US Trading Updates

As trading kicks off in the US, the dollar sees a rise against most major currencies. This upturn is part of a trend that began last week following a 25 basis point cut in interest rates by the Federal Reserve, which noted it wasn’t committed to further cuts by December. When looking at the euro, Japanese yen, and pound, the dollar is now slightly more valuable. The euro saw a 0.14% increase, the yen rose by 0.09%, and the pound also increased by 0.14%.

Last week, the Fed’s stance became less dovish in their comments post-FOMC meeting. Most officials stated they aren’t on a fixed trajectory for rate cuts in December. Interestingly, the newly appointed Fed Director, Milan, expressed a different view, suggesting a 50 basis point cut at the meeting. He reiterated his opinions this morning, stating that current Fed policy is overly restrictive. He believes there’s no need to maintain such a tough stance for long and that the Fed could potentially reach a neutral policy sooner.

Milan cautioned against drawing only one conclusion about monetary policy, noting that many factors influence financial markets. He pointed out that while some financial indicators may seem accommodating, others reveal persistent issues, particularly in housing. He advocates a policy approach that relies on data dependence, emphasizing that it’s important to avoid overshooting. Despite not favoring a significant cut of 75 basis points, he acknowledged that the economy is facing challenges, though he noted it isn’t dysfunctional right now. He suggested that labor market data indicates a drop in demand.

On the political front, there are ongoing discussions between US Democratic and Republican senators aimed at reaching an agreement regarding the FY26 Spending Bill. There is hope that a resolution might help address the current government shutdown. Some optimism exists that a solution could emerge by this weekend; however, significant hurdles remain. There hasn’t been any indication from Trump or Republicans showing willingness to compromise on extending expiring Obamacare subsidies, which has always been a crucial negotiation point for them. Politically, the impact of this deadlock is becoming increasingly noticeable.

Market Performance

• Dow Jones Industrial Average: -25 points
• S&P 500: +19.20 points
• Nasdaq: +156 points

In tech news, Microsoft announced it will ship and start using NVIDIA AI chips in the UAE for the first time, causing NVIDIA stock to rise by 1.71% and Microsoft’s by 0.60%.

The yield on US bonds remains relatively stable at the start of the trading week:

• 2-year yield: 3.598%, -0.8 basis points
• 5-year yield: steady at 3.716%
• 10-year yield: 4.110%, +0.9 basis points
• 30-year yield: 4.690%, +2.5 basis points

In the commodities market:

• Crude oil dipped by $0.12 to $60.86 amid a recent virtual OPEC+ meeting.

• Production Increase for December: OPEC+ has agreed to slightly raise production targets by 137,000 barrels per day, set for December 2025. This continues the gradual increase noted in previous months.

• Future Production Pauses: OPEC+ plans to temporarily halt additional production increases during the first quarter of next year, owing to seasonal weakness in demand and concerns about surplus supply.

• Gold rose by $12 (0.30%) to $4,050.
• Silver increased by $0.07 (0.15%) to $48.73.
• Bitcoin fell by $2,900, now at $107,607.