Market 11/20: Successful 20-year bond auction, market continues to surge strongly

UST 20Y 4.78% lower than 4.79% pre-auction

Market continues to rally on low liquidity after successful auction session with SPX breaking above 4520.

Internal continues to maintain bullish bias for the day.

Oil prices surge ahead of OPEC meeting

Oil prices have risen again after two volatile days ahead of OPEC+ meeting on supply policy.

… even though currently, the weakening of the USD makes commodities more attractive (details below), oil prices are still rising high due to adjustments to new 2024 production quotas (chart below).

UAE - one of the key OPEC+ members declares readiness to increase 2024 production to 3.075 million barrels/day…

But Saudi Arabia, Iraq and Nigeria reduce production…

Below are the changes in new oil production quotas compared to current production (agreed upon by OPEC+ members).

USD plunges after favorable inflation data last week

USD drops the most in a year as declining inflation leads to expectations of early Fed rate cuts…

… USD supply in the market also becomes abundant as investors start buying back US stocks and financial assets.

After weak inflation data was released, traders increased bets that the Fed will start cutting rates in mid-2024 (around May or June).

USD strength over the past year has kept the commodity market quite dull. However, last week's USD decline is a positive sign for the commodity market to heat up again.

US Leading Economic Indicators (LEI) weaken for the 19th consecutive month

Conference Board's Leading Economic Indicators (LEI) continued to decline in October, down -0.8% MoM, worse than expected.

The most positive contribution to LEI was building permits +0.03M/M.
The most negative contributions were new orders and average consumer expectations, both declining -0.22% M/M.

Despite soft-landing hopes, the LEI shows no signs of 'recovery', and has now fallen to levels equivalent to March 2006.

LEI growth down -7.6% YoY - nearly matching the decline at the same time in 2008.

LEI's annual growth rate remains negative, indicating economic activity is still weak.

LEI's trajectory continues to signal a recession in the next 12 months.

Update on OpenAI's drama-filled week:

11/18: Sam Altman, founder of OpenAI and ChatGPT, unexpectedly fired.
11/19: OpenAI board reconsiders and proposes to bring Sam Altman back as CEO after less than 24 hours.
11/20:
- Altman will not return to OpenAI and is preparing to start a new AI company.
- Microsoft hires former CEO Sam Altman after the shocking dismissal to lead an advanced AI research team.
- Hundreds of employees threaten to resign with Altman unless the board resigns (OpenAI's current total employees around 700).

Some other news:

Citigroup announces layoffs of 300 senior managers, equivalent to 10% of total managers.

Biden's approval rating drops to 40% - lowest in his term.

60% of people living “paycheck to paycheck” (spending all their salary) ahead of the holidays.

Bitcoin surges after candidate Javier Milei (a Bitcoin supporter) is elected President of Argentina.
- … known that Javier Milei is an extremely libertarian politician intending to eliminate the Central Bank of Argentina, supports bitcoin, and create a transparent economic legal system.

Deutsche Bank is expected to record a $350 million loss from purchasing an office building in NYC in 2014 after its main tenant, Bank of America, leaves.
- This coincides with WeWork planning to cancel leases for 70 properties due to bankruptcy.