Macroeconomic/ geopolitical developments

• The Nasdaq Composite hit a historic 20,000 milestone, buoyed by AI-driven growth in stocks like Tesla and Alphabet, while global markets saw mixed performance, with U.S. tech stocks outpacing other sectors.

• Alphabet’s launch of the Willow quantum chip and Broadcom’s record-breaking AI revenue growth have propelled their stocks to historic highs, highlighting the transformative impact of AI innovation on the tech industry.

• US inflation edged higher in November to 2.7% annually, driven by stubborn shelter and food costs, complicating the Federal Reserve’s efforts to cut rates.

• Despite political upheaval in South Korea, France, and Syria, financial markets have largely stabilized, reflecting resilience amid global geopolitical uncertainties.
• Markets widely anticipate a 0.25% rate cut at the Fed’s December meeting, but focus will shift to updated economic projections and Powell’s remarks, which may signal a cautious approach to further easing.

Global financial market developments

• US and global equity averages were mixed
• US and European bond were higher in yield
• The US Dollar Index rebounded back close to recent, multi-month highs
• Gold futures rallied, then sold off
• Oil futures rallied to the upper end of a multi-month range

Key this week

Central Bank Watch: The main central bank activity this week is the Federal Reserve Interest Rate Decision, Monetary Policy Statement; Economic Projection, Press Conference and Interest Rate Projections all on Wednesday. Some other activities of note are the Bank of Japan Interest Rate Decision and Bank of England Interest Rate Decision on Thursday and People’s Bank of China Interest Rate Decision on Friday.

Macro Data Watch: The main macro data release this week is the US PCE on Thursday and Friday. Some other releases of note are the Global Flash PMI on Monday, UK and EU CPI on Wednesday and US GDP on Thursday

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