JASPER’S MARKET SQUAWK 06-12-2023

<h2>Soft Landing Picks Up Pace After JOLTS</h2>
<p>Investors expect the Fed to start cutting interest rates as early as next March, far sooner than the end of 2024 projected by the Fed. It follows job openings and quits rates moderating to pre-pandemic levels, a sign of a soft landing.</p>
<p><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-27507" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-3.png" alt="" width="1919" height="914" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-3.png 1919w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-3-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-3-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-3-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Template-Daily-3-1536×732.png 1536w" sizes="(max-width: 1919px) 100vw, 1919px" /></p>
<p><strong>Chart: WTI</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>Soft Landing Expectations Grow as JOLTS Data Surprises to the Downside</li>
<li>Job Openings Spark Market Reaction That Ignores Services Data</li>
<li>Eurozone Faces Recession Concerns as ECB’s Schnabel Pulls Hike Plug</li>
<li>Oil Prices Plummet to July Lows Amid Stock Build and OPEC+ Rhetoric</li>
<li>Moody’s Warning Sends China’s CSI300 Index to 4-Year Low</li>
</ul>
<h2>Markets Respond to JOLTS But Ignore Services Data</h2>
<p>October witnessed the lowest number of job openings since 2021 at 8.733M, significantly below the 9.3M expected, allowing markets to cheer a soft landing. However, according to ISM data, the US service sector displayed resilience at 52.7in November compared to expectations of 50.1, with prices paid also 30bps above expectations. The mixed data led to lower US yields, showing how overdone rate cuts may be and wrong communique from the Fed. But the US index closed back near 104, primarily impacted by the euro’s fall. Next up is 104.40, so long 103.55 holds firm.</p>
<h2>Recession Looms Over EZ As Schnabel Hits Hike Brakes</h2>
<p>The Eurozone faces increasing recession expectations as November’s business activity remained largely in contraction across member states despite improving to 48.7 from 48.7 expected. But the euro saw a depressing day after ECB hawk Isabel Schnabel hit the brakes on more rate hikes after a drop in inflation, suggesting a cut in mid-2024. European shares hit record highs on the dovish tilt, with EURUSD sitting on the 200 WMA near $1.08, down for the 4th session. Lower support is expected at $1.075, with a bounce offering a tilt towards $1.0835.</p>
<h2>Oil Prices Take Another Tumble to July Lows</h2>
<p>According to the API, crude oil inventories rose by 594K barrels for the week ending December 1st, missing expectations of a draw. Cushing stocks saw the largest increase of 4.28 million barrels last week. But oil prices fell ahead of the API release and remained lower due to disappointment over OPEC+’s decision to maintain production cuts into next year. Meanwhile, record US production pressured oil prices, too, as it hit a record high of 13.24M bpd. Oil dropped and closed to a July low of $72 a barrel, marking its 4th day of consecutive declines just shy above the $70 barrier. $73.30 is the expected resistance higher up.</p>
<h2>Moody’s Warning Shakes China, CSI300 to 4-Year Low</h2>
<p>Moody’s warned China of a downgrade on its credit outlook from stable to negative, citing risks from a slowing economy and debt issues. The ratings agency warned that China’s need to support indebted local governments and companies poses risks to its fiscal strength. Meanwhile, S&amp;P Global said China’s growth could slow to below 3% next year if the property crisis worsens. Chinese stock markets fell sharply in response, with the CSI300 index dropping to its lowest since February 2019.</p>
<h2>On The Docket</h2>
<ul>
<li>DE Factory Orders</li>
<li>EA Retail Sales</li>
<li>BOE Gov Bailey Speech</li>
<li>Ivey PMI</li>
<li>BOC Interest Rate Decision</li>
<li>EIA Crude Oil Stocks Change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.50% and 0.55% up</li>
<li>Euro down 0.06%, while Pound 0.1% higher</li>
<li>Loonie 0.11% down, while Franc muted</li>
<li>Japanese yen -0.04% lower down</li>
<li>Gold and Silver 0.31% higher each</li>
<li>Crude 0.08% down, while Brent 0.04% up</li>
<li>Natural gas 0.59% in the red zone</li>
</ul>
<p>The post <a href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-06-12-2023-27503/">JASPER’S MARKET SQUAWK 06-12-2023</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>