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November Market Review: Rates and Uncertainties in Focus


Last Week Market Overview

November witnessed a period of considerable uncertainties, described as a narrative of realization, acknowledgment, and surrender, particularly concerning interest rates and future prospects. At the beginning of the month, the 10-year U.S. Treasury yield declined from 4.90% to 4.355% by month-end, providing favorable support for stocks. Improvements in inflation prospects and easing labor market conditions exerted downward pressure on interest rates, creating a positive atmosphere for risk assets. However, uncertainties such as geopolitical risks, the U.S. elections, and the lagging effects of high-interest rates persist.

Currency and Gold Trends

Federal Reserve Chairman Jerome Powell's resistance to interest rate cuts led to a decline in the U.S. dollar following the drop in Treasury yields. Despite a slight rebound since August, the dollar recorded a poor monthly decline in November. Gold investors remained cautious in response to Powell's efforts, with the gold price nearing historical highs. The market widely anticipates a significant interest rate cut by the Federal Reserve in the coming year, contributing to the bond market's largest monthly gain in years.

Crude Oil Market

The crude oil market experienced a decline of over 2% at the end of November, primarily due to concerns about OPEC+ production cuts and a slowdown in global manufacturing activity. Brent crude and WTI fell by approximately 2.1% and 1.9%, respectively, resulting in a cumulative decline of over 6% for November.

Stock Market Performance

Powell's statement about "maintaining high-interest rates for a longer time" was interpreted by the market as an indication that the Federal Reserve's rate hikes had come to an end, propelling a collective rise in U.S. stocks. The S&P 500 rose nearly 9% in November, and the Nasdaq Composite Index surged nearly 11%, marking the best month since July 2022 and ending a three-month losing streak.

Outlook for the Week

Investors will be closely watching U.S. non-farm payroll data to confirm their bets on a Federal Reserve interest rate cut. Additionally, policy meetings from the Reserve Bank of Australia and the Bank of Canada are closely monitored. The U.S. dollar's trend will be influenced by market expectations for future interest rate cuts. Moreover, the market continues to gradually navigate tail risks in the post-pandemic period, particularly the diminishing concerns about inflation.

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