📆 Monday, December 4
► In Europe, the Stoxx 600 Index remained little changed (- 0.1%) after it's impressive performance in November, its best performance since January. Now we see slight investor caution as traders are anticipating significant economic data, such as the upcoming eurozone PMI data as well as CPI data in Germany later this week. European stocks were driven by rate-cut optimism and recently rapidly cooling inflation.
► US futures dropped 0.2%, and the S&P 500 saw a marginal decline after an impressive rally in November. Treasury yields rose, with the 2-YR yield approaching 4.6%. This could be a sign of investor wariness ahead of this week's US non-farm payrolls and other significant US jobs data. The USD strengthened, reflecting a shift in market sentiment. We also see geopolitical tensions in the Middle East escalated, with Israel expanding operations in Gaza and US Navy ships responding to attacks in the Red Sea.
► Last week, Federal Reserve Chairman Jerome Powell cautioned against early assumptions of forthcoming rate cuts, emphasizing the need for continued “restrictive” monetary policy until inflation consistently aligns with the 2% target. Powell's remarks, aimed at tempering the market's rate-cut optimism, stressed the possibility of further tightening if necessary, underlining that it's too soon to confidently affirm the achievement of an adequately restrictive stance. While the impact has been first limited as more hawkishness was priced in, we now see markets more concerned if the rate cuts are really coming. Our chief analyst Robert Lindner believes that it is unlikely we will see rate cuts within the first half of the year, and market expectations are overly optimistic.
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