© Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo

A look at the day ahead in U.S. and global markets from Mike Dolan

Plummeting bond yields and oil prices clawed back some of the week’s dramatic falls on Thursday, while a burst of speculation about a Bank of Japan policy tightening this month cut across the interest rate optimism and catapulted the yen higher.

The size and slightly erratic nature of this week’s macro market moves may speak a little to yearend markets both squaring off books and jockeying for position for 2024.

But a stream of softer labor market and inflation news – not least an oil price plunge to 6-month lows on booming supplies – has been relentlessly positive for bonds along with clear signs of central bank policy shifts going into next year.

Too far, too fast? Ten-year Treasury yields plumbed three months lows near 4.1% on Wednesday and money markets are pricing well over 100 basis points of central bank rate cuts next year.

Ten-year U.S. yields recaptured about 6bp of the 25bp drop over the past week early on Thursday – although ten-year German bund yields continued to fall to their lowest since May.

Cutting across the global rates euphoria, however, were Bank of Japan comments that spurred markets into upping chances of another tightening of monetary policy there as soon as this month. That saw 10-year Japanese government bond yields jump more than 10bps and the yen jump almost 2% to its best level since September 1.

BOJ Governor Kazuo Ueda said on Thursday the central bank – the lone holdout over the past two years of G7 tightening – has several options on which interest rates to target once it pulls short-term borrowing costs out of negative territory.

The five-year JGB yield leapt 10.5 bps to 0.34% – the biggest increase in a single day since April 2013.

And yet, it was hard to ignore the latest oil price fall to its lowest since June as another major disinflationary force – while trade news from China continued to show worrying demand signs from the world’s second biggest economy despite some rebound in overall exports.

China’s crude oil imports in November fell 9.2% year-on-year, the first annual decline since April, as high inventory levels and poor manufacturing activity took their toll.

U.S. retail gasoline pump prices have now fallen to their lowest since January.

All of which switches Wall St traders back to demand signals at home, with another round of labor market updates on weekly jobless and November layoffs due later ahead of Friday’s official employment report.

The private-sector jobs reading from ADP on Wednesday came in below forecast, chiming with the previous day’s news of a surprising drop in job openings in October.

The frenetic macro market activity – which saw bond market volatility gauges jump back to their highest since October this week – has stopped benchmark stock markets in their tracks. The closed slightly in the red on Wednesday and futures were flat ahead of today’s open.

Asia and European bourses fell back too, with underperforming with losses of almost 2% on the rate speculation and yen surge.

Key developments that should provide more direction to U.S. markets later on Thursday:

* U.S. November layoffs, weekly jobless claims. U.S. Oct consumer credit

* Federal Reserve issues quarterly financial accounts of the United States. European Central Bank President Christine Lagarde attends euro group meeting of euro finance ministers in Brussels, focussed on 2024 budget plans

* EU-China Summit in Beijing

* U.S. Treasury auctions 4-week bills

* U.S. corporate earnings: Broadcom (NASDAQ:), Cooper Companies, Lulumelon Athletica, Dollar General (NYSE:)

(By Mike Dolan, editing by Christina Fincher; mike.dolan@thomsonreuters.com)

© Reuters.

Investing.com– Gold prices moved little in Asian trade on Thursday as traders hunkered down in anticipation of more cues on a cooling U.S. labor market, while focus also remained on when the Federal Reserve planned to begin trimming interest rates.

The yellow metal appeared to have settled into a trading range of between $2,020 and $2,050 an ounce after briefly surging to record highs above $2,100 at the beginning of the week.

A string of different factors had spurred gold’s rally, as seemingly dovish cues from Fed Chair Jerome Powell pushed up expectations that the Fed will cut rates by as soon as March 2024.

But markets tapered these expectations over the week, especially amid some signs of resilience in the U.S. economy.

Increased safe haven demand, following an attack on U.S. vessels in the Red Sea, also aided gold prices, although a lack of any escalation in the Middle East saw tensions ebb out of markets.

steadied at $2,026.30 an ounce, while expiring in February fell 0.2% to $2,043.05 an ounce by 00:24 ET (05:24 GMT).

Nonfarm payrolls in focus as markets speculate over Fed cuts

Traders were now focused squarely on data for November, due on Friday, for any more cues on the labor market.

and data released earlier this week signaled some cooling in the U.S. labor market. But markets were awaiting definitive signals from the nonfarm payrolls reading.

The reading is also due amid growing uncertainty over the timing of the Fed’s interest rate cuts. While the central bank is widely expected to , markets were uncertain over when it could begin loosening policy.

So far, Fed officials have shown little inclination to begin cutting interest rates, with Powell having recently reiterated his higher-for-longer stance. But traders are betting that a further cooling in inflation and the labor market will see the Fed change its tone in the coming months.

Gold is expected to benefit from any signals of a less hawkish Fed and a cooling labor market. The yellow metal has comfortably held the $2,000 level since late-November, which could herald more strength in the coming weeks.

Copper rebounds on positive China import data

Among industrial metals, copper prices rose sharply on Thursday, rebounding from three straight days of losses as data showed Chinese imports of the red metal surged to a two-year high.

expiring in March rose 0.7% to $3.7568 a pound.

China’s copper imports jumped 10.1% in November to 550,566 metric tons- their highest since December 2021. The data indicated that Chinese copper demand remained robust, even as other aspects of the economy slowed.

China’s overall unexpectedly shrank in November, while grew for the first time in six months.

Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon INVSPRO2024 to avail a limited time discount on our Pro and Pro+ subscription plans. Click here to know more, and don’t forget to use the discount code when checking out!

© Reuters.

Investing.com– Oil prices rose in Asian trade on Thursday after tumbling to over five-month lows, as a meeting between Russian and Saudi leaders saw the two discussing more “cooperation” on oil prices.

Russian President Vladimir Putin met with Saudi Crown Prince Mohammed bin Salman this week, with the two reportedly discussing between members of the Organization of Petroleum Exporting Countries and allies (OPEC+). 

Putin is also set to meet United Arab Emirates and Iranian leaders this week. 

The meetings come just a few days after the OPEC’s new production cuts for 2024 largely underwhelmed markets, sending oil prices into a tailspin. Saudi Arabia and Russia have led the cartel in cutting supply through 2023 to support crude prices.

But the latest OPEC+ meeting showed other member states as less enthusiastic about decreasing production, given that the cuts also eat into national revenue streams. This saw the OPEC+ declare less than 1 million barrels per day of new cuts in 2024, with most of the new cuts also coming as voluntary. 

Oil prices had plummeted after the meeting, sinking to their weakest levels since early-July this week. Prices were also pressured by growing concerns over weakening crude demand in the coming months, as global economic conditions deteriorated. 

expiring February rose 0.5% to $74.63 a barrel, while rose 0.5% to $69.99 a barrel by 20:45 ET (01:45 GMT). 

But while the OPEC+ cuts underwhelmed, they are still expected to tighten crude markets marginally in the first quarter of 2024. Analysts expect to trade in the low $80s in early-2024.  

Demand concerns remain in play

A string of weak economic readings from Asia, the U.S. and the euro zone pushed up concerns over sluggish crude demand in the coming months. 

An underwhelming showed that the U.S. labor market was cooling steadily, while an outsized jump in showed that fuel demand was rapidly declining in the world’s largest fuel consumer. 

U.S. slumped to a near two-year low after the inventory report, which also showed a bigger-than-expected draw in overall over the week to Dec. 1. 

But U.S. oil production remained largely upbeat, while crude inventories were sitting on six straight weeks of oversized builds.  

Markets were now awaiting key oil import data from China, due later in the day. Broader focus was also on U.S. data due this Friday.