Morning Daily

@9AM November 23, 2021

Our View on Equity Market:

The S&P 500 and Nasdaq Composite fell on Monday as growth pockets of the market reacted to a jump in U.S. 10-year Treasury yield to above 1.62%. Stocks initially reacted positively to the announcement that Federal Reserve Chair Jerome Powell was nominated for a second four-year term by President Joe Biden, driving expectations that the central bank will stay on its monetary path as the economy recovers from the pandemic and attempts to combat inflation. However, markets reversed course towards the end of the session and yields continued to rise. Shares in Asia-Pacific were mostly lower. In line with the selloff in US tech stocks, the Asian tech names also are down sharply. The Nifty lost heavily yesterday weighed down by Bajaj Finance (-5%), ONGC (-5%) and RIL (-4.4%). Bharti was the gainer on news of tariff hikes. Realty, Hotels and Upstream oil stocks were major losers.

Global Markets:

U.S. stock indices closed mixed on Monday. Investors well-received the continuation of Fed leadership, which has deftly managed monetary policy during a challenging economic environment but continue to remain anxious about rising inflation and talk of the need for more aggressive Fed monetary policy.

The National Retail Federation is predicting November and December holiday sales will rise 8.5% to 10% this year to around $850 billion. Moreover, existing home sales for October rose by nearly 1% to a 6.34 million annual rate, ahead of market estimates for 6.2 million and a 6.29 million rise in September. Investors await the massive dump of releases coming Wednesday, which will include an update to Q3 GDP, durable goods and personal income.

European stock indices ended mixed on Monday. Investors will be keeping an eye on the spread of Covid-19 across the continent after Germany and Austria re-imposed strict containment measures last week. Moreover, high frequency data has already shown the European economy struggling to gain traction.

Debt/FX Markets:

U.S. Treasury yields settled higher on Monday. The yield on the 10-year Treasury note climbed by 9.3 bps while the yield on the 30-year Treasury bond rose 6.4 bps. Some market participants suggest that there was a great deal of focus on the nomination, which implies the passing of the event risk might see some follow-through price action and add to the curve flattening pressure.


Oil futures ended higher on Monday, after a report said that OPEC+ could rethink plans to continue with modest output increases if the U.S. and other energy-consuming countries follow through on plans to release crude from strategic reserves. Market participants suggest that the SPR release would likely suck maybe a dollar or two out of the market and it is possible a U.S. SPR draw is already in the market.

U.S. gold futures finished lower on Monday, as the dollar jumped on expectations that the central bank may stay the course on tapering economic support. U.S. gold futures settled 2.4% lower at $1,806.30.


Disclaimer: The views expressed here are based solely on information available publicly/internal data/other reliable sources believed to be true. Facts presented have been verified, however, the same may contain human errors/ errors from database. The information is provided merely as a complementary service and do not constitute an offer, solicitation for the purchase or sale of any financial instruments, inducement, promise, guarantee, warranty, or as an official confirmation of any transactions or contract of any kind.