11/11/2024 Evening Reports
Oil prices extended their biggest drop in almost two weeks, with Brent near $73 a barrel and WTI falling below $70. The decline followed weak Chinese inflation data for October and falling factory-gate prices. A stronger dollar, driven by President Trump’s re-election, made commodities less appealing. Traders are assessing global demand prospects for 2025, amid expectations of a surplus next year and ongoing geopolitical tensions, particularly between Israel and Iran. Key outlooks, including OPEC’s, are expected this week.
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Trump’s Victory Fuels Record US Stock Gains Amid Market Optimism and Rising Inflation Concerns
US stocks continued their climb toward record highs Monday, with futures suggesting further gains for the S&P 500 and Nasdaq 100, spurred by investor optimism over Donald Trump’s re-election. Tesla led premarket growth, up 7.3% with a valuation surpassing $1 trillion, reflecting positive expectations for the EV sector under a Trump administration. Bitcoin surged to a new high above $81,000, boosting crypto-linked stocks on prospects of a Republican-led, pro-crypto Congress.
The dollar extended its winning streak, rising 0.3% against other currencies. Bond markets, closed for the holiday, face potential challenges as Trump’s proposed tariffs and fiscal policies could drive inflation, pushing rates higher. European stocks rebounded after three weeks of declines, supported by strong earnings reports. Investors now await US inflation data, set for release Wednesday, for indications of the Fed’s rate path, as concerns mount that increased spending could widen the budget deficit and increase pressure on bond yields.
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Is the Bond Market Facing New Risks After Trump’s Election Victory?
Following Trump’s election win, the bond market saw a sharp initial selloff, as investors recalibrated positions in response to anticipated shifts like tax cuts and tariff increases. BlackRock, JPMorgan, and TCW Group have all flagged concerns about continued volatility. With Trump’s proposed policies potentially sparking inflation by boosting import costs, analysts are watching the 10-year Treasury yield closely, which may approach a high of 5%—a level that could test market resilience and raise borrowing costs.
Many had expected rate cuts, but Trump’s policies, aimed at fostering growth, may lead the Fed to limit future reductions. Revised forecasts from Goldman Sachs, Barclays, and JPMorgan show fewer anticipated cuts, pushing traders to rethink strategies as bonds adjust. Trump’s fiscal policies could further swell the federal deficit, pressuring bondholders to demand higher yields. This adjustment has the potential to reshape the bond landscape as investors weigh the risks of holding Treasuries amid growing supply and potential inflationary pressures.
