Markets React to Inflation Data: Russell Gains, Bonds Rally, Dollar Holds Strong | November 13, 2024
Today’s inflation data came in mostly as expected, and markets are trying to hang on to their gains. The Russell 2000, which tracks small-cap stocks, had a solid jump at first but is now pulling back a bit. Even with the NASDAQ lagging, the overall market trend is still strong. The main question is whether the resistance we’re seeing turns into a bigger drop, but there’s no big warning sign yet. Inflation is still sticking around a bit higher than the Fed would like, which could keep things uncertain.
The dollar has calmed down slightly but is still hovering near one-year highs, which also mark multi-year peaks. With how much it’s run up recently, a breather isn’t surprising. The bond market is on a solid rally, with bond futures up around 40 basis points. However, the 10-year yield is facing some resistance at 4.4%, a key spot where yields have struggled to break higher since the post-election spike. If that resistance holds, it could keep bond momentum in check.
Meanwhile, Bitcoin is down about half a percent, while gold is up a similar amount. Overall, there’s a lot happening. On the stock front, companies like Spotify and Kava are having a good run, while Skyworks is falling behind, especially as cyclical chip stocks face some pressure. Legacy names like Cisco are also worth watching, as they could set up for some interesting trade moves soon.
Bond moves are especially important for the Russell since it usually follows bond market trends more closely than the NASDAQ or S&P. After the post-election surge, the Russell has settled in the 2400 range, briefly dipping below 2,400 yesterday to 2,399. It’s worth keeping an eye on whether it holds or breaks lower. The sharp jump on election day and the sideways action since suggest that a big move could be brewing if bond trends stay influential.
Looking at the past week, the 10-year yield has been testing resistance around 4.4%, and the dollar remains strong and steady. The dollar’s strength reflects a tricky Fed outlook, as policy moves and potential tariffs could shake things up. It’s a tough call on how this might affect what happens in December and beyond.
Despite the strong bond rally, the dollar’s moves are a bigger deal right now. A strong dollar usually means rising bond yields, but with bonds gaining strength today, the market still seems a bit unsure about where everything’s headed.
