(CercleFinance.com) – Wall Street halted Thursday’s violent slide (a completely failed end to October, with the S&P500 erasing 100% of its monthly gains in a single session) and began November on a moderately positive note.
The gains could have evaporated over the hours given the heavy fall in the interest rate markets, with a symmetrical surge in yields from 1:45 p.m., to the worst levels observed since July 4.
In the end, the Dow Jones rose +0.7% to 42,052, the S&P500 +0.4% to nearly 5,729 and the Nasdaq Composite (-2.8% the day before) rebounded +0.8% to 18,240. … slightly slowed down by Apple (-1.3%) following brilliant results, but not surprisingly.
The Nasdaq-100 (+0.7%) was driven upwards by the locomotive Intel (+6.8%) and Amazon (+6.2%), without forgetting Atlassian with +19% (only $36 billion in ‘capi’ and $31 billion the day before), but the index was handicapped by the -2.6% of PayPal and the -1.5% of AMD… and of course rates which only fall for the better go back the following hours.
The deterioration in rates appears to have no apparent logical link with the employment report (NFP): the US ’10-year’ rose by +10.3 basis points towards 4.39% (+15.5 bps on the past week), the ’30 years’ by +10.5 bps towards 4.58%… and the ‘2 years’ took +12 bps over the week to 4.213% (level of August 1).
Such tension has no coherence with any figure published earlier this week, and even less so with regard to the ‘NFP’. The American economy only generated 12,000 non-agricultural jobs in October instead of 113,000 (median consensus), according to the Department of Labor (DoL).
The unemployment rate, however, remained at 4.1%, in line with expectations, while the labor force participation rate stood at 62.6%, and the average hourly income increased by 4 % over one year.
Furthermore, the creations of non-agricultural positions for the previous two months were revised, from 159,000 to 78,000 for August and from 254,000 to 223,000 for September, i.e. a total revision balance of -112,000 for these two months.
‘The labor market undoubtedly suffered from various hazards in October,’ warned Oddo BHF at the start of the week. But no one anticipated a 95% drop in job creation, which means that the figure is very ‘skewed’ and will certainly experience a sharp upward revision next month… that’s what Joe Biden predicts who hastened to make a reassuring statement on this subject.
Another highly anticipated figure, the United States manufacturing PMI index (calculated by S&P Global): it recovered slightly in October, standing at 48.5 against 47.3 the previous month, but remains below the threshold of 50 which marks the limit between expansion and contraction of the sector’s activity.
S&P Global said production and new orders fell less sharply last month, while inflationary pressures eased and recent hurricanes caused delays in supply chains.
Published separately, the Institute for Supply Management (ISM) index paints a less cheerful picture of the American manufacturing sector, contracting to 46.5 for the past month, compared to 47.2 in September.
The behavior of the T-Bonds does seem to reflect a result very different from what the ‘mainstream’ media, mainly pro-democratic, have been anticipating for weeks, that is to say a victory for the Democratic candidate, favored by a female vote which is mostly won by him.
