Bonds Declined and Equities Linger on Rate Cut Push Back – Europe Market Wrap

On the final trading day of the quarter, Treasury bonds declined and S&P 500 futures saw some volatility as Fed’s Governor Waller dampened the outlook for lower interest rates.

Waller stated that before the Fed eases monetary policy, it still needs to see reduced inflation in a speech titled “There is Still No Rush.” The dollar strengthened as two-year Treasury yields increased by five basis points. US market futures saw minimal movement following yesterday’s record-breaking closing of the S&P 500.

Nevertheless, the financial markets are about to wrap up a quarter of record gains. Over the last three months, the MSCI global equity index has risen 8% thanks to rallies in the US and Japan as well as the fervour surrounding artificial intelligence. Later today, there will be data on jobless claims and US economic growth. The core personal consumption expenditures price index, the Fed’s preferred inflation measure, is expected on Friday, the day that markets are closed.

The STOXX 600 gained 0.3% in Europe, extending its winning run to four days. This month’s European market rise has extended beyond the largest companies on the benchmark, such ASML and Novo Nordisk, in contrast to the US, where gains are still primarily concentrated in large tech stocks.

ONS: The UK economy shrank by 0.1% QoQ in Q3, meaning it still meets the technical definition of a recession in H2 2023.