News & Analysis

Weekly Summary: Good Bye November

November 30, 2018

By Deepta Bolaky

As we head into the last month of the year, the Fed risk has been resolved, and market participants have switched their focus back to trade tensions. The price action in the financial markets is subdued ahead of the G20 summit, and investors are hopeful that the event will produce a positive outcome.

Central Banks Speeches

This week we have already witnessed bank speeches by the RBA, RBNZ, BOJ and ECB. While investors managed to draw insightful information from different members, the statements made by the Fed officers emerged as the most pivotal. The dovish shift by the Chairman, Jerome Powell, was the game changer that prompted markets to re-evaluate their rate hike expectations.

  • Equity markets got a breather, and Wall Street extended gains.

Source: Bloomberg Terminal

  • The US dollar lost ground and edged lower against the major G10 currencies.

Source: Bloomberg Terminal

Geopolitical Risks

Brexit and the Italian budget woes are still making headlines. The EU had endorsed the Brexit deal proposed by Theresa May, and traders welcomed the good news. However, they remain apprehensive of the approval of the Parliament. In Italy, the finance committee is defending its spending budget by challenging the European Commission. The Sterling and the shared currency were not able to fully benefit from the retreat of the US dollar as domestic political challenges are capping gains.

US Housing Market and Core PCE

The economic data released this week shows that the housing sector is weakening at a faster pace. The S&P/Case Shiller Home Price Index came below expectations at 5.1% instead of 5.3% for September. New and Pending Home Sales were also disappointing. Above all, Core Personal Consumption Expenditure (PCE) is known to be a significant indicator of inflation, yet it has missed estimations by 0.1%. YoY PCE dropped from 1.9% to 1.8% and MoM PCE from 0.2% to 0.1%.. As a result, the dovish comments and weaker data sent the greenback on the offer.

Oil Markets

Oil prices bottomed down to fresh yearly-low on Thursday. The supply (an oil supply glut) and demand side (a fall in global demand) are both putting downward pressure on oil prices. The EIA and API reports were also bearish showing an increase in crude oil stockpiles.


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