Midweek Market Update

So Jerome Powell spoke today at the Brookings Institute, and nothing unexpected was mentioned. The more this man speaks, the less we come to know about what the Federal Reserve is certain of, or what it even understands.

Market Reaction

The part markets seemed to fixate on was: “The time for moderating the pace of rate increases may come as soon as the December meeting”. This statement dropped the dollar lower and sent stocks absolutely screaming into the daily close. The Dow Jones is now less than 7% away from ATH.

Crypto also had a decent day, with Bitcoin up nearly 4% over the past 24H. If 17k is held in the next few candles, it’s reasonable to expect continuation toward 17.5-17.6k.

PCE Numbers Up Next

That being said, at 8:30AM Eastern time, the Personal Consumption Expenditures (PCE) numbers will be released before the market open. October’s Core PCE is expected to come in at +0.3% MoM vs. +0.5% in the month prior.

If it’s a miss on the high side, expect equities and crypto to give back some of today’s gains.

Friday Employment Report

We also have a huge jobs report on Friday, which was revised slightly downward after today’s ADP Employment Change release. Remember we live in opposite world right now, so a bad jobs report would actually be good for the market.

Anything below 200K for NFP and I’d expect continuation of today’s risk on sentiment.

Balancing the Labour Market

Powell made no secret about the juggling act of restoring a balance in the labour market. He commented that workplace participation is still lower than pre-pandemic levels, and that there are 1.7 jobs available for every unemployed person.

All these job opportunities exist, but where are the takers? Powell believes the participation shortfall has to do with expedited retirements and a decline in the working population due to the pandemic.

That’s all for today. We’ll catch up after the next batch of data hits the books!