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Financial Market in Focus: November 3

11/03/2023

On this Friday, November 3, 2023, the financial market was stirred by the release of macroeconomic data that defied expectations. The possibility that the interest rate tightening cycle in the United States may have come to an end has excited investors, while the weakening economy could prompt the US Central Bank to reduce interest rates in the near future.


Following the Federal Reserve's decision to keep interest rates unchanged last Wednesday, all eyes were on President Jerome Powell's remarks. His suggestion that the monetary tightening cycle may have concluded grabbed attention. In particular, Powell highlighted that the recent rise in government bond yields since mid-year was fulfilling the central bank's mission, reducing the need for further rate hikes by the Fed.


Regarding the job market, the United States created 150,000 jobs outside the agricultural sector in October, falling short of the expected 180,000 positions. The unemployment rate experienced a slight increase from 3.8% to 3.9%, surpassing stability projections. Meanwhile, the average hourly wage for non-agricultural private payroll workers in the US increased by 0.2%, reaching $34.00. Over the past 12 months, there has been a 4.1% increase in the average hourly wage.


Activity indices also did not go unnoticed. The Institute of Supply Management (ISM) index on the US services sector activity fell to 51.8 points in October, below the expected 53 and the 53.6 points recorded in September. On the other hand, the Services Purchasing Managers' Index (PMI), which compiles data on industrial, services, and construction activity, rose to 50.6 points in October, surpassing the 50.1 of September but falling short of the expectations of 50.9.


In summary, the release of this macroeconomic data has spurred positive fluctuations and bolstered expectations in the financial market, with a particular focus on the potential conclusion of the interest rate tightening cycle in the United States and its impact on investment strategies.

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