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U.S. stocks were largely flat Friday, while Treasury yields nudge higher as investors looked to extend another winning week on Wall Street in the face of pushback from policymakers on the Federal Reserve regarding the prospects for 2024 rate cuts.
Updated 3:03 PM EST
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Updated 1:57 PM EST - Martin Baccardax
The U.S. dollar index, which tracks the greenback against a trade-weighted basket of its global currency peers, hit a two-month low of 103.920 Friday after falling 0.43% on the session as investors continue to challenge the Fed's rate hike warnings.
The move is helping stocks book late session gains, as well, with the S&P 500 now 8 points higher on the day, while the Dow edged 38 points to the upside.
Updated 11:47 AM EST - Martin Baccardax
Treasury yields on the rise
Treasury yields are inching higher Friday, and keeping a cap on stock market gains heading into the mid-day session, with benchmark 10-year notes rising 6 basis points from overnight lows to change hands at 4.631%
At the same time, 2-year notes have added around 10 basis points, and were last marked at 4.911%, following a series of hawkish messages from Fed officials and a better-than-expected reading for October housing starts.
The S&P 500 was last marked 4 points lower on the day, while the Dow slipped 40 points and the Nasdaq fell 20 points.
Updated 11:00 AM EST - Martin Baccardax
Collins preaches patience
Boston Fed President Susan Collins added to the chorus of Fed speakers looking to tame rate-cut expectations Friday, telling CNBC's Steve Liesman that she's not willing to rule out further increases.
"I wouldn't take additional firming off the table," Collins said, noting "noisy" economic data. "In order to get back down to 2% (inflation) in a reasonable amount of time you need to be patient and resolute."
Updated 9:56 AM EST - Martin Baccardax
Stocks slipped modestly lower in the opening half hour of trading, with the S&P 500 down 2 points and the Dow Jones Industrial Average giving back 12 points. The Nasdaq was last marked 17 points lower.%
Updated 9:45 AM EST - Martin Baccardax
Daly Says 'Be Bold'
San Francisco Fed President Mary Daly poured cold water onto the Treasury market's hot November rally Friday, telling a marquee banking event in Frankfurt that the U.S. economy is in a period where "the risks seem high and the waters, murky."
The Fed needs to be 'bold' in its patience on rate policy, she said, warning that 'the perils of deciding too quickly are real. Declaring certainty too early is not just a missed forecast. It's a policy mistake."
Updated 8:35 AM EST - Martin Baccardax
Housing Starts notch modest rebound as mortgage rates retreat
October housing starts nudged 1.9% higher last month, the Commerce Department reported Friday, to an annualized rate of 1.372 million units, firmly ahead of the Street's 1.35 million forecast.
Permits for new construction, a key indicator of demand, were up 1.1% to 1.487 million units, following last week's big decline in 30-year fixed mortgage rates, which were last pegged at 7.61%.
Updated 8:00 AM EST - Martin Baccardax
Cash on the sidelines
This year's surge in fixed income yields, which have six-month Treasury bills trading at 5.445% in early Friday dealing, have attracted record flows into money market funds, according to data from the Investment Company Institute.
ICI says money market fund assets have soared to $5.73 trillion so far this year, with the bulk of that tally – $4.68 trillion – finding its way into government-targeted funds.
Updated 7:17 AM EST - Martin Baccardax
Retail looking weaker amid muted holiday forecasts
BJ's Wholesale (BJ) -) and Gap (GPS) -) joined a growing list of retailers that see muted holiday sales action this year, although improving profits at the clothing brands group has shares soaring nearly 20% in pre-market trading.
BJ's, on the other hand, is down nearly 5% after missing third quarter revenues estimates and forecasting flat same-store sales for the holiday period.
Related: Gap stock soars after blasting Q3 earnings forecasts and seeing improving profit margins
Stocks have been closely tracking Treasury bond yields for much of the past few months, and even more so of late now that traders have essentially abandoned bets on a final Federal Reserve rate hike and booked in cuts of around 1% for next year amid a predicted economic slowdown.
Earnings optimism, underlying economic strength and a job market that, while weakening, is still producing robust monthly additions with muted wage growth.
That's helped plough more than $23.5 billion into equity funds over the past week, according to Bank of America's closely-tracked 'Flow Show' report, and could set up a bullish near-term backdrop for stocks heading into the final weeks of the year.
On Wall Street, futures contracts linked to the S&P 500 are priced for a modest 9 point opening bell gain while those linked to the Dow Jones Industrial Average are indicating a 115 point advance. The tech-focused Nasdaq is likely to open 2 points higher last night's closing levels.
In other markets, global oil prices rebounded from their worst single-day decline in four months yesterday, as crude slumped into a bear market – defined as a 20% fall from a recent high – amid concerns over the fate of global demand heading into next year and the ongoing supply gut from a surge in U.S. production.
Brent crude contacts for January delivery, the global pricing benchmark, were last seen trading $1.15 higher at $78.56 per barrel while WTI crude contracts for December, which are tightly-linked to domestic gas prices, added $1.00 to trade at $73.90 per barrel
In Europe, stocks are on pace for a solid 2.7% gain amid a better-than-expected third quarter earnings season and bets on 2024 rate cuts from the European Central Bank. The region-wide Stoxx 600 index was marked 0.96% higher in mid-day Frankfurt trading while Britain's FTSE 100 gained 0.73% in London.
Overnight in Asia, a steep decline for Alibaba (BABAF) -), which dumped plans to spin-off its cloud division amid the ongoing ban on U.S. chip exports, pulled China and Hong Kong stocks lower and left the MSCI Asia ex-Japan index 0.48% lower into the final hours of trading.
Japan's Nikkei 225, meanwhile, closed 0.48% higher, ending the week at a four-month peak of 33,585.20 points.
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