Data Comes to Life and Yellen Returns

11/25/2020 10:00 am EST

Focus: FOREX

Adam Button

Co-Owner and Managing Director,

It's been far too long since an economic data point moved the market but a surprise jump in the Markit US PMIs this week sparked some activity, says Adam Button of

GBP was the top performer while the yen lagged. Metals were dealt a severe blow as yields rallied, prompting USD higher. 

It's tough to overstate just how strong the Markit services and manufacturing PMIs were on Monday. Both were above the highest economist estimates and at multi-year highs. The manufacturing figure was at 56.7 versus 53.0 expected and 53.4 last month. The services index was at 57.7 vs 55.0 expected and 56.9 previously.

Importantly, the report highlighted some of the highest pricing pressures in both sectors. That sparked a slump in bonds and a rally in the US dollar, particularly USD/JPY. The report also tipped gold below the key double bottom at $1850 in a nearly 2% drop.

The Fed's Evans reiterated no plans to hike until 2023 or 2024 but the market will no double question that, or at least question hopes for more easing in December or Q1. At one point, equities gave back strong gains, which had been inspired by more positive vaccine news.

Equities cheered multiple reports saying Yellen will be Biden's Treasury Secretary. Her dovish bent and fiscal largesse are obvious positives, plus she was friendly to Wall Street as Fed chair. One negative could be her ability to be a dealmaker in Congress, but the market is certainly giving her the benefit of the doubt.

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