Symax Fintech Daily Market Insights 04.01.24

US job openings eased in November to the lowest level since early 2021. Fewer workers voluntarily quit their positions and the number of hires fell, adding to evidence of cooling labor demand. Vacancies decreased to 8.79 million from an upwardly revised 8.85 million in the prior month, according to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS. Hiring declined to the lowest level since April 2020. Meantime, the ISM’s  US manufacturing gauge remained stuck in contraction territory for a 14th month at the end of 2023, restrained by weaker orders. BB

Federal Reserve policymakers agreed last month that it would be appropriate to maintain a restrictive stance “for some time,” while acknowledging they were probably at the peak rate and would begin cutting in 2024, according to the minutes of the Dec. 12-13 Federal Open Market Committee meeting released Wednesday. Meanwhile, bond traders who just days ago were piling into wagers for more than six interest-rate cuts from the Fed this year already appear to be having second thoughts. BB

The largest technology stocks that lifted the broader market last year are having a less-rosy start to 2024. The so-called Magnificent Seven, which includes Apple, Amazon.com, Alphabet, Microsoft, Meta Platforms, Tesla and Nvidia, slipped for the last four trading days, the longest losing streak in a month, according to the Bloomberg Magnificent 7 Price Return Index. It’s a signal that investor doubts over the sticking power of the 2023 rally were well-placed. BB

Chinese government bond yields fell to the lowest in more than three years as bets on further monetary easing gathered pace following weak economic data. The rally kicked off late last year amid the central bank’s liquidity support and as major lenders slashed deposit rates three times in 2023. That fueled expectations that Beijing will stick with loose monetary policy in the near future to aid growth. BB

Chinese stocks dragged Asian equities down. The CSI 300 slid 1.4% as Fitch downgraded four mainland bad-debt managers on weaker state support. A report saying the country’s infrastructure financing vehicles must pay back a record $651 billion of debt this year added to the gloom.

Tensions and national security rules in China are prompting US and European banks to spend tens of millions of dollars to ringfence operations there.  BB

The threat of rising yields is putting assets from stocks to corporate bonds to real estate at risk. Yields are already climbing in 2024 amid signs the economy is doing pretty well. That means the Fed won’t have to cut interest rates as much as some investors expect and yields will rise. Here are some of the dangers:

• Stocks will fall on fears that higher yields will damp growth
• Corporate bonds are increasingly sensitive to rising yields after pricing in swift and aggressive 2024 Fed easing. Better quality bonds have longer durations, signifying steep losses for blue-chip bonds in a rates rout
• The dollar stands to gain as rising Treasury yields attract foreigners
• Bitcoin and gold are vulnerable because they don’t pay interest, making them less attractive as bond yields advance
• Real estate will suffer because higher mortgage costs will bite BB