Aviso Weekly Market Pulse: November 13th – November 18th

Nov 20, 2023

Market developments

Equities:
After a $2.7 trillion rally in November, spurred by speculation that the Federal Reserve might halt its hiking cycle, the S&P 500 is now trading above 4,500 and posted its third consecutive week of gains. The S&P 500, despite recent consolidation, faces potential short-term pullback, valuations of high-quality stocks have surged, historically associated with periods of turmoil. Earnings season concludes with a 4% YoY increase, potentially ending a three-quarter streak of declines, with attention on upcoming reports from retailers and tech companies like Best Buy, Nordstrom, Lowe’s, and Nvidia.

Fixed income:
Inflation in the U.S. continues to cool leading to lower yields in the U.S. with the 10yr and 2yr yields down ~20bps and ~15bps respectively. Investors are cautious about potential rate cuts, with mixed signals from Fed officials, however at this moment it appears investors believe we are at global peak rates as the U.S., Canada and Eurozone show no probability of another rate hike.

Commodities:
Oil futures rebounded on Friday, erasing previous session losses that pushed U.S. benchmark prices into bear-market territory. The Financial Times reported that OPEC+ might consider additional production cuts in their November 26 meeting, boosting prices. Saudi Arabia is reportedly planning to extend its oil-production cuts into the next year. The recent dip below $80 in prices triggered speculation about OPEC intervention.

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