[Marchnad yr UD]Stocks rise sharply since July, government bond yields plunge – 144 yen high – Bloomberg

The US stock market rebounded sharply on the 3rd. A weak ISM manufacturing index in September eased concerns about excessive monetary policy tightening, pushing US Treasury yields lower.

The dollar/yen exchange rate remained virtually unchanged from the previous business day at the 144 yen high. After temporarily hovering around 145 yen from Tokyo time to European time, it fell.

The S&P 500 index rose 2.6% to 3678.43 over the weekend, its biggest gain since July, with around 95% of stocks in the index gaining. The Dow Jones Industrial Average rose $765.38, or 2.7%, to $29,490.89. The Nasdaq Composite Index rose 2.3%.

The ISM manufacturing index fell more than expected in September to its lowest level in more than two years. The rush to raise interest rates more aggressively has subsided.

US ISM manufacturing index hits lowest level in more than two years – orders shrink again (2)

“The market is oversold and sentiment is extremely negative, so a rally could happen at any time, even a sudden rally,” said Matt Maley, chief market strategist at Miller Tabak. “But before we reach the final bottom in this bear market, we expect a further retracement. Equity has not yet fully priced in a recession.”

The US Treasury increased. Yields on five-year bonds temporarily fell 30 basis points (bp, 1 bp = 0.01%). As of 4:17 pm New York time, the yield on the 2017 bond fell 20 basis points to 3.89%. The 10-year bond yield fell 18 basis points to 3.65%.

Economist Ed Yardeni said the Fed should consider ending its tightening campaign after another rate hike in November. The stress on financial markets from large rate increases, a strong dollar and quantitative tightening has reached a point where officials should make financial stability a top priority, he added. He is known for coining terms such as “bond vigilantes.”

In the foreign exchange market, the dollar generally fell. Asset prices such as bonds rose after the ISM manufacturing index failed to meet market expectations. On the other hand, the increase in crude oil prices supported the currencies of the resource-rich countries. A pound rises. UK Chancellor of the Exchequer Kwarteng has withdrawn a proposal to cut the top rate of income tax.

UK Prime Minister withdraws top income tax break; support for the Chancellor continues (5)

The Bloomberg Dollar Spot Index, which tracks the dollar’s movements against 10 major currencies, fell 0.5%. As of 4:18 pm New York time, the dollar was virtually unchanged against the yen at 144.70 yen. In the morning, the dollar was temporarily sold to 144.16 yen. The euro rose 0.2% against the dollar to $0.9824 per euro. The pound rose 1.4% against the dollar to $1.1321.

The New York crude oil market rebounded. It rose more than 5%, its biggest peak since July.By “OPEC Plus” which includes the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC oil producersConcerns about a tight supply situation have increased against a backdrop of potential production cuts.

OPEC+ could discuss cutting output by more than 1 million barrels a day at its meeting on Wednesday, representatives said.

“The fact that OPEC is talking about cutting production by 1 million barrels a day while inventories are still pretty tight and they’re pushing their own production targets is a big deal,” said Rob Howarth, senior strategist investment strategy at US Bank Wealth Management The fact that it is not meeting the requirements is a surprise to the market,” he said. “However, with oil prices falling from over $120 to $80 now, they are certainly sees it as proof.”

West Texas Intermediate (WTI) futures for November delivery on the New York Mercantile Exchange (NYMEX) rose $4.14, or 5.2%, to $83.63 a barrel. ICE North Sea Brent for December delivery increased $3.72 to $88.86.

The New York gold market continued to rise. The fall in US Treasury yields has made gold relatively more attractive to invest in as it does not generate interest. Concerns that tightening global central banks could lead to a recession and the view that bond yields may have peaked were also weighed.

“Gold prices are holding out in a deeper decline,” said Bart Melek, commodities strategist at TD Securities. “As we enter October, the downside risk remains high for gold, with strong data continuing to point to a more aggressive path for US interest rates,” he said.