The treasury yields took a breather on Wednesday after rising dramatically for the past week. This comes as ADP Nonfarm Employment change showed a softer reading than expected, sending hopes that the labour market could be softer.
It comes timely as policymakers and analysts examine for evidence of monetary tightening effects on the labour force. Markets welcome the signs of labour market loosening, which will be helpful towards the Fed’s effort in cooling inflation.
Oil prices continue to fall.
Another positive sentiment is contributed by the fall in oil prices. As an instrumental commodity that powered economic activity, its ascent from $78 per barrel to over $90 per barrel recently had spoked investors’ worry that it could push inflation higher in the short term, complicating hope for a softer inflation reading in the coming quarter.
While stocks cheered, energy stocks trended lower. In the Dow component, Chevron is probably the worst hit.
Initial jobless claims on the focus
With the first set of positive labour data outcomes, traders wait anxiously for Initial Jobless Claims that will be released today. We will want to see further signs of a cooling labour market to keep the risk-on momentum in equity good.
If it does accelerate to 210,000 from 204,000, we could see bond yields retreating further, setting up a conducive environment for the stock market to recover.
Shares of Tesla rose in a quiet environment.
There wasn’t any news on Tesla on Wednesday, but stock prices rose despite a poor delivery report on Monday morning. Perhaps most of the negative news about delivery has already set in, given China’s challenging environment, and bears could not have predicted that, giving bulls a post-delivery rally.
According to Bloomberg, the short interest on Tesla stocks rose by around 7 million shares leading up to the delivery figure reports, setting up a potential squeeze on the upside.
It is 5 October, Thursday, 9.05 am in Singapore and 9.05 am in New York. Markets remain volatile, and we hope you have a safe trading day.
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