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T3's Take 3: Janet Yellen Teases a Hawk Attack


Today's financial recap and tomorrow's financial outlook.

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Economic Data

For the second day in a row, economic data was mostly positive, a nice turnaround from last week's disappointments.

This morning, the ADP employment reported showed a 182,000 increase in jobs in October. This was slightly ahead of the 180,000 consensus. September's number was revised down to 190,000 from 200,000.

The market was unfazed by the report, likely due to the fact that traders are eagerly waiting the NFP report on Friday at 8:30am ET.

The ISM non-manufacturing composite came in higher than expected at 59.1 vs. the 56.5.consensus.

Additionally, the Markit US Services and Composite PMI figures showed improvement from last month.

Oily Shake and Bake

Yesterday, oil prices rose over $47 on various news items, including a bullish price forecast from United Arab Emirates Energy Minister Suhail Al Mazrouei.

Also, Libya's National Oil Corp. declared force majeure, which allows it to suspend crude oil demand shipments.

However, crude oil inventories were larger-than-expected today, driving-profit taking in the oil patch.

Crude oil fell 2.8%, and energy stocks were among the day's worst performers.

The Energy Select SPDR ETF (XLE) fell 0.9% today, giving back a good chunk of yesterday's 2.6% gain. 

Hawks On?

Following the Fed's hawkish turn at the October rate decision release, Chair Janet Yellen gave hints that a December rate hike may be in the cards.

Ms. Yellen told the House Financial Services committee said that rates could be raised in December if the economy continues growing, and if the Fed anticipates a rise in inflation.

According to data from Bloomberg, futures markets are now pricing in a 58% probability of a December rate hike, up from 50% yesterday.

Those revelations pushed equity markets back a bit, and the S&P 500 fell 0.4% today. The 10-year US Treasury Yield rose 10 bps to 2.23%.

Financial stocks, which would presumably benefit from an interest rate hike, did slightly better than the broader market, with the Financial Select SPDR falling 0.3% today.

Thursday Preview

Tomorrow morning's US economic reports include Challenger Job cuts, Jobless Claims, Nonfarm Productivity, and Unit Labor costs.

Overseas, the Bank of England's Inflation Report and Official Bank rate, and the EU's Economic Forecasts will be released.

Also, the Reserve Bank of Australia will make its monetary policy statement.

In earnings, Apache (APA), Celgene (CELG), and Duke Energy (DUK) report before the open.

After the close, Cyber-Ark Software (CYBR), NVIDIA (NVDA), Skyworks (SWKS), Tableau Software (DATA), and Walt Disney (DIS) report their numbers.

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