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Risk Assets Gobble Up Gains Heading into Thanksgiving

 

Equities Rebound Heading into Holiday

Stocks markets had something extra to be thankful for as they bounced back from the basting they had endured over the past few sessions, with the tech-heavy Nasdaq leading the way with a 0.92% rise while the S&P 500 (+0.31%) posted a more modest gain.  The risk-on sentiment endured a weak business investment report from the Commerce Department which displayed durable goods orders declining 4.4% in October- its largest drop since July 2017.  Also adding to the growing list of fundamental economic indicators that have disappointed recently, existing home sales recorded the largest annual drop in the past four years at a seasonally adjusted rate of 5.22 million during October.

 

 

The flight to safe haven assets that has been present throughout the majority of this month’s trading sessions was missing today, as US Treasurys held within a tight range and the 10-year note yield remained near 3.06%.  The VIX or “Fear Index” came down a few points, though there should be plenty of volatility leftover for a shortened Friday session.  In energy markets, crude oil recovered a portion of yesterday’s 6% tumble as WTI futures settled 2.3% higher to $54.63/barrel. 

 

FDIC Proposed Leverage Ratio Not All Gravy

Banks affected: Assets < $10 billion

This week the FDIC unveiled its proposal for community banks to maintain a leverage ratio of at least 9% to be eligible for exemption from the Basel III capital standards.  Earlier this year, Congress had approved a range of 8%-10% while regulators decided on the appropriate level to instate.  Its benefit lies in its simplicity, however, there are more than 600 community banks around the country that currently carry a leverage near 8%, which would not meet the new standard.  Speaking on the matter, FDIC Chairman Jelena McWilliams explained “Here is the bottom line: you could potentially set it at 8%, 9% or 10% but each of those would have caveats where we feel the community banks would have to be, so it seemed to be the right approach to give us some flexibility moving forward. Most of the community banks are well above that.”

 

 

Thanksgiving Dinner Cost near All Time Highs..

..But has remained steady on an inflation-adjusted basis. Illustrating the remarkably low inflation levels that the U.S. has experienced the past eight years:

 

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