Bassanese Bites: Bessent bump – December 02 2024
Global markets
Global equities continued their rebound last week, supported by market confidence in Trump’s choice for the new US Treasury Secretary. Easing Middle East tensions and encouraging Fed minutes were also market positives.
There was little in the way of major global economic data again last week. Instead, a positive market reaction to the choice of hedge fund billionaire Scott Bessent as Trump’s Treasury Secretary at the start of the week helped set the market tone. As I alluded to last week, although supportive of tariffs, Bessent’s Wall Street background and comments that Trump “does not want to cause inflation” gave investors some relief. Not only did equities rise, but there was also a decent decline in bond yields.
Also notable last week, Trump’s announcement that he would levy a 25% tariff on Canada and Mexico – and a 10% tariff on China – was, perhaps surprisingly, well absorbed by the market. One suspects the market is already somewhat prepared for and inoculated against the various Trump outbursts we’re likely to get in coming months (and years!). So far at least, Trump’s threats are being treated as opening bargaining chips in a likely heated series of global negotiations to “get a fair deal for America” in various areas.
In other news, minutes to the recent Fed meeting highlighted most voting members remain confident that inflation will continue to ease – allowing them to support the labour market from weakening further by gradually lowering rates toward a more neutral setting. According to the markets, this leaves a rate cut at this month’s Fed meeting still a warm (66%) chance.
Last but not least in global news, was the ceasefire deal struck between Israel and Hezbollah, which helped to ease oil prices. Reports suggest the upcoming December 5 OPEC meeting will see its production cuts rolled forward, given the market appears well supplied heading into 2025.
Global week ahead
The major global highlight this week will be Friday’s November US payrolls report, although it’s likely to be heavily distorted by the bounce back in employment following hurricane and strike-related disruptions. Indeed, the market expects a 200k employment bounce back after a meagre 12k gain in October, with the unemployment rate edging up to 4.2% from 4.1%.
