Indices Advance with Nov Employment Data

STOCK INDEX FUTURES

Stock index futures advanced to daily highs when the November employment data were released.

Nonfarm payrolls for November increased 227,000 when a gain of 211,000 was expected, and private payrolls were up 194,000 when a gain of 200,000 was anticipated. Manufacturing payrolls increased 22,000 when up 25,000 was forecast.

The unemployment rate was 4.2% as expected. Average hourly earnings increased 0.4%, which compares to the predicted gain of 0.3%.

The 9:00 central time December consumer sentiment index is expected to be 73.0.

The 2:00 October consumer credit report is anticipated to show a $10 billion increase.

The long term fundamentals and technicals remain supportive to stock index futures.

CURRENCIES

The U.S. dollar index was higher in the overnight trade but came under pressure when the November U.S. employment data were released.

The U.S. dollar index is likely to recover from the morning pressure and trade higher on the day.

Overall gains in the greenback since October were linked to ideas that the U.S. economy will hold up well compared to a deteriorating economic outlook in other parts of the world.

The seasonally adjusted GDP in the third quarter of 2024 increased by 0.4% both in the euro area and in the EU, compared with the previous quarter, according to an estimate published by Eurostat.

German industrial production declined 1.0% month-over-month in October 2024, missing expectations of a 1.2% rebound and following a downwardly revised 2.0% drop in September.

The Halifax House Price Index in the U.K. increased 4.8% year-over-year in November 2024, which is the most in two years, following an upwardly revised 4.0% increase in October and higher than predictions of 3.6%.

The fundamentals and technicals remain supportive to the U.S. dollar, and higher prices are likely. The fundamentals and technicals remain bearish for the euro currency and the British pound, and lower prices are likely.

INTEREST RATES

Futures advanced when the U.S. employment report was released.

Federal Reserve speakers today are Michelle Bowman at 8:15, Austan Goolsbee at 9:30, Beth Hammack at 11:00 and Mary Daly at 12:00.

There is a 91% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at its December 18 policy meeting, and there is a 9% chance of the FOMC keeping rates unchanged at 4.50% – 4.75%.

It is likely that the FOMC will be slower to add accommodation in 2025 than the consensus view.

 

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