Market Review: November 22, 2024

Data from November 22, 2024, presents a mixed economic picture. The S&P Global Composite PMI and Services PMI showed robust expansion, reflecting resilience in key economic sectors. However, manufacturing continued to contract, with the Manufacturing PMI remaining below 50. Consumer sentiment weakened, as indicated by lower Michigan Consumer Sentiment and Expectations readings. Inflation expectations revealed a divergence, with 1-Year expectations steady at 2.60%, while 5-Year expectations ticked up to 3.20%. Speculative interest in tech and equity markets rose, signaling confidence in growth sectors despite cautious consumer sentiment.



Today's Event Overview:

1. S&P Global PMIs (Nov): The Composite PMI increased to 55.3, driven by a strong Services PMI at 57, signaling robust expansion in services. However, the Manufacturing PMI remained at 48.8, indicating continued contraction in manufacturing activity.
   
   
2. Michigan Inflation Expectations: The 1-Year expectations remained steady at 2.60%, while the 5-Year expectations rose to 3.20%, signaling increased medium-term inflation concerns.
   
   
3. Michigan Consumer Sentiment and Expectations (Nov): Consumer sentiment declined to 71.8, while expectations fell to 76.9, reflecting weaker confidence and forward-looking sentiment.
   
   
4. Speculative Net Positions (CFTC): Speculative positions in crude oil, Nasdaq 100, and S&P 500 increased, indicating growing investor confidence in equities and energy markets. Gold speculative positions decreased slightly, signaling reduced investor interest.
   
   
5. Baker Hughes Rig Counts: Both the oil rig and total rig counts remained stable, reflecting consistent U.S. drilling activity.

Impact Analysis:

• USD Impact:
  The strong Services PMI and rising 5-Year inflation expectations provide support for USD, as they reflect robust economic activity and potential for future Fed tightening. However, weaker consumer sentiment and ongoing manufacturing contraction temper this strength, leaving the overall USD impact mixed to slightly bullish.

• Gold Impact:
  Gold faces bearish pressure from higher 5-Year inflation expectations and strong services data, which reduce safe-haven demand. The slight decline in speculative positions further weakens gold's appeal. However, weak consumer sentiment and manufacturing data offer some support, leaving the overall gold outlook bearish to neutral.

• Equities Futures Impact:
  Equities futures are likely to respond positively to the strong Services PMI and increased speculative interest in the Nasdaq 100 and S&P 500, signaling confidence in growth-oriented sectors. However, weaker consumer sentiment and persistent manufacturing contraction may weigh on industrial and consumer-sensitive stocks. The overall equities impact is positive for growth sectors but cautious for consumer-related equities.

Today’s data underscores a resilient U.S. economy driven by services sector strength but tempered by manufacturing contraction and consumer caution. Rising 5-Year inflation expectations may suggest growing concerns about medium-term price pressures, supporting USD while weighing on gold. Equities benefit from strong speculative interest and robust PMI data, although weak consumer sentiment may pose challenges to sectors reliant on discretionary spending.