A further upward revision in GDP and employment data that does not let up, plus some announcements by tech companies such as Tesla and Micron, were enough to knock down Wednesday’s rebound. In this case, the positive signs in the economy, and especially in employment, make it unlikely to see any sign of change in monetary policy in the coming months, although markets continue to price in a rate cut for the second part of 2023. In the same vein, today we will have the last relevant US inflation figure of the year, with November’s consumer deflator, the Fed’s benchmark measure of inflation. In addition, this will be the last full market week of the year, giving way to a short week – Monday is a holiday in the US and Europe – and lower trading volumes.

The mini rebound comes to a sudden end in the United States. Technology weighed on the US stock markets with sharp falls, especially in the semiconductor sector (-4.6%) following Micron’s announcement (-3.44%) pointing to a reduction in the demand for chips for next year. In addition, Tesla (-8.9%) announced a price cut in its largest models, which the market understood as a weakness in demand in view of the company’s repeated policy of not offering discounts.

Europe is also dragged down by global sales. Sector-level declines similar to those seen in the United States, with technology (-2.5%) worse than the market, especially due to the high weight of the semiconductor sector in European technology. On the other side, there is the energy sector (-0.2%), which barely fell in the face of rising energy prices in recent weeks, and banks also performed well, which continue to be favored by the upward movement of interest rates.

Asian stock markets close with slight declines. The Chinese stock exchanges retreat after yesterday’s rally in the face of the increase in contagions in China and the falls in the mobility indicators of the main cities. On the other hand, the stock exchanges where the weight of semiconductor companies is higher suffer, as indicated by the Korean Kospi (-3.3%) and the Taiwanese Taiex (-1.2%). Finally, the Topix fell 0.5%, still digesting the Bank of Japan’s move.

Pressure on European bonds as the US curve continues to unwind. The most important movements in the bond market are taking place in Europe, it seems that the ECB stirred up investor sentiment in Europe and yesterday we saw again relevant movements in the long part of the curve with the German bond yield back above 2.3% and closing just 6 b.p. away from the maximum required yield of the year. On the other hand, in the United States, the curves are still in the process of disinvestment while long rates rise slightly more than short rates, anticipating the Fed’s expected turnaround in the second half of the year. 

In the currency market, throughout yesterday we saw a market with little movement, where the dollar ended the session with slight gains of +0.08%, although this morning the opening already shows an opposite sign registering -0.18% for the moment. The cross today stands at 1.0615 EUR/USD. On the pound side, yesterday there were corrections for the sterling currency worth -0.29%, while this morning it opens without a clear sign for the moment. The cross is valued at 0.88 EUR/GBP.

As for commodities, yesterday was a negative day for the oil price, which left its red tone in a week full of positive returns. Yesterday’s fall was -1.48% in the case of Brent, opening this morning with some gains of +0.75%. The price of a barrel of crude oil currently stands at $81.59. This time, the noise of the session moves to the supply side, where Russia warns of a possible cut in response to the price cap imposed by way of sanctions for the war, by the countries of the West. In the case of gold, yesterday we saw strong corrections of -1.21%, although this morning it starts recording some gains of +0.22%. With this, the market price of an ounce of gold moves at 1,796 dollars.

Political and economic outlook

The U.S. Senate approves the $1.65 trillion omnibus bill.The Senate yesterday approved the $1.65 trillion bill, which provides for miscellaneous spending to avoid a partial government shutdown. The Senate’s wide approval (68 in favor – 29 against) comes as a surprise considering that Republicans could wait for the renewal of the chambers to block the vote in the House of Representatives, still with a Democratic majority before the midterm results are applied. However, the sharp increase in military spending of 10% compared to last year -858 billion dollars- and the characteristics of this “omnibus” bill, which brings together hundreds of personal projects of senators and congressmen, mean that the Senate has already approved the bill and that the House of Representatives will soon do the same, before it reaches Biden’s desk. In addition, the package includes a $45 billion spending plan for Ukraine and NATO allies and expands restrictions on the use of TikTok on government devices.

Macroeconomics

US GDP in Q3 revised upwards. Positive surprise in the final growth figures for the US economy, with an upward revision of three tenths of a percentage point, bringing the pace of GDP growth in Q3 to +3.2% quarter-over-quarter annualized. Moreover, this upward revision was mainly due to the improvement in personal consumption, which was revised up by five tenths to +2.3% q/q annualized. On the price side, the underlying consumption deflator was also revised up by one tenth of a point to +4.7%, one tenth of a point higher than the previous figure.

Continuing with data from the United States, yesterday’s jobless claims surprised positively as jobless claims fell again in the last week to levels of 222 thousand versus the previous 228 thousand. Finally, on the leading indicators side we had a new disappointment and the aggregate index of leading indicators fell -1% on a monthly basis versus -0.9%. With this new drop, this important indicator has now accumulated eight consecutive months in contraction.

In Spain, yesterday we learned the mortgage market figures. In October, the number of mortgages on homes registered in the property registries was 41,022, up 13.5% year-on-year. On the side of the average amount, this increased by +8.4% year-on-year and now stands at 149,730€.

Agenda for the day

Today we will have in the United States, the personal spending data for the month of November, including the deflator as an indicator of inflation. In addition, November durable goods orders data, the University of Michigan consumer sentiment indicator for December and November new home sales data will also be released. 

On the other hand, in Europe we will have the producer price data for the month of November in France and Spain. In addition, manufacturing and consumer confidence data for December in Italy will be released.