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The week in the markets –
October 25, 2024
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Bond yield spikes prompted a shift away from equities
- Equity bulls finally woke up to what’s been happening with bonds, as the U.S. 10-Year Treasury yield climbed.
- U.S. inflation fears and a resilient economy are cooling hopes for quick rate cuts.
- Tesla shone during Wall Street’s earnings season.
It looks like the recent spike in bond yields has finally caught the attention of equity market bulls. It was time. Maybe partly spurred by the so-called "Trumpflation” risk, we’ve seen a major shift in expectations for future rate cuts, particularly for next year, with rates likely to remain higher. The 10-Year Treasury yield climbed to 4.24%, marking the highest level since late July. Meanwhile, the U.S. dollar had strengthened significantly by Wednesday, with the U.S. Dollar Index climbing above 104.5. On the other side of the world, the yen plunged to 153, its lowest point since July.
This broader sentiment among investors of reducing exposure to risk emerged as aggressive bets for rapid rate cuts were tempered, due to growing concerns about persistent inflation and a resilient U.S. economy. Speculation about a Republican sweep in upcoming elections has added to these inflation worries, further supporting the case for a slower pace of monetary easing. Comments from U.S. Federal Reserve officials earlier this week largely signalled that they, too, favour a more cautious approach to reducing rates.
Amid the bond market drama, earnings season continued to unfold on Wall Street. Tesla saw its stock surge by 20% (marking its biggest post-earnings jump since late 2019), after the company posted its highest quarterly profit in over a year and issued promising targets for 2025. On the flip side, IBM shares dropped by 4%, due to disappointing third-quarter revenues, particularly in its consulting and infrastructure divisions. Meanwhile, Nvidia supplier SK Hynix reported record profits, driven by booming demand for AI-related products. Traders are now braced for more tech earnings, with Alphabet, Amazon and Meta set to report next week. Having consistently lowered expectations this quarter, the bar for beating earnings estimates has been set unusually low.
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This week's market closing value - week ending October 25, 2024
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 24,476.04 | -337.78 | -1.36% | 16.78% | 29.18% | 8.33% |
| S&P 500 | 5,810.88 | -51.00 | -0.22% | 27.68% | 39.80% | 15.39% |
| DJIA | 42,114.40 | -1,161.51 | -2.05% | 17.16% | 28.40% | 10.70% |
| FTSE 100 | 8,248.84 | -109.41 | -1.29% | 13.73% | 19.91% | 3.91% |
| CAC 40 | 7,497.54 | -115.51 | -1.50% | 1.92% | 11.58% | 6.32% |
| DAX | 19,463.59 | -193.78 | -0.97% | 19.15% | 34.50% | 9.37% |
| Nikkei | 37,913.92 | -1,067.83 | -3.86% | 10.05% | 20.49% | 4.78% |
| Hang Seng | 20,590.15 | -213.96 | -0.38% | 27.27% | 22.19% | -3.69% |
| CURRENCY RETURNS |
CAD | Change | WTD | YTD | 1-year | 5-year |
| US$ | 1.3897 | 0.0090 | 0.65% | 4.85% | 0.72% | 1.25% |
| Euro | 1.5002 | 0.0002 | 0.02% | 2.54% | 2.91% | 0.73% |
| Yen | 0.0091 | -0.0001 | -1.15% | -2.87% | -0.62% | -5.35% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 3.51 | -0.17 | Oil | $71.68 | $2.21 |
| 5-year | 3.03 | 0.12 | Gold | $2,742.80 | $23.13 |
| 10-year | 3.26 | 0.13 | Natural Gas | $2.55 | $0.28 |
| CANADIAN PRIME RATE |
|---|
| 5.95% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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