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European equities bounced from the lows of the day but still finished in the red.

Closing changes:

• Stoxx 600 -0.2%
• German DAX -0.2%
• France CAC -0.7%
• UK FTSE 100 -0.2%
• Spain IBEX -0.3%
• Italy’s FTSE MIB -0.3%

This article was written by Adam Button at www.forexlive.com.

• Prior was 4.215%
• Bid to cover at 2.71 vs 2.74 prior

The bond market isn’t having a problem digesting some serious supply this week ahead of Thanksgiving. In the aftermath of the sale, long-dated yields are at the lows of the day with 10s down 5.2 bps to 4.25%. There is some follow-through in USD/JPY as well.

This article was written by Adam Button at www.forexlive.com.

The US dollar is soft today and I think we’re getting an idea why at the moment. It’s struggling into the London fix, which highlights some flows ahead of month end.

The US is on holiday tomorrow (and de facto on Friday) so flows are being jammed through today.

This article was written by Adam Button at www.forexlive.com.

• Crude oil inventories -1844 K vs -605K exp
• Gasoline inventories +3314K vs -46K exp
• Distillates inventories +416K vs -103K exp
• Refinery utilization +0.3% versus expectations of +0.4% exp
• Production 13.49mbpd from 13.2mbpd

Private oil inventory data from late yesterday:

• Crude -5939K
• Gasoline +1814K
• Distillates +2543K

WTI crude oil was trading 10-cents higher to $68.87 before the data. Note that the OPEC decision is due on Sunday. They’re expected to rollover production through January and perhaps all the way through Q1.

This article was written by Adam Button at www.forexlive.com.

• Prior month +7.4%

Details

• Pending home sales 2.0% versus -2.0% expected
• Home sales index 77.4 versus 75.8 last month
• Sales up 5.4% year on year. Highest level since March.

Regionally:

• Northeast 4.7% MoM and +7.2% YoY
• West 0.2% MoM 16.8% YoY
• Midwest 4.0% MoM and 1.8% YoY
• South 0.9% MoM and 2.5% YoY

There is more supply which could be helping the pending home sales. The number of active listings up 29% for the year. The number of Lockbox openings rose 7% in October vs last year according to SentriLock which is also a positive indicator.

NAR chief economist Lawrenc Yun said:

“Homebuying momentum is building after nearly two years of suppressed home sales. Even with mortgage rates modestly rising despite the Federal Reserve’s decision to cut the short-term interbank lending rate in September, continuous job additions and more housing inventory are bringing more consumers to the market.”

This article was written by Greg Michalowski at www.forexlive.com.

• Prior was +2.7%
• Core m/m +0.3% vs +0.3% exp
• Unrounded core PCE was +0.2727% m/m
• Core PCE +2.8% y/y vs +2.8% expected
• Headline inflation PCE +2.3% y/y vs +2.3% expected (Prior +2.1%)
• Deflator +0.2% m/m vs +0.2% expected
• Unrounded +0.238% m/m

Consumer spending and income for October:

• Personal income +0.6% vs +0.4% expected. Prior month +0.2%
• Personal spending +0.4% vs +0.3% expected. Prior month +0.6%
• Real personal spending +0.1% vs +0.5% prior
• Savings rate 4.4%

This report is very much in line with expectations, I don’t see much scope for market moves on the headlines. Fed pricing for a Dec cut remains at 65%.

This article was written by Adam Button at www.forexlive.com.

There are some major geopolitical considerations around how the war in Ukraine ends. Trump will reportedly pick Keith Kellogg as envoy to end the war, according to a Reuters report.

Here’s a recent article where he lays out how he would end it.

• Continue arming Ukraine while pursuing formal ceasefire negotiations, with aid conditional on Ukraine agreeing to peace talks
• Delay Ukraine’s NATO membership in exchange for security guarantees and a verifiable deal with Russia
• Ukraine keeps its claim to all territories but agrees to pursue diplomatic means for recovery, acknowledging it may take significant time
• Use partial sanctions relief on Russia as incentive for peace steps; implement levies on Russian energy to fund Ukraine’s reconstruction
• Seek an interlocutor trusted by both sides (suggests Trump could fill this role) for negotiations, noting Biden’s limited engagement with Putin
• Provide Ukraine with bilateral security agreement ratified by Senate, similar to arrangements with Korea and Taiwan
• Continue military support even after negotiations to prevent Russian aggression, while rejecting Russian demands for Ukrainian demilitarization

This article was written by Adam Button at www.forexlive.com.

Eyes are on US inflation with the market pricing in a 65% chance of a cut at the December FOMC. That ticked up about 8 points yesterday with the FOMC minutes highlighting a strong consensus around gradual rate cuts.

The main number to watch is core PCE, which is forecast to rise 0.3% m/m and 2.8% y/y. Even a slight rise above that would give the Fed a real headache.

The report is out at 10 am ET.

This article was written by Adam Button at www.forexlive.com.

S&P 500 futures are fractionally lower as we count down to the open. With the US holiday tomorrow and month end looming, flows are likely to overwhelm everything else today. That’s also what could have the US dollar on the backfoot today.

But if you look at the field of play, it’s a good one for risk assets. Treasury yields and the US dollar are lower. Bitcoin has turned higher and is up 2.7%.

Some of the concerns are around earnings with Dell lower by 13%, HP off by 8%. The main event in terms of economic data comes after the open with the PCE report out at 10 am ET — an unusual time in a condensed schedule because of the US holiday. Also notable is that US stocks were extremely strong late yesterday in to the close.

This article was written by Adam Button at www.forexlive.com.

The pound is slowly chewing through last week’s losses.

It’s trading at a session high, up 79 pips to 1.2646 in the second day of gains. It comes after a tough three day stretch late last week that sent it to the lowest since May.

This week, the US dollar has been softening on the pick of Scott Bessent as Treasury Secretary and indications that Kevin Warsh is the favourite to replace Jerome Powell in 2026. That’s put a bid into bonds, dragging 10-year yields from 4.50% mid-month to 4.25% today.

Trump’s tariff threat on Canada and Mexico is also not landing the way that many thought. It’s looking toothless and like a path to negotiations rather than a real threat. That has the market ratcheting down tariff estimates, which should be good for global growth.

All that is very speculative but the market is trying to get a read on the next four years. I also highlighted yesterday a path where the main lever that Trump might use is a softer currency.

This article was written by Adam Button at www.forexlive.com.

• Advance Q3 reading was +2.8% annualized
• Final Q2 reading was +3.0% annualized

Details:

• Consumer spending +3.5% vs +3.7% advance
• Consumer spending on durables +8.1%
• GDP final sales +3.0% vs +3.0% advance
• GDP deflator +1.9% vs +1.8% advance
• Core PCE +2.1% vs +2.2% advance
• Business investment (nonresidential fixed investment) +% vs +3.3% advance
• PCE services inflation excluding energy and housing +2.6% vs +2.6% advance
• Corporate profits prelim 0.0%
• Personal saving rate 4.3% vs 4.8% advance

Contributors and subtractors to the 2.8% growth, in percentage points:

• Consumption: +2.37 pp vs +2.46 pp advance
• Government: +0.83 pp vs +0.85 pp advance
• Net International trade: -0.57 pp vs -0.56 pp advance
• Inventories: -0.11 pp vs -0.17 pp advance

The changes in this revision are immaterial.

This article was written by Adam Button at www.forexlive.com.