Wednesday's Markets Update (November 13, 2024)

14 Nov 2024 by rate3

On Wednesday, equities closed mixed. The Dow saw modest gains, while the S&P and Nasdaq declined. The consumer discretionary, energy, and real estate sectors outperformed, while technology and healthcare lagged. Investors digested October's inflation data, which met expectations but indicated ongoing inflationary pressures. Core inflation remained steady, while overall inflation increased. Both the dollar and gold rose as investors bet on higher Fed rates and higher inflation (stagflation) simultaneously. EU stocks hit a 13-week low amid a looming economic downturn, exacerbated by a significant outflow of capital across the Atlantic on Trump-trades. The Brazilian real dropped to a 3-year low on Lula's high social expenditure policies. BTC (90K) continued to push toward 100K, while ETH slowed down again, retreating to 3.1K.

Details

Core inflation remained steady at 3.3% in October, with services inflation, particularly shelter and transportation, continuing to rise. Monthly inflation also held steady at 0.3%. These figures suggest underlying inflationary pressures persist, despite recent declines in headline inflation. 1Y trend: "Down" Meanwhile annual inflation rose to 2.6% in October, reversing the previous month's decline. While energy prices slowed their decline, shelter costs remained elevated. Monthly inflation held steady at 0.2%. 1Y trend: "Down" (BLS)
30-year mortgage rates rose for the third consecutive week to 6.86%, the highest since mid-July. This increase is attributed to rising Treasury yields and expectations of limited Fed rate cuts due to Trump's policies and potential inflationary pressures. 1Y trend: "Down" (MBA)
Household debt reached a record high of $17.94T in Q3, driven by increases in mortgages, credit cards, and auto loans. While income growth has outpaced debt, elevated debt levels remain a concern. Rising interest rates and a potential economic slowdown could further strain household finances. 1Y trend: "Up" (NYF)

Crypto

Robinhood reported a 72% increase in transaction-based revenue in Q3 2024, driven by growth in crypto, options, and equity trading. Crypto trading volumes were up YoY. The company's Assets Under Custody also increased, reflecting strong user growth and asset valuations. (source)

World Markets

Russia's GDP growth slowed to 3.1% in Q3, down from the previous quarter. This reflects waning base effects from the 2022 crisis and weaker Chinese demand. 1Y trend: "Up" Annual inflation eased to 8.5% in October, but remains above the central bank's target. Monthly inflation accelerated to 0.8% in October. 1Y trend: "Up" (RU)

Currencies

The dollar index surged to a multi-month high as October's inflation data met expectations. The market is now focusing on upcoming economic releases and Fed Chair Powell's speech. The dollar's strength is partly driven by "Trump trades," with investors anticipating potential inflationary policies and limited Fed rate cuts. 1Y trend: "Side"
The Brazilian real weakened to a three-and-a-half-year low as concerns about President Lula's fiscal policies and rising inflation expectations grew. The market is worried about the government's ability to balance the budget, leading to a weaker currency. Additionally, a stronger US dollar and global risk aversion have further pressured the real. 1Y trend: "Up, Depreciating"

Commodities

Gold prices edged higher after US inflation data came in line with expectations. While this data supports the Fed's potential rate cut in December, the market is now pricing in a less aggressive easing cycle due to Trump's policies and inflationary pressures. However, recent outflows from gold ETFs and weaker global demand have limited gold's upside potential. 1Y trend: "Up"
Silver prices rebounded to $31 per ounce after a recent decline. This recovery was driven by expectations of further Fed rate cuts due to moderate inflation data. However, weak Chinese demand for solar panels, a major silver consumer, and potential tariffs on Chinese solar products limited the upside for silver prices. 1Y trend: "Up"
Brent crude oil prices rebounded slightly above $72 per barrel, supported by short-term supply tightness. However, weaker-than-expected Chinese demand and concerns over potential tariffs on Chinese goods continue to weigh on oil prices. OPEC's lowered global demand forecast for 2024 further adds to the bearish sentiment. 1Y trend: "Side"