Global Equities Tumble 

Equities fell on Monday amid a generally risk-off trade and extended the decline early on Tuesday. Paris and London edged down by around half a percent in the first hour of trade, whilst Frankfurt shed about a quarter of a percent. Gold prices rose firmly on Monday to $2,018/oz and are holding gains around the $2,013 level this morning. Iron ore prices fell as Beijing talked about increased market supervision. Oil has bounced back a bit but remains volatile ahead of the OPEC+ meeting on Thursday. 

U.S. Stocks: A Thanksgiving Food Coma 

US stocks also paused for breath on Monday as traders returned from the Thanksgiving holiday. The S&P 500 edged down by a modest 0.2% but Wall Street is still heading for its best month since July 2022, with SPX +9% roughly and Nasdaq +11% roughly. The Dow +7% roughly is best since October 2022. For the broad market the 9% rally would be its 4th best monthly advance in ten years.  

Consumer Spending 

As for the consumer, a bit of a pullback in spending is seen as a positive that rate hikes are taking effect – as long as it doesn’t last too long and doesn’t bite too deep. Some e-commerce names rallied amid the Cyber Monday spending splurge – after a series of warnings from retailers in the last week or two. Black Friday online spending rose 7.5% in the US, whilst Cyber Monday spending was up 9%.  

Looking to Central Banks: 

The rally since the end of Oct has really been about the central bank narrative – pause and cuts to come soon seems to be the thinking. That may be premature, as stated here many times, and recent comments from European Central Bank officials is interesting. Joachim Nagel, President of the  Bundesbank, said hikes are not necessarily over. ECB president Christine Lagarde said on Monday that it’s too soon to declare victory. "We need to remain attentive to the different forces affecting inflation and firmly focused on our mandate of price stability,” she said. Key EZ and US inflation data is up later this week to help further construct the narrative around what the CBs do next. Fed speakers aplenty today – Goolsbee, Waller and Bowman among the highlights.  

Yields Yield, Dollar Wavers 

The dollar is under pressure as Treasury yields retreated further – the 10yr struggling to hold 4.40% whilst DXY is just about holding above 103 handle - the 50% retracement of the Jul to Oct rally, but hit its lowest since August. GBPUSD has firmed up above 1.26 and now could take on the August highs at 1.28. RSI looking toppy but the MACD is still positive. Dollar bulls generally facing a tough ask into the PCE report at the end of the week.  

FTSE 100 – trend resistance held, broken down at the 21-day EMA, opens up possible move to 7,200? Potential support around 7,385. MACD turning bearish at the trend resistance?