Hey Folks, momentum is with the Bulls as we saw new all-time highs in both the S&P; and the DOW. Get my take in the current markets and price action below;
WEEKLY SOUND BITES:
US Indexes finished another strong week with the DOW and S&P both making new All Time Highs… Further reflecting the strong investor sentiment, the CBOE Volatility Index (VIX) also fell to its lowest level since the beginning of the pandemic. Investors appeared to be paying close attention to how higher energy and raw materials prices were affecting both third-quarter profits and future guidance, but favorable earnings momentum helped counter elevated inflation concerns. Analysts were expecting overall Q3 earnings for the S&P to have risen 33% versus the year before. This would be down considerably from the Q2’s pace of 89% but still the third-fastest growth rate since 2010…
The week’s economic data were mixed. This was especially true in the housing sector, where both housing starts and building permits came in well below expectations on Tuesday, while existing home sales, reported Thursday, jumped unexpectedly to their highest level since January. Industrial production fell 1.3% in September. Weekly and continuing jobless claims fell more than consensus expectations and reached new pandemic-era lows.
U.S. Treasury yields increased through most of the week, with the 10-year U.S. Treasury note yield briefly trading around 1.69% Friday morning—up from 1.59% the previous week and a five-month high. With monetary policy remaining in focus, five-year notes experienced the most meaningful yield increases and served as the fulcrum for the Treasury yield curve, which pivoted between a steeper and flatter slope throughout the week. Weak demand for the Treasury Department’s 20-year bond auction added upward pressure on long-term rates.
Shares in Europe rose as optimism about corporate earnings season overcame worries about the potential risks if central banks tighten monetary policy as economic growth loses momentum. UK inflation unexpectedly slowed to 3.1% year over year in September—down from the 3.2% registered in August but still well above the BoE’s 2% target. Eurozone business activity slowed for a third consecutive month in October, amid increasing supply-chain bottlenecks and ongoing coronavirus-related disruptions. The Eurozone PMI Composite Output Index fell to 54.3 from 56.2 in September. Activity in the manufacturing and services sectors remained above 50—the level denoting expansion—but average selling prices rose to the highest level since the survey began in 1998.
In Japan, their export growth decelerated sharply in September, falling to 13.0% year on year from the previous month’s 26.2%. On the other hand, imports rose for the eighth consecutive month, growing 38.6% year on year, having expanded 44.7% the prior month. Growth was driven by strong demand for oil, coal, and medicines. And the latest PMI data rose for the first the since April 2021 to 50.7 from 47.9 in September. Separate data showed that the core consumer price index (CPI) rose 0.1% year on year in September, a sign that rising energy and raw material costs are gradually pushing up inflation. The rise in the CPI was the first since the early stages of the coronavirus pandemic in March 2020.
Chinese stocks got off to a weak start after data released Monday showed that the country’s GDP rose a lower-than-expected 4.9% in Q3 from a year ago as power shortages and property sector curbs reined in expansion. The latest quarterly growth was the weakest since Q3 of 2020 and considerably slower than Q2’s 7.9% pace. Also, credit agencies continued to downgrade ratings on several developers amid fears of a liquidity crunch resulting from a property sector slowdown and slower economic growth.
Enjoy This Week’s Round-Up
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
