The market dynamics on Wednesday were significantly influenced by softer economic data, reduced Treasury borrowing than initially feared, and Federal Reserve Chair Powell's hesitation to advocate for a December rate hike. This combination of factors resulted in a softened US dollar (USD), a decrease in 10-year Treasury yields by 11 basis points (bps), and an equities rally, with Nasdaq notably increasing by 1.65%.
In the currency market, amidst broad USD selling, the Australian dollar (AUD) emerged as the leader, gaining 60 pips due to shifts in global tightening and China's new easing and spending policies. This culminated in the best AUD/USD close since October 10. However, the Euro lagged behind other currencies. The Japanese Yen also experienced reversals as USD/JPY fell below 151.00.
On the commodities front, both gold and West Texas Intermediate (WTI) crude oil prices experienced a dip. Gold prices dropped to $1978 per ounce while WTI crude oil prices fell to $80.92 per barrel.
Investors are now looking ahead to Friday's jobs report and ISM services report. If these reports present softer numbers, it could further depress yields, potentially triggering fear of missing out (FOMO) as 5% yields seem to be slipping away.
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