Market Update

Good morning,
 
Yesterday equities began Fed Week on a down note with the S&P 500 falling 0.4%, finishing near the lows of the day. The equal-weight trailed but the Russell outperformed as it closed flat. That was notable as the Tech sector actually gained 1% (semis higher) and treasury yields backed up a few bp across the curve. All other sectors finished lower. S&P futures were around unchanged this morning but have faded to their lows, currently down slightly as the markets trade ahead of the FOMC rate decision and Powell’s press conference tomorrow. President Trump announced the US will allow Nvidia to sell its H200 chips to approved customers in China (with 25% of the sales going to the US government). Futures dropped briefly earlier this morning after China said it would limit access to those chips according to the FT but quickly bounced back. There are several prominent Investor Days today.  CVS is trading modestly higher in the pre-market while Home Depot is lower.  GE Vernova will hold its event after the close today.  
 

 
               
The weekly ADP employment report had 4.75K jobs/week added during the four weeks ending November 22. This was better than the last weekly report on 11/25 that showed a decline of 13.5k/week, and also an improvement from the Monthly report on 12/3 showing a loss of 32k jobs in November. The NFIB Small Business Optimism Index rose 0.8 points in November, to 99.0. Sales expectations and employment plans saw the largest increases, while economic outlook, capex plans and credit expectations saw declines. The rest of the day includes more labor with the JOLTS data at 10am and a 10y auction at 1pm. Treasury yields were unchanged across the curve but have moved a little lower, while the Dollar Index is trying to hold onto a very modest gain.
 

• US 2yr -1bps to 3.57%, 5yr -2bps to 3.73%, 10yr -2bps to 4.14%, 30yr -3bps to 4.78%
• USD index: +$0.03 to $99.10

Europe is trading mixed with Germany leading while France lags. Japan finished slightly higher overnight. Finance Minister Katayama switched her commentary from the yen to JGB yields, saying she is closely monitoring yield levels with the 10y near 2%. The Nikkei reported Japanese companies issued a record amount of foreign-currency bonds this year and are on track to issue more than yen-denominated bonds. China was lower. Tech names came under some pressure on news of Trump’s allowance of Nvidia chip sales. Australia maintained its policy rate at 3.6% as expected.
 

 
Like futures and rates, crude oil isn’t doing much, down marginally. Nat gas is lower again, following through on yesterday’s drop. Precious metals are trading higher while copper is lower as it pulls back from recent highs. Bitcoin and Ether are down slightly as well.
 

 
Economic Data:
US:

• Weekly ADP employment: 4.75K vs. prior -13.5K
• NFIB Small Business Survey: 99.0 vs. cons. 98.4, prior 98.2
• 10:00am JOLTS
• 10:00am Conference Board Leading Index
• 12:00pm WASDE report
• 1:00pm 10y auction
• 4:30pm API crude inventories

Global:

• Australia rate decision: Maintain at 3.6% as expected
• Japan Machine Tool Orders y.y: 14.2% vs. prior 16.8%
• Taiwan Exports y.y: 56% vs. 41.1% cons., prior 49.7%
• Germany Trade Balance (Oct): €16.9B vs. €15.2B cons., prior €15.3B
  • Exports m.m: 0.1% vs. -0.2% cons., prior 1.5%
  • Imports: -1.2% vs. 0.2% cons., prior 3.1%