Wall St Week Ahead: Nvidia results in focus as stock market’s election boost stalls

NEW YORK – Nvidia Corp’s results in the coming week could guide the US stock market on its next path, as investors turn their focus to the technology sector and artificial intelligence trade after an election-fueled rally stalled.

A nearly 800% run in shares of Nvidia over the past two years, driven by its gold standard AI business, has propelled the semiconductor company to the world’s top spot by market value.

That heft gives Nvidia huge sway in market benchmarks, such as the S&P 500 and Nasdaq 100, while its results on Nov. 20 will also be a gauge for the market’s appetite for tech stocks, the AI trade and sentiment for equities broadly, investors said.

The benchmark S&P 500 has pulled back from record highs following the Nov. 5 US election that gave Donald Trump a second term as president and his fellow Republicans control of Congress.

Markets are “looking for direction right now,” said Garrett Melson, portfolio strategist at Natixis Investment Managers. “If those results are pretty strong, that tells you that there’s still momentum behind that investment and that trade and I think that helps to broaden out risk appetite.”

Nvidia’s dominant AI position has catapulted its share price and led to an astonishing financial performance. For its fiscal third quarter, the company is expected to post net income of USD 18.4 billion as revenue jumped over 80% to USD 33 billion, according to LSEG data.

However, after soaring past analysts’ earnings estimates last year, Nvidia’s surprises have become more modest, with earnings beating by 6% in its most recently reported quarter, LSEG data showed.

“It’s getting harder to hurdle those expectations,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Nvidia’s results cap a mixed third-quarter earnings season for US companies. S&P 500 earnings are on pace to have risen 8.8% from a year earlier, with 76% of companies beating estimates compared to an average of 79% in the past four quarters, according to LSEG IBES data.

As in recent quarters, results from Nvidia and a small group of other megacap tech and related companies are carrying the load. Those so-called Magnificent 7 companies, which also include Apple and Microsoft, are expected to have increased earnings by 30% in the third quarter compared to 4.3% for the other 493 companies in the index, said Tajinder Dhillon, senior research analyst at LSEG.

“It’s really the Mag 7 led by Nvidia that’s done the heavy lifting to address the kind of earnings growth that has supported the advance we’ve seen in stock prices,” Luschini said.

Nvidia’s results may also be crucial to support the broader market’s lofty valuation, with the S&P 500’s forward price-to-earnings ratio above 22 times and near its highest level in more than three years, according to LSEG Datastream.

The benchmark index is up 23% this year. Trump’s victory initially sparked broad stock gains on optimism about his agenda of lower taxes and deregulation.

But stocks have pulled back this week as markets continue to digest the implications of the election.

Investors will keep the focus on Trump’s transition plans, including his picks for key cabinet roles, after some of his initial appointees drove weakness in areas of the market such as pharmaceutical and defense shares.

Stocks also fell after Federal Reserve Chair Jerome Powell said on Thursday that the central bank does not need to rush to lower interest rates, which will keep monetary policy at the forefront for markets in coming weeks.

“Given that the stock market has become so expensive, the fact that the Fed is signaling that they’re not going to be as accommodative as they had indicated before the election … will create at least some headwinds in the days and weeks ahead,” Matthew Maley, chief market strategist at Miller Tabak, said in a note on Friday.

(Reporting by Lewis Krauskopf; Editing by Richard Chang)

Gold set for biggest weekly fall in 3 years as Fed rate-cut bets ease

Gold prices on Friday were on track for their biggest weekly decline in over three years as expectations of less aggressive interest rate cuts by the US Federal Reserve lifted the dollar, denting allure for bullion among investors.

Spot gold lost 0.1% to USD 2,565.49 per ounce as of 01:44 p.m. ET (1842 GMT). Prices have fallen more than 4% so far this week, touching their lowest since Sept. 12 on Thursday. US gold futures settled 0.1% lower at USD 2,570.10.

The dollar was set for its biggest weekly gain in more than a month, making gold more expensive for other currency holders.

US Treasury yields, meanwhile, extended gains after data showed retail sales in the world’s largest economy rose more than expected last month.

“All the uncertainties, specifically the short-term uncertainties have been removed from the mix. Now gold is just going back to basic fundamentals,” said Alex Ebkarian, chief operating officer at Allegiance Gold.

Economists believe President-elect Donald Trump’s tariff plans would stoke inflation, potentially slowing the Fed’s rate easing cycle.

Higher interest rates make holding gold less attractive as it is a non-yielding asset.

Speaking on Thursday, Fed chair Jerome Powell said the US central bank did not need to rush to lower interest rates.

Markets now see a 62% chance of a 25-basis-point rate cut in December, down from 83% a day before, according to the CME Fedwatch tool.

“So far gold has been negatively impacted by the election of Trump but this can change if there is some more uncertainty which could come back in the medium term,” said Kinesis Money market analyst Carlo Alberto De Casa.

Traders will now be on the lookout for remarks from several Fed officials scheduled to speak later in the day.

Spot silver fell 0.4% to USD 30.32 per ounce, platinum was down 0.1% at USD 939.22 and palladium added 0.7% to USD 947.77. All three metals were on track for weekly declines.

(Reporting by Anjana Anil and Rahul Paswan in Bengaluru; editing by David Evans, Vijay Kishore and Mohammed Safi Shamsi)

US yields modestly higher as strong data raises odds rate cut pause

NEW YORK – US Treasury yields edged higher on Friday, coming off earlier highs that were fueled by data showing retail sales rose more than expected last month and import prices increased in the world’s largest economy.

The reports increased the possibility that the Federal Reserve could pause cutting interest rates at next month’s policy meeting.

The benchmark 10-year yield inched 1 basis point (bp) to 4.429%. It hit 4.505% earlier in the session, a 5-1/2-month high, in the wake of strong economic data. On the week, the 10-year yield gained 12 bps.

US two-year yields, which reflect interest rate expectations, were slightly up at 4.305%, rising to 4.379% earlier, the strongest level since late July. The yield was up 4.9 bps for the week.

Data showed US retail sales rose 0.4% last month after an upwardly revised 0.8% advance in September. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, climbing 0.3%.

“The big story in the retail sales data was not the October results but rather the huge upward revisions to September which now show a huge 0.8% (month-on-month increase). It was up 0.4% in the initial release,” wrote Dave Rosenberg, founder and chief executive officer at Rosenberg Research, in a note.

“Watch for a growing chorus of FOMC (Federal Open Market Committee) officials preparing us further for a policy pause at the December meeting, barring a disastrous employment release.”

US import prices, on the other hand, unexpectedly increased in October due in part to higher prices for fuels and other goods, suggesting inflation has stalled. Import prices were up 0.3% last month after an unrevised 0.4% decline in September.

Economists polled by Reuters had forecast import prices, which exclude tariffs, slipping 0.1%. In the 12 months through October, import prices increased 0.8% after dipping 0.1% in September.

Data on import prices followed gains in both consumer and producer prices earlier this week, suggesting that inflation remains sticky even with the Fed in the middle of an easing cycle.

US rate futures have reduced the odds of a 25-bp rate cut at next month’s policy meeting to 61%, compared with 63.2% late on Thursday, according to LSEG calculations.

The chances of a pause in rate cuts, on the other hand, increased to 39% from 37% the previous session. For 2025, futures have implied another 44 bps in rate reductions, down from 47 bps in the previous session.

“The Fed has probably a few more cuts to go before they’re kind of done in this cycle,” said Pramod Atluri, principal investment officer of the Bond Fund of America, which is part of the Capital Group.

“That’s where we’re at. We’re still trying to determine whether the promise of faster growth and stickier inflation will come to pass.”

In other maturities, US 30-year yields firmed 2.7 bps to 4.611%.

The US yield curve steepened after Friday’s data, with the gap between two-year and 10-year yields at 13.1 bps, up from 8.6 bps on Thursday. The gap was 19.5 bps on Nov. 6, a day after the election.

The steepening of the curve suggested that the market is still pricing in rate cuts next month and some in 2025, with yields on the short end under control.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Jonathan Oatis and Marguerita Choy)

Powell says no rush needed on more rate cuts

A look at the day ahead in Asian markets.

A warm reading on US producer price inflation in October and hawkish comments by Federal Reserve chair Jerome Powell weighed on Wall Street and shouldn’t distract Asian investors much from focusing on the incoming Trump administration.

Markets were muted ahead of an afternoon speech by Powell. Investors were right to be guarded, since he leaned more hawkish than in recent months, saying the central bank does not need to rush to lower rates and can carefully deliberate over the solid economy and job market and inflation that has yet to come back down to its 2% target.

After Powell’s remarks, rate-futures contracts priced in about a 60% chance of another quarter-point policy rate cut next month. Those odds had already come down to 75% after the data, from about 80% prior to that.

On Wall Street, stocks fell a bit more than they had after the Producer Price Index news, while the dollar index moved back up a bit but not enough to clear its overnight highest level in about a year.

Bitcoin hovered on either side of USD 90,000 after Wednesday’s surge above USD 93,000 as the election of Donald Trump spurred bets that friendlier US regulation could usher in a new boom for all corners of the cryptocurrency sector.

Traders are not hanging as much on US indicators due on Friday, and so spent most of the day digesting the Labor Department’s report showing PPI for final demand rose 0.2% last month, after an upwardly revised 0.1% gain in September. That was in line with forecasts.

In the 12 months through October, the PPI increased 2.4% after advancing 1.9% in September. Data also showed initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 217,000 for the week, a slightly better labor market than expected and than last week.

At the same time the Labor Department said initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 217,000 for the week, slightly below expectations of economists polled by Reuters calling for 223,000 claims, suggesting a weak October government payrolls report was an anomaly.

Powell followed other Fed speakers on Thursday. Richmond Fed President Thomas Barkin said the Fed needs to keep building on its great progress and that the current level of unemployment is fine. Whether it is normalizing or weakening is still to be determined, he said

Fed governor Adriana Kugler said the central bank has made considerable progress toward achieving its job and inflation goals, but stopped short of offering firm guidance for the near-term monetary policy outlook.

Worries about US-China relations were already weighing on stocks in China, where the Shanghai Composite index and China’s blue-chip CSI300 index .CSI300 both suffered their biggest retreats in nearly a month.

President-elect Trump has signaled with his choice of US Senator Marco Rubio for Secretary of State that policy toward Beijing could go beyond tariffs and trade to a more hawkish stance on China as the United States’ main strategic rival.

Republicans have criticized the outgoing Biden administration’s approach of “managing competition” with Beijing as too conciliatory.

Other cabinet picks awaiting Senate confirmation might also upset China, such as Representative Mike Waltz as national security adviser and John Ratcliffe to lead the Central Intelligence Agency.

Concerns about US alliances and trade policy are widespread and affecting international markets.

The greenback climbed above 156 yen JPY=EBS for the first time since July, ending at 156.31, while the euro was at USD 1.0513 after slumping to its weakest since October 2023. Euro/yen went up a smidge to 164.42. The offshore Chinese yuan was still trading at its weakest levels since August at 7.2554 per dollar.

(Reporting by Alden Bentley; Editing by Bill Berkrot)

Gold slumps to 2-month low as dollar marches on; Fed signals in focus

Gold prices were subdued after hitting a two-month low on Thursday, pressured by a strong dollar rally, though traders have not lost confidence in a December rate cut following the latest U.S. economic data.

Spot gold fell 0.1% to USD 2,570.05 per ounce as of 02:00 p.m. ET (1900 GMT), touching its lowest level since Sept. 12. US gold futures settled 0.5% lower at USD 2,572.90.

The US dollar index .DXY continued its relentless march higher, trading at a one-year high, making gold more expensive for overseas buyers.

“I don’t see the latest inflation data as having a significant direct impact on gold,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

“I think the Fed is going to hold its cards close to the vest until the Trump administration and the new Congress are in place and actually try to enact some of the policies that have been bandied about throughout the campaign and post-election.”

Easing labor market conditions are expected to encourage the Federal Reserve to deliver a third interest rate cut next month, even as data showed progress in lowering inflation has stalled.

Markets now see a 76% probability of a 25-basis-point rate cut by the Federal Reserve in December..

Following the Republicans’ clean sweep in the Nov. 5 election, gold has plunged over USD 170 as President-elect Trump’s proposed tariffs are seen as potential drivers of inflation, which could prompt the Fed to slow its rate-cutting pace.

Markets are dismissing gold as a hedge against inflation, despite Trump’s policies potentially raising US inflation, said Exinity Group Chief Market Analyst Han Tan.

Investors are awaiting remarks from Fed Chair Jerome Powell later in the day along with Friday’s retail sales data.

“Gold could benefit if Powell avoids directly linking potential policy shifts to the Fed’s decisions, as this could dampen US rate expectations,” Forex.com analyst Fawad Razaqzada said in a note.

Spot silver rose 0.5% to USD 30.48 per ounce, after hitting its lowest level since Sept. 12 earlier in the session. Platinum lost 0.1% to USD 936.94, while palladium rose 0.8% to USD 941.00.

(Reporting by Sherin Elizabeth Varghese and Daksh Grover in Bengaluru; Editing by Vijay Kishore and Mohammed Safi Shamsi)

Oil settles slightly higher, investors focus on steep draw in fuel stocks

HOUSTON – Oil prices closed slightly higher in choppy trading on Thursday, as a steep draw in US fuel stocks outweighed oversupply concerns and demand worries stemming from a stronger dollar.

Brent crude futures settled 28 cents, or 0.4% higher at USD 72.56 a barrel, while US West Texas Intermediate crude futures rose 27 cents, or 0.4% at USD 68.70. Both benchmarks had briefly dipped into negative territory during the trading session.

Brent was on track to lose about 1.7% for the week, while WTI was set to end the week over 2% lower due to a stronger US dollar and worries about rising supply amid slow demand growth.

US gasoline stocks fell by 4.4 million barrels last week, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 600,000-barrel build. The stockpile of 206.9 million barrels for the week ended Nov. 8 was the lowest since November 2022.

Distillate stockpiles, which include diesel and heating oil, fell by 1.4 million barrels, versus expectations for a 200,000-barrel rise.

US gasoline futures settled 0.8% higher, while heating oil futures closed down about 0.3% after briefly spiking on the data.

Capping oil-price gains, however, was a 2.1-million barrel rise in US crude inventories last week, much more than analysts’ expectations for a 750,000-barrel rise.

Meanwhile, the International Energy Agency forecast global oil supply will exceed demand in 2025 even if cuts remain in place from OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, as rising production from the US and other outside producers outpaces sluggish demand.

The Paris-based agency raised its 2024 demand growth forecast by 60,000 barrels per day to 920,000 bpd, and left its 2025 oil demand growth forecast little changed at 990,000 bpd.

The premium of the front month WTI contract over the second month contract also narrowed this week to its smallest since June. The narrowing of the premium, or backwardation, indicates that a perception of tight supply for prompt delivery has eased.

The dollar surged to a one-year high, and headed for a fifth-straight daily gain fuelled by higher yields and President-elect Donald Trump’s election victory in the United States.

A stronger greenback makes dollar-denominated oil more expensive for holders of other currencies, which can reduce demand.

A rally in US 10-year Treasury yields and a surge in the 10-year break-even inflation rate to 2.35% added to demand worries, said Kelvin Wong, senior market analyst at OANDA.

“(This) increases the odds of a shallow Fed interest-rate-cut cycle heading into 2025 (and) overall, there is less liquidity to stoke an increase in demand for oil,” he added.

OPEC on Tuesday cut its forecast for global oil demand growth for this year and next, highlighting weakness in China, India and other regions, marking the producer group’s fourth-consecutive downward revision in the 2024 outlook.

“Crude futures are trying to establish an equilibrium pricing, as a rising US dollar index is creating a further headwind, along with a Trump administration that will now have control of Congress, which is likely to roll back most of the Biden administration’s energy policies,” Dennis Kissler, senior vice president of trading at BOK Financial, said in a note.

Brent crude is expected to average USD 80 across 2025, down from a forecast at the end of September for UD 85, UBS Switzerland AG’s oil strategist Giovanni Staunovo wrote in a note, citing lowered demand growth estimates, particularly from China.

“Overall, we see the oil market as balanced to marginally oversupplied next year,” Staunovo said.

(Reporting by Arathy Somasekhar in Hosuton, Paul Carsten and Ahmad Ghaddar in London and Katya Golubkova and Trixie Yap; Editing by Marguerita Choy, Ros Russell and Rod Nickel)

Inflation looks sticky, so bring on Powell

An uptick in US consumer price inflation last month that was in line with forecasts propped up Wall Street indexes on Wednesday, and lifted the dollar close to levels against the yen that had been concerning to the Bank of Japan.

The CPI report, especially an increase in the 12-month rate, hardened thinking that while the Fed had justification to ease another 25 basis points at its December meeting, 2025 could see it rethink the pace of easing if inflation readings keep moving in the wrong direction. After all, it has approved a full percentage point of reductions since September.

Markets could get insight into how the Fed will process October’s fourth straight 0.2% CPI increase — and the year-on-year inflation rise to 2.6% from 2.4% in September — when Fed Chair Jerome Powell delivers a speech on the economic outlook on Thursday at 3:00 p.m. EST (1700 GMT), which will be followed by a question and answer session.

By then, the Fed chief will have also had time to digest the October producer prices report that comes out on Thursday morning and feeds more directly into the central bank’s preferred inflation indicator, the personal consumption expenditures price index that arrives later in the month.

Meanwhile, bitcoin vaulted above USD 93,000, and crypto currencies still looked like the trade of the week, continuing to outshine other asset classes.

US President-elect Donald Trump embraced digital assets during his campaign, promising to make the United States the “crypto capital of the planet” and to accumulate a national stockpile of bitcoin.

It was last up 4.08% at USD 91,910, marking a 32% rise since the Nov. 5 election. Smaller peer ether has risen 37% since election day, while dogecoin, an alternative, volatile token promoted by billionaire Trump-ally Elon Musk was up more than 150%.

The dollar rose to 155.62 yen, its highest since July 24 and a level that many market participants consider a trigger point for verbal intervention by Japanese authorities.

At this point it looks like prospects for the Fed to ease up on its easing is a more prominent factor than whatever the timetable will be for the Bank of Japan’s decision to hike rates. A jump in Japan’s October wholesale inflation reported Wednesday does not make that call any easier.

Until recently Japan faced a greater risk of deflation than inflation. The BOJ ended negative rates in March and its Governor Kazuo Ueda has stressed it is ready to raise them again, having last done so in July because of inflation and the risk of a weak yen.

The euro fell to its lowest in almost a year against the dollar, and euro/yen was almost flat at 164.33.

Senior US officials said on Wednesday that US President Joe Biden will meet Chinese counterpart Xi Jinping in Peru for likely the final time on Saturday, as Beijing prepares for a potentially more confrontational period with Washington under Trump.

Worries of Trump stacking his administration with China hardliners like Florida Senator Marco Rubio – who has now been tapped to become secretary of state, and Representative Mike Waltz – who was picked for national security adviser – have weighed on Chinese markets, although the blue chip CSI 300 and Shanghai Composite managed firmer closes on Wednesday.

The offshore yuan was little changed at 7.243 per dollar, after the People’s Bank of China pulled the currency off a three-month low versus the dollar by setting a firmer-than-expected official guidance for the exchange rate, signaling growing discomfort over the currency’s recent rapid decline.

Here are key developments that could provide more direction to markets on Thursday:

– New Zealand Manufacturing PMI (Oct)

– Japan GDP (Q3)

– China industrial output (Oct)

– Indonesia trade balance (Oct)

– US Producer Price Index (Oct)

– Fed Chairman Powell’s speech

(Editing by Deepa Babington)

Oil rebounds slightly on short-covering as strong dollar caps gains

NEW YORK – Oil prices rebounded slightly on Wednesday on short-covering a day after they fell near a two-week low on OPEC’s reduced demand forecast, but gains were limited as the dollar hit a seven-month high.

Brent crude futures settled up 39 cents, or 0.5%, to USD 72.28 a barrel. US West Texas Intermediate crude (WTI) futures gained 31 cents, or 0.5%, to USD 68.43.

On Tuesday, the benchmarks closed at their lowest level in nearly two weeks after the Organization of the Petroleum Exporting Countries lowered its global oil demand growth forecasts for 2024 and 2025, citing weak demand in China, India, and other regions. It was the producer group’s fourth straight downward revision for 2024.

“The forecast is no doubt bearish and the market is still digesting it,” said Bob Yawger, director of energy futures at Mizuho, adding the market bounced back as some speculative investors tried to recoup losses.

Both US and global oil production are set to rise to slightly larger record highs this year than prior forecasts, the US Energy Information Administration said.

US oil output is now expected to average 13.23 million barrels per day (bpd) this year and global production is set to reach 102.6 million bpd.

The International Energy Agency, which has a much lower demand growth forecast than OPEC’s, is set to publish its updated estimate on Thursday.

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman have underscored the importance of continuing a “close coordination” within OPEC+ during a phone call on Wednesday, also providing some support.

On the supply side, markets could still face disruption from Iran or further conflict between Iran and Israel.

“If this war continues, Israel is eventually going to attack Iranian oil assets,” said Clay Seigle, an independent political risk strategist. “This could be limited to Iran’s refineries, but Israeli planners may be more ambitious and go for production and export facilities,” he said.

Trump’s expected pick for secretary of state, Senator Marco Rubio, could be bullish for prices as his hawkish view on Iran could see sanctions enforced, potentially removing 1.3 million bpd from global supply, said Panmure Liberum’s Ashley Kelty.

Iran’s oil minister said Tehran had made plans to sustain oil production and exports and was ready for possible oil curbs by the US, the ministry’s news website Shana reported.

Limiting oil price gains, the dollar advanced to near a seven-month high against major currencies after data showed US inflation for October increased in line with expectations, suggesting the Federal Reserve will keep cutting rates.

A stronger greenback makes dollar-denominated oil more expensive for holders of other currencies, which can reduce demand.

US crude stocks fell by 777,000 barrels last week, market sources said, citing American Petroleum Institute figures on Wednesday.

That compares with a forecast by analysts polled by Reuters for a 100,000-barrel build. Government data is due on Thursday at 11 a.m. ET. Both reports were delayed a day due to Monday’s Veterans Day holiday.

(Reporting by Nicole Jao in New York, Arunima Kumar in Bengaluru, Colleen Howe in Beijing, Jeslyn Lerh in Singapore, and Alex Lawler and Enes Tunagur in London. Editing by Marguerita Choy, Alexander Smith, and David Gregorio)

Gold extends fall as dollar, Treasury yields rise

Gold prices extended losses for the fourth straight session on Wednesday, weighed down by a stronger dollar and elevated bond yields on news that October US consumer prices increased as expected.

The Labor Department also reported slower progress toward low inflation since mid-year, which could result in fewer interest rate cuts from the Federal Reserve next year.

Spot gold was down 0.7% at USD 2,580.39 per ounce by 01:49 p.m. ET (1849 GMT), after hitting a near two-month low earlier in the session.

US gold futures settled 0.8% lower at USD 2,586.50 per ounce.

The dollar advanced near a seven-month high against major currencies, while benchmark US 10-year yield climbed.

“The CPI increased but met expectations, leading to a mixed impact on gold prices. Markets have increased their bets on a potential 25 basis points interest rate cut in December,” Zain Vawda, market analyst at MarketPulse by OANDA, said.

Traders are pricing in an 82% chance of a Fed rate cut in December, up from around 58% before the data, according to CME FedWatch tool.

However, investors believe Trump’s presidency might cause the Fed to pause its easing cycle if inflation takes off after expected new tariffs.

“In the short term, there is potential for gold prices to slightly recover to around USD 2,650 per ounce, but they may decline again afterward,” Vawda added.

Looking ahead, the US Producer Price Index (PPI) and weekly jobless claims are due on Thursday, with retail sales data on Friday. Remarks from Fed Chair Jerome Powell and other central bank officials are also on the radar.

“Gold bulls’ next upside price objective is to produce a close above solid resistance at USD 2,700. Bears’ next near-term downside price objective is pushing futures prices below solid technical support USD 2,500,” Jim Wyckoff, a senior market analyst at Kitco Metals, said in a note.

Spot silver fell 0.5% to USD 30.55 per ounce. Platinum slipped 0.9% to USD 938.60 per ounce, while palladium dropped 1.3% to USD 932.10 per ounce.

(Reporting by Sherin Elizabeth Varghese, Brijesh Patel and Anjana Anil in Bengaluru; Editing by Shreya Biswas, Richard Chang and Mohammed Safi Shamsi)

US yields mixed with those short end down after in-line inflation data

NEW YORK – US Treasury yields were mixed on Wednesday, with those on the shorter end of the curve falling, after data showed no major surprises on inflation in the world’s largest economy, coming in largely in line with forecasts and suggesting the Federal Reserve is on track to cut interest rates as expected next month.

The US two-year yield, which reflects interest rate expectations, was down 6.9 basis points at 4.275%.

Yields on the long end of the curve, however, led by the benchmark 10-year note, rose on the back of heavy corporate bond issues on Wednesday, market participants said. That followed around USD 30 billion in offerings on Tuesday.

Wall Street dealers typically looked to lock in borrowing costs for corporate bonds they are underwriting. As part of that process, a dealer sells Treasuries, pushing their yield higher, as a hedge to lock in the borrowing cost on the bond issue before the deal is completed. Once the bond is sold, the dealer buys Treasuries to exit the “rate lock.”

The 10-year yield edged up 1.6 basis bps to 4.449% while US 30-year yields advanced 6.3 bps to 4.6329%.

Shorter-dated Treasury yields, meanwhile, dropped after data showed the consumer price index rose 0.2% for a fourth straight month in October. In the 12 months through October, the CPI advanced 2.6% after climbing 2.4% in September. Economists polled by Reuters had forecast the CPI gaining 0.2% and increasing 2.6% year-on-year.

Excluding the volatile food and energy components, the CPI increased 0.3% in October, rising by the same margin for the third consecutive month. In the year through October, the so-called core CPI gained 3.3%, sporting the same rise in September.

The report also indicated that prices for shelter, transportation services, and used cars and trucks, key components tracked by investors, remained elevated, though they have shown meaningful improvement.

“The report overall is not out of the realm of what the Fed would consider roughly on a path toward its inflationary target. Again, while we are only talking about a modest number of basis points, in these sectors the rate of change (of improvement) has clearly decelerated,” Rick Rieder, chief investment officer of Global Fixed Income at BlackRock, wrote in emailed comments.

“Markets always seem to react to the CPI data, and maybe with some more acute focus today, but we think a quick flipping of the calendar suggests that Core CPI and Core PCE (personal consumption expenditures) should allow the Fed to execute on one more rate cut at the next meeting and then interpret where the inflation trajectory is from here.”

FED RATE CUT INTACT

Federal funds futures, which measure the cost of unsecured overnight loans between banks, have priced in an 85% chance of a 25-bp rate cut at next month’s policy meeting after the CPI data, and a 15% probability that the Fed will pause easing, according to LSEG calculations. That probability was at 80% late on Tuesday.

For 2025, futures have implied 52 bps in rate reductions, compared with 45 bps in cuts in the previous session.

Treasury yields overall were on the upswing following the US presidential election with the victory of Donald Trump seen as ushering renewed inflation with lower taxes and higher tariffs.

The US yield curve steepened after the inflation data, with the gap between two-year and 10-year yields at 17.4 bps, compared with 8.4 bps late Tuesday. The gap narrowed as much as 3.4 bps immediately after the release of the data. The gap hit 19.5 bps on Nov. 6, a day after the election.

The steepening of the curve suggested that bond investors are pricing in continued easing by the Fed, at least for next month and until 2025, with the short end of the yield curve under control with the cuts.

Post-CPI data, the US break-even inflation rate on five-year US Treasury Inflation-Protected Securities (TIPS) slipped to 2.413%, from 2.433% on Tuesday. It had surged more than 50 bps since Sept. 10, when it was at a four-year low.

The five-year breakeven suggested that US inflation will average roughly 2.41% over the next five years.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Chuck Mikolajczak; Editing by Andrew Cawthorne and Jonathan Oatis)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Policy rate views: Fed expected to do baby steps

Inflation Update: Faster but full-year average within target