Financial Services Association, December 6 (Editor: Xiaoxiang) Before the release of key US non-farm payrolls data this Friday, the rise in US stocks and the US dollar both showed signs of stopping on Thursday, and the US bond market also fell into a weak consolidation pattern. For a while, it seemed that no one in the whole of Wall Street dared to act recklessly.

According to market data, as of the day's close, the Dow Jones Industrial Average fell 248.33 points, or 0.55%, to 44,765.71 points; the Nasdaq Composite Index fell 0.18% to 19,700.26 points; and the S&P 500 index fell slightly by 0.19% to 6075.11 points. Compared to the bustling scene where the three major stock indexes hit record highs one after another on the previous trading day, the trend seemed quite deserted. Especially at the close, a wave of anxious sellers poured into the market, leading to a rapid decline in stock prices...

Daniel Morgan, portfolio manager of Synovus Trust in Atlanta, Georgia, said in this regard that investors are digesting recent economic data and awaiting Friday's employment report. “It's clear that trading in the stock market will depend on what action the Federal Reserve will take.”

Keeley Teton portfolio manager Brian Leonard believes that the current market lacks sufficient enthusiasm and motivation. He said that the problem may be that valuations are completely overvalued. Historically, when the market hits new highs, valuations are usually more reasonable than they are now.

In the foreign exchange market, as French treasury bonds gradually stabilized again after the downfall of the French government landed, driving the euro to rebound, the upward trend of the US dollar also came to a standstill. The French/German 10-year Treasury yield gap narrowed to 76.9 basis points on Thursday, the narrowest since November 22. Of course, despite an overnight recovery, the euro will continue to decline, and will most likely usher in its fourth weekly decline in five weeks.

US bond yields for various maturities also had mixed ups and downs on Thursday. Among them, the yield on the short end of the curve rose and declined on the long end. By the end of the New York session, 2-year US Treasury yields rose 2 basis points to 4.154%, 5-year US Treasury yields rose 0.8 basis points to 4.08%, 10-year US Treasury yields fell 0.2 basis points to 4.181%, and 30-year US Treasury yields fell 1.1 basis points to 4.335%.

In terms of economic data, the number of new applicants for unemployment benefits in the US increased moderately last week, indicating that the labor market continues to cool steadily. According to data released by the US Department of Labor, the number of initial jobless claims increased by 9,000 in the week ending November 30, to 0.224 million after seasonal adjustments. Economists surveyed by the media had previously predicted 0.215 million.

However, Jason Ware, chief investment officer and chief economist at Albion Financial Group, said, “The rise in initial jobless claims is no big deal; even though the number of applicants increased by 9,000 in the last week, the number of initial jobless claims is actually still at a very low level.”

But in any case, before the release of the critical US non-farm payrolls report for November, market traders on Thursday slightly reduced their bets on the Federal Reserve's interest rate cut this month. According to CME's US Federal Reserve's observation tool, the probability that the Fed will cut interest rates at the interest rate meeting two weeks later is 70%, slightly lower than 78% a day ago.

Mike Lorizio, senior fixed income trader at Manulife Investment Management, said, “From now until the conference, there are a number of key economic data — Friday's non-farm payrolls data, next week's CPI and PPI. The market will regard these data as the key to decision-making.”

Federal Reserve Chairman Powell on Wednesday seemed to send a signal of support for slowing down the pace of interest rate cuts in the future. He said that the current economy is stronger than the Federal Reserve expected in September. However, since it did not express a clear opinion on whether to cut interest rates next week, the decision on whether to still have the “last drop” before the end of the year clearly falls on the CPI data for this Friday and next Wednesday.

(US stocks prepare for turbulence on a non-farm night)

According to the median survey by industry media, economists currently generally expect the number of non-farm payrolls to increase by 0.195 million in November, which is significantly higher than 0.012 million the previous month. However, one potential downside is that the unemployment rate is likely to rise further to 4.2%, up from 4.1% the previous month.

Wells Fargo's economic team, led by Jay Bryson, wrote in a report to clients, “Through monthly fluctuations in the number of non-farm payrolls, we expect the November employment report to reaffirm that although the labor market remains stable in an absolute sense, the trend of weak employment conditions has not stopped. This message may come more clearly from the unemployment rate — we expect the unemployment rate to rise to 4.2%.”

John Flood, head of American stock sales and trading at Goldman Sachs Global Banking and Marketing, said in a report on Tuesday, “I think the sweet spot of the non-agricultural market is between 0.15 million-0.2 million. The market is ready for a sharp rebound from the poor performance of October, so the negative factors of the previous hurricane and strike are over. But the stock market also doesn't want to see more than 0.275 million new non-farm payrolls, because the unexpectedly hot data will give Powell and his team the flexibility to stay on the sidelines at the December meeting.”