Aviso Weekly Market Monitor: November 27th – December 1st

Dec 4, 2023

Market developments

Equities:
The S&P 500 experienced a slight increase on Friday, rebounding from earlier losses and closing the week up 0.75% following Federal Reserve Chair Jerome Powell’s statement that policy is “well into restrictive territory.” This week saw the end of one of the strongest November’s in the last 20 years as the S&P 500, Nasdaq and TSX ended the month up 8.9%, 10.7% and 7.2% respectively. These indices are now pushing up against short term levels of resistance which could potentially lead to a reversal of momentum in the near term.

Fixed income:
Wall Street responded positively to Powell’s efforts to discourage bets on interest-rate cuts, with bond yields falling on speculation that the Federal Reserve will maintain its current stance this month and potentially ease policy in 2024. Despite Powell’s readiness to tighten further if necessary, the market continues to anticipate future rate cuts, with odds rising for a quarter-point cut in March and a reduction fully priced in by May. The market appears unconvinced by Powell’s attempt to keep a more cautious tone. North American 10yr yields fell this week as the Canadian 10yr and U.S. 10yr yields ended the week 27bps and 24bps lower respectively.

Commodities:
Oil futures experienced another down week, as traders remained skeptical about the commitment of OPEC+ producers to implement additional production cuts. Following the eagerly awaited OPEC+ meeting, which resulted in an agreement to cut approximately 2.2 million barrels per day in the first quarter of the next year, oil traders remained doubtful.

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