It’s the time of the Year again!

Thoughts of the Day

The US Congress needs to agree on a budget before the Nov 17 deadline to avert a govt shutdown. Moody’s recent downgrade of the US credit rate outlook from “stable” to “negative” highlights the risk that political wrangling will impact risk sentiment in the shorter term.

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Day Ahead

The US Consumer Price Index is expected to show that prices rose +3.3% in October on a Year-on-Year basis, down from +3.7% in September. The core index is expected to show that prices rose +4.1% YoY as it did in September.

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What Happened Yesterday

Market Movements as of New York Close 13 Nov 23
  • The US Treasury Yield curve inversion narrowed to 0.39% as the US 2-year bond yield fell -0.02% to 5.02% while the US 10-year bond yield rose +0.02% to 4.63%.
  • The US stock futures traded within a small range through the Asian and London trading sessions, eventually falling a mere -0.20% before the New York session began.
  • The US stock market opened lower from last Friday. The market then traded just slightly higher and stayed within a small range.  Consequently, the S&P 500 closed the day slightly lower at -0.08% (high: +0.15%, low: -0.49%), the Dow inched +0.16% (high: +0.36%, low: -0.23%) while the Nasdaq fell -0.30% (high: -0.03%, low: -0.80%).
  • The crypto market was encouraged on Friday with Bitcoin and Ether rising +1.7% and Ether rising +12.30% respectively after a Nasdaq filing confirmed BlackRock’s plan to file for an ETH-based ETF. However, the market was muted on Monday due to the lack of market drivers. As a result, Bitcoin fell -1.71% while Ether gained +0.50%.
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Headlines & Market Impact

Consumer spending fell in October, according to new CNBC/NRF Retail Monitor tracking card transactions

Notable Snippet: The consumer took a spending break ahead of the holiday season, with October retail sales, excluding autos and gas, falling by 0.08%, and core retail, which also removes restaurants, declining by 0.03%

The October data shows a cooling of consumer spending, in line with the consensus of Wall Street forecasts. Year over year, overall retail and core retail sales are both up 2.6%.

The October data showed weakness in gas station sales, electronics and appliances, and furniture and home stores. There was strength in sporting goods and hobby stores and non store retail, or internet sales, along with health and personal care.

The new Retail Monitor, debuting Monday, is a joint product of CNBC and the National Retail Federation based on data from Affinity Solutions, a leading consumer purchase insights company. The data is sourced from more than 9 billion annual credit and debit card transactions collected and anonymized by Affinity and accounting for more than $500 billion in sales. The cards are issued by more than 1,400 financial institutions.

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Biden, China’s Xi will discuss communication, competition at APEC summit

Notable Snippet: The White House said on Monday President Joe Biden and Chinese President Xi Jinping will discuss strengthening communication and managing competition when they meet on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit this week.

The face-to-face meeting in the San Francisco Bay Area on Wednesday will be the first between Biden and Xi in a year, with the high-stakes diplomacy aimed at curbing tensions between the two superpowers.

Sullivan said Biden would go into the summit “on a solid footing,” having positioned the United States to be able to compete effectively at home and abroad and with “the strongest recovery and lowest inflation of any leading economy.”

He said Washington is looking for specific outcomes from the meeting and hoped to see progress in reestablishing military-to military ties with China and in combating the trade in fentanyl that has become a scourge in the United States.

The meeting is also expected to cover global issues from the Israel-Hamas war to Russia’s invasion of Ukraine, North Korea’s ties with Russia, Taiwan, human rights, artificial intelligence, as well as “fair” trade and economic relations, senior Biden administration officials said.

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US House speaker’s plan to avoid shutdown gains some Democratic support

Notable Snippet: U.S. House of Representatives Speaker Mike Johnson’s plan to avoid a partial government shutdown secured tentative support from top Senate Democrat Chuck Schumer on Monday, even as some of Johnson’s hardline Republican colleagues pushed back against it.

Senate Majority Leader Schumer, whose support would be critical to pass the measure to head off a government shutdown beginning on Saturday, said he was “pleased” that Johnson’s proposal did not include sharp spending cuts.

“The speaker’s proposal is far from perfect, but the most important thing is it refrains from making steep cuts,” said Schumer, who stopped short of backing the idea.

Despite an unusual structure that sets different funding deadlines for different parts of the government, Johnson’s CR amounts to a “clean” bill without spending cuts, policy provisions or other strings attached – the kind of measure that led to the historic ouster of his predecessor, Kevin McCarthy, by his right flank.

The plan would need to pass the Democratic-majority Senate and be signed into law by President Joe Biden by midnight on Friday to avoid disrupting pay for up to 4 million federal workers, shuttering national parks and hobbling everything from financial oversight to scientific research.

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord