Weekly Market & Economic News Recap (Week of October 30, 2023)

• Fed pause helps treasury yields retreat and stocks climb. Gains accelerate after Jerome Powell says financial conditions have tightened. (Wall Street Journal, November 1, 2023, https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-11-01-2023-0470a33b?mod=stocks_more_article_pos1)

• The S&P 500 rallied Friday, capping its best weekly performance since November 2022, after the latest monthly jobs report suggested the Federal Reserve’s interest-rate raising campaign is working. (Wall Street Journal, November 2, 2023, https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-11-03-2023-8110321c?mod=stocks_news_article_pos4)

• US lays path for more financial giants to get Fed oversight. Officials led by Janet Yellen describe bid to mitigate risk. The systemically important tag would mean stepped-up oversight. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/yellen-lays-path-for-more-financial-giants-to-get-fed-oversight?srnd=null)

• Bonds are having the best run since 2020 on bets fed is done hiking. Jobs data, Fed meeting and Treasury refunding drive the rally. Bond traders see room for Fed to finally end rate-hiking cycle. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/best-run-for-bonds-since-2020-as-traders-bet-on-fed-hike-finale?srnd=null)

• US services growth slips to five-month low as activity softens. ISM services PMI decreased by 1.8 points to 51.8 in October. Gauge of services employment falls by most since April 2022. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/us-services-growth-slips-to-five-month-low-as-activity-softens?srnd=null)

• US jobs data show broad cooling after run of surprise strength. October payrolls rose 150,000, led by health care, government. Unemployment rate unexpectedly climbed to almost two-year high. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/us-hiring-cools-to-150-000-while-unemployment-rises-to-3-9?srnd=economics-v2)

• The rise in unemployment to 3.9% last month means joblessness is close to triggering the so-called Sahm Rule, which has proven to be reliable predictor of recessions in the past. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/us-unemployment-rise-on-verge-of-triggering-sahm-recession-rule?srnd=null)

• A cooling US job market gives the Federal Reserve room to keep interest rates on hold in December and reinforces market views that the US central bank is done with the most aggressive hiking campaign in four decades. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/fed-hiking-cycle-looks-done-after-us-jobs-report-shows-cooling?srnd=null)

• US yields dive after jobs data as traders move up rate-cut bets. Markets now see the Fed’s first cut in June, instead of July. Long-end bonds are experiencing historic declines this week. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/traders-now-bet-on-first-us-rate-cut-in-june-rather-than-july?srnd=null)

• US bank stocks bounce as rate cut hopes drive best week since 2020. The beaten-down sector has rallied each day this week. Bill Gross said regional bank stocks’ falling knife hit bottom. (Bloomberg, November 3, 2023, https://www.bloomberg.com/news/articles/2023-11-03/us-bank-stocks-bounce-as-rate-cut-hopes-drive-best-week-since-2020?srnd=null)