🧑‍💻 NFP: Markets Trembling as Jobs Data Drops Today!

Good Morning!

The markets are serving up a mixed bag as we kick off November. Asian shares took a hit with the Nikkei sliding 2.3%, but China's offering a glimmer of hope – their manufacturing sector's finally expanding again after the government's stimulus efforts. The Hang Seng jumped 1.6% on the news. Meanwhile, oil's on a three-day winning streak. Amazon's stellar earnings (adding a cool $104B to their market cap) provided some relief for European futures. The real showstoppers are still ahead: Friday's US jobs report and next week's presidential election!

In today’s email:

• NFP: All eyes on today’s NFP data

• Bitcoin: Back below $70k… for now!

• Tether: Has reached $7.7 billion in year-to-date profit

• Gold: Still holding strong above $2750+

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THE BIG IDEA

Wall Street faces potential turbulence as strong jobs data could derail Fed rate cut expectations, complicating an already tense market environment ahead of the presidential election

Here's what's cooking in the markets, and it's spicier than your average financial stew. October wrapped up with a thud – the S&P 500 took its biggest hit in two months (down 1.5%), while the Nasdaq 100 tumbled 2.3% despite stellar earnings from tech titans. Not even Meta and Microsoft's impressive numbers could charm the bears away.

Now all eyes are on October's jobs report, but here's the plot twist: while consensus expects a modest 113,000 job gain, the signals are flashing otherwise. ADP's latest report showed a whopping 233,000 new jobs, S&P Global's PMI data is pointing up, and Citigroup's analysis suggests economic data has been consistently beating expectations since August.

This persistent outperformance hints that analysts' models might be playing catch-up with reality.

The real kicker?

The Fed rate cut narrative that's been supporting markets is starting to crack. Markets have already scaled back their expectations from two cuts to just one (with a mere 28% chance of a second), and strong employment numbers could further shake this house of cards. With borrowing costs potentially staying higher for longer and the presidential election looming, investors might be reaching for the exit signs.

The futures market has dramatically scaled back its 2025 rate cut expectations too – now pricing in just 77 basis points of easing, down from 123 basis points after September's Fed meeting.

Remember, sometimes good news for Main Street can be challenging news for Wall Street, especially when it comes to Fed policy expectations. With wage growth still running at 4% annually – nearly double the inflation rate – the job market's resilience might just be too much of a good thing for rate cut hopes.

MARKETS AT A GLANCE

TOP NEWS

Treasury yields teetering near 4.3% as bond market braces for crucial jobs report ahead of Fed meeting and presidential election

Bond traders are on high alert, with Treasury market volatility hitting yearly highs. After October's brutal bond selloff – the worst in two years – players are hedging against yields potentially climbing to 4.5%. While a Fed rate cut next week seems likely, a strong jobs report today could shake up expectations for future cuts, especially with the Trump-Harris showdown looming.

Bank of Japan maintains current rates but signals potential hike ahead, with analysts divided between December and January timing

Despite holding rates at 0.25% post-election, the BOJ's sending clear signals about normalizing policy. Governor Ueda's comments about easing U.S. risks sparked yen movement to 151.9 against the dollar. With inflation projections steady and a weakening yen (now at 152.27), analysts are betting on a rate hike by January – though timing hinges on global trends and domestic politics.

Apple's holiday forecast disappoints as China sales slump and global growth concerns mount, despite iPhone strength

Apple's latest earnings paint a mixed picture: iPhone sales beat expectations at $46.2B, but the tech giant's conservative holiday forecast (low-to-mid single digits vs expected 7%) sent shares down 2%. China remains a sore spot, with revenue dropping to $15B against $15.8B estimates. While services hit record revenue, all eyes are on Apple Intelligence's potential to drive future growth.

CRYPTO

Bitcoin and broader crypto markets dip as Trump's election victory odds decline on Polymarket, though analysts debate the direct correlation

Bitcoin's retreated to below $70K, while the broader crypto market's down over 4% as Trump's victory odds on Polymarket slipped from 67% to 61%. While some link this to election jitters, others point to natural profit-taking after bitcoin's 22% October surge. Trump Media stock's 34% three-day plunge adds to the uncertainty.

Coinbase stock plunges 15.3% in largest single-day drop since July 2022 following disappointing Q3 results

The crypto exchange missed analyst expectations with $75M net income (vs. $112.2M forecast), while Q3 revenue dipped to $1.13B from Q2's $1.38B. Despite announcing a $1B share buyback program and an extra $25M donation to pro-crypto PAC Fairshake, investors weren't impressed. Year-to-date gains now sit at just 3%.

Tether has reached $7.7 billion in year-to-date profit, boosted by record-high reserves

The company added $5 billion in U.S. Treasuries and 7,100 Bitcoin, raising its total equity to $14.2 billion. Tether now holds $102.5 billion in U.S. Treasuries, ranking among the top 18 global holders, and its USDT circulation surged to nearly $120 billion. CEO Paolo Ardoino highlighted Tether's focus on stability and strategic investments in sectors like renewable energy and AI.

Short-term Bitcoin holders panic-sold 54,000 BTC ($3.76B) on exchanges as price dipped below $70,000

As Bitcoin retreated from near all-time highs, short-term holders (those holding less than 155 days) showed classic panic behavior, flooding exchanges with the largest single-day transfer since April. Their profit margins are evaporating, with the spent output profit ratio nearing breakeven at 1.01. Some traders, however, see this as typical pre-election jitters, noting similar patterns in 2016 and 2020.

GOLD

JP Morgan analysts predict that both Bitcoin and gold could see significant gains if Donald Trump wins the U.S. election

Driven by market uncertainty and the “debasement trade” against a potentially weaker dollar. A Trump victory could heighten inflation concerns and geopolitical tensions, bolstering gold and Bitcoin as safe-haven assets. Bitcoin, currently nearing an all-time high, is positioned alongside gold as an attractive hedge amid volatile economic conditions.

DAILY ECONOMIC CALENDAR (ET)

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