Market Report-week ending Dec. 4th,2020
Major stock benchmarks scored a round of records Friday to cap another week of gains for equities as investors looked past a weaker-than-expected jobs report. The Dow Jones Industrial Average, S&P 500, Nasdaq Composite and Russell 2000 RUT, 2.35% each ended at an all-time high, the first simultaneous record finish for the quartet since Jan. 22, 2018. The Dow DJIA, 0.83% rose around 249 points or 0.8%, to close near 30,218, according to preliminary figures, while the S&P 500 SPX, 0.88% advanced around 32 points, or 0.9%, to finish near 3,699 and the Nasdaq Composite COMP, 0.70% gained around 87 points, or 0.7%, to 12,464.
U.S. Treasury yields shot higher and the yield curve steepened on Friday after a disappointing November employment report added to pressure for Washington to pass a new round of stimulus to help the coronavirus-battered economy. The selloff in Treasuries, which lost some steam later in the session, lifted yields particularly on the longer end of the curve. The benchmark 10-year yield climbed to its highest level since March at 0.986%-see cap#3 and was last up 4.8 basis points at 0.9692%. Before retreating as the day wore on, the 20-year yield reached 1.541%, the highest since June, and the 30-year yield touched 1.75%, the highest since Nov. 10. The yield curve (2s30s) steepened by the most since August this week, to its steepest since May 2017.
The closely watched spread between two- and 10-year notes hit 82.56 basis points, the widest since February 2018. It was last up about 6 basis points at 81.65 basis points. The U.S. Labor Department reported non-farm payrolls increased by 245,000 jobs last month, the fewest in six months, after rising by 610,000 in October. Economists polled by Reuters had forecast payrolls increasing by 469,000 jobs in November. The unemployment rate fell to 6.7% from 6.9% in October.
As the hope of moar free money soars, 'Most Shorted' stocks soared for the 5th week in a row as the short-squeeze is accelerating. Energy stocks soared on the week (thanks to a huge spike today), outperforming its peers once again as Utes lagged. And that is nowhere more evident than the collapse in demand for protection, with the Put-Call ratio plunged to a decade lows (the indicator’s five-day moving average has hit its lowest level in 20 years)-see cap #5.
Remember this is a retail gauge and does not reflect 'tutes or other non-retail participants
Silver was the week's big winner (after 3 straight losing weeks), rebounding strongly off a brief dip to a $21 handle (on Nov. 29th in the WW trade).
End of Libor Jolts Multitrillion-Dollar Derivative Market Again
The drip feed of news on the demise of the London interbank offered rate is causing some violent reactions in derivative markets, including another major shake up on Friday. Activity surrounding June 2023 eurodollar futures which are linked to the three-month dollar Libor rate spiked over the course of the session amid new details on the so-called spread calculation used to determine fallback rates for contracts tied to the benchmark. The gap between the June 2023 and September 2023 contracts widened 4.5 basis points Friday, bringing the weekly move to 20 basis points – an unprecedented surge for a three-month spread. Volumes by 3 p.m. New York time were at a record 85,000 contracts. The surge in activity came after a webinar hosted by the International Swaps and Derivatives Association revealed that an announcement as soon as early next year would trigger a fallback spread calculation for all dollar Libor tenors, including the three-month rate. Traders were quick to catch on to the detail and adjust positions accordingly. Volumes exceeded 370,000 contracts in the September 2023 future for the first time ever.
https://www.bnnbloomberg.ca/end-of-libor-jolts-multitrillion-dollar-derivative-market-again-1.1532026
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Fed Readies More Guidance on Bond-Buying Plans
https://www.wsj.com/articles/fed-readies-more-guidance-on-bond-buying-plans-11607115890
https://finance.yahoo.com/quote/%5EDJI
https://www.marketwatch.com/investing/bond/tmubmusd10y
https://www.marketwatch.com/investing/index/dxy
https://www.macrotrends.net/2566/crude-oil-prices-today-live-chart
https://www.marketwatch.com/story/major-benchmarks-end-at-records-as-investors-look-past-weak-jobs-report-2020-12-04
https://www.zerohedge.com/markets/mega-tech-small-caps-surge-dollar-purge-accelerates
cap #4 corrected