Market Observations
In this edition: France’s current mess? SARIM called it in June 2024. The USD strength isn’t about America. How long can the K economy run?
If there was one market shouting louder than all the others this week, it wasn’t equities — it was bonds. The S&P 500 slipped just 0.27%, while the Nasdaq actually gained 0.45%.
The S&P 500 finished roughly 1.1% higher, while the Nasdaq jumped about 3.2%, helped once again by enthusiasm surrounding AI and technology. Monday’s 1.5% S&P rally set the tone, although soaring Treasury yields later in the week provided a fairly brutal reminder that interest rates haven’t disappeared as a problem. The US 10-year yield briefly pushed above 5% as September business activity hit its strongest level in more than five years.
In this edition: DRAM supply accelerates, as Chinese DRAM chipmaker CXMT announced on Sunday that its fifth-generation technology platform had entered mass production … and prices are turning.
The S&P 500 finished almost exactly where it started, slipping roughly 0.1%, while the Nasdaq managed a 0.7% gain. Beneath the surface, though, things were considerably less relaxed.
Over the weekend I had a discussion with an important European industrialist friend, who asked me about the outlook for the stock market, i.e. what I thought would happen over the next year or so.
This week at a glance — The strongest weekly moves were recorded for the 2-year US Treasury yield (+19 bps), the 10-year US Treasury yield (+17 bps), and WTI crude oil (+12.0%, where a sell signal is active). On the downside, the Russell 2000 (-2.8%), coffee (-2.8%, where a sell signal is active), and cocoa (-2.0%) posted the largest declines.
In this edition: CPI stays tame as substitution and real-income effects kick in…
This was the week when oil reminded markets that inflation hadn’t disappeared – it had merely gone for a cup of tea. The S&P 500 lost 0.8%, despite Friday’s 0.9% recovery, as rising crude prices and Treasury yields approaching 5% unsettled investors.
In this edition: Astonishingly strong labor data … but for the Fed inflation (and Trump) matters. Strong nominal data in Japan, real less so France’s problem is French — the ECB hikes regardless. Short duration, selective carry, and go local