AI fights rising long-term yields

00:00:00: Stronger than expected.

00:00:01: U.S growth and jobs data, alongside softer-than-expected inflation delivered a Goldilocks combination yesterday.

00:00:09: yet rising long term Treasury yields regardless kept brother equities under pressure.

00:00:16: Now happily technology proved more resilient supported by strong AI demand.

00:00:20: Microns earnings beat an upbeat guidance along side HP's networking outlook And the release of the Gemini.

00:00:27: for all these leftist sentiment in technology but elsewhere.

00:00:31: That's not really the case, there are two opposite forces for U.S markets today AR and rising long-term yields.

00:00:37: an increasingly uncomfortable set up for the yearables and a diverging short long term outlook for gold.

00:00:43: so welcome to swiss coast.

00:00:45: daily market dog is the first of october Today And The First Day Of The Last Quarter of This Year.

00:00:51: Already I'm Ipeko Skardeshkaya.

00:00:54: We Will Be Discussing Very Interesting Topics & Road Topics Today Before we do and as always, please keep in mind that opinions are my own.

00:01:03: And this is not financial advice!

00:01:13: So yesterday's data could be hardly better, at least for the United States.

00:01:17: Growth and job numbers came in stronger than expected by analysts while inflation metrics came in softer than expected.

00:01:25: That was a full scenario that I was talking about In yesterdays market talk remember?

00:01:30: The so-called goldilocks scenario one that i believe Was the least likely but the best one.

00:01:36: And there you go.

00:01:37: sometimes You've got to wind blowing toward the right direction Yesterday.

00:01:41: well it of these days, it wasn't really so we will discuss.

00:01:44: But software that expected PC numbers from the US actually pulled us two year yield lower yesterday but to fact at this number are still very much above the first two percent post targets still requires attention.

00:01:57: as such a U.S.. Two-year yield that best captures fit expectations fell again As I said although that easing remain quite short lived.

00:02:06: today We can say however dad at least it doesn't push any higher.

00:02:10: Again, yesterday's software didn't expect that PCE REIT does not mean the Federal Reserve is out of the woods with inflation and won't be hiking interest rates further but the urgency for this action has somehow eased in October.

00:02:26: That's good news!

00:02:27: The other good news was the stronger growth and jobs data came to support the idea that U.S.

00:02:31: economic activity remains resilient to higher energy prices and rising borrowing costs especially on a longer and off the yield curve.

00:02:39: Now we all know that some sectors are doing so great today, but they're masking the weakness in others.

00:02:46: with yesterday day remain under the shadow of rising long-term yields still especially on index level.

00:02:52: deals kept climbing along end up to yield curve despite soft inflation data as investors were probably factoring into strong growth numbers and big government spending and sending us ten year yield straight above five point thirty percent.

00:03:07: and let her pull this MP-Five hundred lower.

00:03:10: The equal weighted index was hit harder, mind you!

00:03:12: the only place we could see a small gain on Nasdaq understeal...the latter printed a point twenty three percent gain yesterday despite rising yields that were thanks to strong appetite for technology names And that fist in narrative.

00:03:26: That's strong demand there Could help technology companies withstand higher yields.

00:03:31: On that end What HP boosted is networking revenue forecast.

00:03:35: yesterday announced a one-point two billion dollars order from a cloud company called Volter.

00:03:40: Google releases Gemini for model and Marklin delivered the strong beat, its revenue reached fifty four point twenty three billion dollars worth around fifty to fifty one billion US dollars expected for that quarter.

00:03:52: adjusted EPS came in at more than thirty three dollars versus thirty ones or thirty two dollar penciled in by analysts on next quarter of Revenue.

00:04:01: Guidance was sixty one point five billion us dollars.

00:04:04: That Was Also Comfortable higher than the US dollar consensus.

00:04:09: The initial share price reaction was modest, however as a company warned that their exceptional margin could soften but the adjusted gross margin was eighty seven percent and the guidance was for eighty six point twenty five per cent next quarter in monastic line of point seventy-five percentage points.

00:04:28: so let's don't boom Right?

00:04:30: As such, investors could get the AI relief that they were looking at from Macron.

00:04:34: NASDAQ futures are up this morning.

00:04:36: their leading gains possibly is by one point twenty percent as well and SoftBank released three-and a half per cent despite news that FTC has opened an investigation into open AI anthropic over potential risk to consumers And whether companies misled public about safety of their AI systems.

00:04:55: Let's see if appetite can hold Atlantic Ocean, the news are a bit messier.

00:05:01: Earlier this week Spanish CPI hit the five percent mark.

00:05:04: remember in early September.

00:05:06: yesterday French Italian and German inflation figures also came to reinforce that fear.

00:05:12: Inflation Israel is mounting and letter heating up in price pressures increases chances of further ECB tightening.

00:05:19: maybe next move could come as soon October meeting.

00:05:23: Now the combination of more dovish Fed and a more hawkish European central bank could have pulled the euro dollar out off the medium term bearish consolidation zone into which it fell earlier this week, remember?

00:05:36: But no, the euro dollar is now extending weakness within this bearish consolidation zone as US long-rate story remains a dominant driver here while also in European side widening spreads between German and French yields fail to restore appetite.

00:05:55: There are so many questions regarding what the French will do how that will impact the Euro area.

00:06:01: moving forward we'll continue watch data from the US on Friday.

00:06:08: The U.S.

00:06:09: officials' jobs data could suggest that the U. S. Jobs market remains healthy, keeping the Fed's focus on fighting inflation.

00:06:16: and the risk with strong data is that if the upcoming inflation metrics continue to worry investors ,the fed hawks would return rapidly to a market that has become difficult to cheer up anyway where the u.s.

00:06:28: dollar is going up even with softer than expected inflation figures.

00:06:33: And From A Cross Asset Perspective The rising long-term yields now increase competition for capital.

00:06:39: At the current levels, and given that long term inflation expectations for U.S economy remain anchored some investors come to like their idea of just going into safer play by US treasuries and sit on them.

00:06:52: And latest analysis from Bloomberg actually highlights this.

00:06:55: The risk for buying and holding US ten year papers today are asymmetric.

00:07:00: Investors who buy the paper should not be worried they say about price losses before the yield, the ten-year yield rises to six percent.

00:07:10: A hundred basis points rise would lead to a one point six per cent loss they say while a hundred basis falls in the yield will generate an nearly thirteen percent return.

00:07:21: but if the yields continue to arise it's because investors are not yet convinced that going into government bonds is good idea or big buyers simply aren't buying for various reasons these big buyers being China Japan and the European Union.

00:07:36: You know what they're buying instead?

00:07:37: Gold!

00:07:38: They are buying gold.

00:07:39: Now looking at gold, Gold is obviously under the pressure of rising yields right now.

00:07:44: but long-term big buyers still buy and they're buying regardless.

00:07:50: Central banks bought two hundred eighty nine tons of gold in the second quarter this year which was a record for a quarter with more than sixty percent rise compared to one year ago according to The World Gold Council's latest report.

00:08:04: that same report highlights of reserve managers would love to increase their gold holdings and eighty-nine percent believe that the central banks will keep increasing their Gold Holdings over the next twelve months.

00:08:17: That's wild!

00:08:19: So, conclusion here is that Goals short term troubles will most probably not weaken The longer term positive trend as the world as it stands today needs a safe asset A Safe Haven Asset.

00:08:33: one single country that could suddenly turn from your best friend to you, your biggest threat.

00:08:39: Last year and so proved it was never a good idea anyway!

00:08:43: And now its time to add up.

00:08:46: So this is all for today.

00:08:48: I'm Ipekos Kardashian and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

00:08:55: I hope This Episode Of Market Talk Has Been Helpful And It Has Been Insightful To You so Please Do Not Hesitate To Leave Your Comments, Your Reactions And Your Questions Below.

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00:09:29: And until then, good day trading!

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