Market Update: 27th November; Strong US GDP data with inline inflation print, S&P500 breaks 6-day winning streak, US 10 Year yields back to pre-election level

News Today(11/27): US Core PCE and US GDP at 8:30 AM, BOE chief economist Pill’s speech at 1:00 PM

US yields drove FX markets with the USD experiencing significant depreciation in the overnight period followed by a muted US session.
The Euro gained momentum after ECB’s Isabel Schnabel remarked that she sees “only limited room for further rate cuts,” pushing EUR/USD higher.
There was little to no reaction to better-than-expected US GDP and jobless claims data, along with in-line inflation figures. However, the USD weakened after the data digestion, as markets speculated that the Fed might lean toward a rate cut in December due to robust growth, a strong job market, and sticky inflation.
US 10-year yields have returned to pre-election levels, with bond markets now pricing in a 65% chance of a 25 bp rate cut in December, up from 60% yesterday, pressuring the USD.
The JPY appreciated for the third consecutive day, with a close-to-close move of nearly 200 pips. This was driven by expectations of a December rate hike in Japan and a potential cut in the US, though the extent of the move appears to be an overreaction.
The S&P 500 ended its six-day winning streak, closing 0.4% lower, weighed down by Big Tech losses. Dell and HP both fell 12% after earnings, dragging down AI and semiconductor-related sectors.

We saw significant moves across markets today, likely driven by reduced US money liquidity due to the upcoming Thanksgiving weekend. I expect some of these moves to revert to yesterday’s close by Monday, provided there are no major developments in geopolitical tensions or comments from Trump.