15 November 2023to compensate for the effect of more recent volatility in stock prices.
(Click on image to enlarge)
The most interesting headlines of the week came on Thursday, 9 November 2023 and are related to a disappointing auction of 30-year U.S. Treasuries that was apparently handicapped by the hacking of a Chinese bank, whose absence from participation briefly caused long term interest rates to rise that day. Follow the links below to find out more, although that's just one of several themes recorded in the week's market moving headlines.
Monday, 6 November 2023
- Signs and portents for the U.S. economy:
- Fed minions claim they're not responsible for October surge in long-term interest rates, think they might hike rates more, see tighter credit:
- Mixed economic signs in China:
- Chinese government claims made without supporting data:
- Other signs of bigger trouble developing in Asia:
- BOJ minions say they are making progress in fighting inflation, will keep never-ending stimulus alive:
- Bigger trouble developing in the Eurozone:
- ECB minions thinking about hiking rates again after getting results they wanted:
- Nasdaq, S&P, Dow end marginally higher after posting their best week of 2023
Tuesday, 7 November 2023
- Fed minions say they're putting inflation where they want it, think GDP growth may be too hot, starting to get excited about chance for more rate hikes:
- Signs of stimulus finally getting traction in China:
- Bigger trouble developing in the Eurozone, even ECB minions notice, ready to stand by:
- S&P 500, Nasdaq score longest win streak in 2 years on rates view
Wednesday, 8 November 2023
- Signs and portents for the U.S. economy:
- Fed minions not happy with geopolitics, claim they are more strategic than ever before:
- BOJ minions thinking about ending never-ending stimulus sooner:
- ECB minions told what they need to do, see Eurozone consumers as a new problem:
- Nasdaq, S&P, Dow end mixed as November rally takes a beat; Disney results in focus
Thursday, 9 November 2023
- Signs and portents for the U.S. economy:
- Fed minions say they would exploit uncertainty, see repos drop below $1 trillion for first time since 2021:
- Chief Fed minion doubles down on higher for longer short term interest rates:
- Bigger trouble developing in China:
- BOJ minions thinking about ending never-ending stimulus as early as January 2024:
- ECB minions say they want smaller balance sheet, but not too much smaller; also say too soon to talk rate cuts:
- Nasdaq, S&P, Dow slip as hawkish Powell, disappointing 30-year auction stops market rally
Friday, 10 November 2023
- Signs and portents for the U.S. economy:
- Fed minions try to keep threat of more rate hikes alive:
- Bigger stimulus developing in China, Japan:
- Nasdaq, S&P, Dow rise as yields stabilize; Wall Street set for back-to-back weekly gains
The CME Group's FedWatch Tool's projections now anticipates the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% into mid-June (2024-Q2). Starting from 12 June (2024-Q2), investors expect deteriorating economic conditions will force the Fed to start a series of quarter point rate cuts at six-to-twelve-week intervals through the end of 2024, which is six weeks later than expected a week ago.
The Atlanta Fed's GDPNow tool's estimate of real GDP growth for the current quarter of 2023-Q4 bounced up to +2.1% from the +1.2% annualized growth it projected a week ago and back in the ballpark of where it was two weeks ago.
Image credit: Bing Image Creator. Prompt: "A digital art concept illustrating rising stock prices and falling bond yields. 4k." 10 November 2023.
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