Markets Largely Offset Friday’s Moves

Rates jump as many as 10bps higher. Swap rates and Treasury yields bear flattened today, as the short end of the curve rose ~10bps and the long end a more muted +4bps. The move largely offset last Friday’s significant rate decline, though rates remain ~5bps lower on the month. Meanwhile, Bitcoin continued to surge on its route to best annual performance since 2020, as Fed cut bets coupled with talk of loosening regulatory restrictions on Bitcoin ETFs have pushed the cryptocurrency to nearly $42,000. On the flip side, oil failed to gain traction as prices declined for the third straight session following the most recent OPEC+ meeting.

Saudis say OPEC+ members will adhere to production cuts that could extend past 1Q24. Saudi Energy Minister Prince Salman said today that recently announced production cuts of ~2.2 million barrels per day can “absolutely” last beyond 1Q24. He added that supply cuts will only end after market conditions are assessed, and pushed back on market skepticism that the cuts will materialize by confirming his faith that Russia and the UAE will comply. To boost confidence that the cuts will be effective, he said, “…the 2.2 million will overcome even the usual inventory build that usually happens in the first quarter.” Still, oil prices have failed to find momentum, with WTI Crude down ~1.10% to ~$73 and Brent Crude down ~0.90% to ~$78 on the day.

Labor data preview: NFP and unemployment rate incoming. After last month’s slower job growth, economists predict that November NFP will rebound while the unemployment rate holds steady at 3.9%. NFP is expected to increase by 180,000, up from October’s 150,000 but below September’s robust 336,000 gain. Meanwhile, average hourly earnings should rise from 0.2% to 0.3% monthly. If these projections materialize and the labor market tightens, it could contribute to delayed 2024 rate cuts, a movement against the recent shift in market sentiment.