Short-dated yields trot higher post data dump, King Dollar, bitcoin lower

Stocks down, Treasuries climb

US stocks are declining after an economic data barrage showed inflation has yet to peak, the consumer is strong, and the labor market recovery might be accelerating. Short-dated US Treasury yields continued to rise, up 3.4 basis points to 0.648% after a wrath of US data raised the prospects that the Fed may have to move sooner on interest rates. The 10-year Treasury yield was flat at 1.665%.

Retail earnings have disappointed this week. Yesterday, Best Buy’s comp sales guidance unnerved many investors and that was followed by disappointing results from Nordstrom and after Gap cut its annual forecast. A strong consumer and pent-up demand was supposed to make this a strong holiday season for retail, but margin and wage pressures are disrupting many retailer outlooks.

US Data Barrage

A wrath of economic data was squeezed in on the day before the Thanksgiving holiday. US stocks were initially boosted after the first wave of economic data showed weekly jobless claims fell to the lowest level since 1969 and capital goods orders non-defense ex-air showed businesses are using their checkbooks.

US Data

Weekly jobless claims fell to a fresh pandemic low of 199,000, the lowest reading since 1969, but that was most likely impacted by the volatility around the holidays. Optimism is growing that the Fed will have to acknowledge mission accomplished in the labor market a lot sooner than they expected.

The October durable goods posted a headline miss, but when you factor out airplanes and cars, the data did not look bad at all. The capital goods orders placed by factories increased by 0.6% in October, better than the 0.5% consensus estimate.

The Fed’s favorite inflation gauge, core PCE deflator year-over-year rose 4.1%.

Wage outlooks will continue to rise after Personal Income and Spending data came in above expectations.

FX

The dollar is surging after a wrath of US economic data showed the economy continues to head in the right direction, prompting expectations for a faster taper and possibly three Fed rate hikes next year.  Europe is considering more curbs and that is just throwing fire onto the hot dollar trade.

Cryptos

All the top cryptos are lower as Wall Street begins to grow more confident that despite consistent inflation pressures, the Fed will be in a position to deliver some rate hikes next year.  Bitcoin seems like it is poised to consolidate a little more as this latest surge in the greenback unfolds.

Going into year-end, many traders have locked in crypto profits, but bitcoin is still up 95% and ethereum is higher by 471%. Low trading volumes might remain the case for the rest of the week, so bitcoin might struggle to do anything. December could be a volatile trading month as traders will get a better sense if the Fed is positioning itself for a few rate hikes in 2022.

Bitcoin’s long-term bullish outlook remains intact, but prices could consolidate just ahead of the USD 55,000 level as low trading volumes persist.

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