Wall Street: almost perfect scenario, except for T-Bonds

(CercleFinance.com) - What a weekly scenario, and what an end to the week with a happy ending worthy of the most enchanting fairy tales.
The US indices are all -simultaneously- at their annual zeniths, five sessions away from the "4 Witches" on December 15.

The year-end "balance sheet dressing" seems actively underway, and the bullish rally that began on October 27 will be among the most "productive" of the 21st century, and it is above all the first to see the US indices return to their previous long-term records, six months and then two years apart.

The S&P500 (+0.41%) improved its annual record by two points to 4,609 (a 'high' since March 2022) and its closing record by 15 points to 4.604 (i.e. +0.1% weekly): the index completed its sixth consecutive week of gains, without ever having lost more than 0.8% since October 27.

The Nasdaq Composite (+0.45%) recorded its best annual close ever at 14,404, equalling the annual zenith of 14,445 reached on July 17: the annual performance reached its maximum at +37.5%.

But not everything was absolutely perfect, as not all the planets ended up aligned - as had been the case over the previous five weeks: the day ended with a sharp rise in rates following the publication of the eagerly-awaited monthly US employment report by the Labor Department.

The consensus figure of +150,000 new non-farm payrolls was well exceeded, with almost +200,000, and the unemployment rate, expected to rise to 4%, actually fell by -0.2 points to 3.7%.

This much higher-than-expected statistic will complicate the Federal Reserve's task of recalibrating its monetary policy: the speech it will deliver on December 13 after the FOMC meeting may prove more hawkish than Wall Street had hoped. As a result, bonds are under considerable pressure, with the US 10-year yield up 13 basis points to 4.255%.

US light crude (WTI) has recovered 2.2% to $71.25, but this is not enough to pull the oil sector out of a downward spiral, with heavy weekly losses such as Halliburton -7.5% and Diamondback -3.6%.

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