US Market Outlook: Dollar Buys Strengthen, Number of New US Unemployment Insurance Claims Decrease More Than Expected, Dow Average Starts at 101 Dollars Higher

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Expected fluctuation rate of US stocks, low level interest rate hike for the first time in 2 months, end of observation
The “VIX Index,” which indicates the expected fluctuation rate of US stocks, is declining. It fell for 3 consecutive days until the 21st, and hit a low level of 13.35 for the first time in about 2 months since 9/14. The view that interest rate hikes will end by the US Federal Reserve (Fed) has spread, and the sense of caution against rising interest rates has faded.

The number of new US unemployment insurance claims declined more than expected in response to dollar purchases
The number of new US unemployment insurance claims for the previous week was 209,000, which fell below market expectations of 227,000. Along with rising US bond yields, there has been a reaction of dollar purchases. However, since the October US durable goods orders and preliminary report prices announced at the same time fell more than expected to -5.4% from the previous month, the movement to buy dollars is limited.

Even if the US growth rate is less than 1%, it is enough for a double-digit return on investment grade bonds - JP Morgan
JPMorgan Chase indicated that although it does not have such high expectations for US economic growth in 2024, the spread of US investment grade corporate bonds, which have already shrunk to a level for the first time in about 4 months, has further shrunk, and there is a large probability that returns will grow enough to set a level for the first time in 5 years by the end of next year.

OpenAI agrees to return Altman to CEO
US Open AI, which developed the interactive AI (artificial intelligence) “chat GPT,” announced that Sam Altman will return as Chief Executive Officer (CEO). It was revealed in a post on X (old Twitter) 21 days late.

Ripples and speculations of “slimming drugs” spread in the US stock market
“Slimming drugs” are attracting interest in the US stock market. While stock prices of pharmaceutical companies that handle development have risen drastically, stocks whose stock prices fall from observations that changes in consumption behavior will have an impact on a wide range of sectors such as food are also conspicuous. The market size is expected to expand mainly in the US, where 40% of adults are obese, and trading ahead of expectations is spreading.

Higher Defaults, Higher Returns on Bonds - Alliance Bernstein
Even if the number of companies falling into default (default) due to interest rates remaining high increases next year, there are many investment opportunities in the corporate credit market. This is how Gershon Disstenfeld, the bond co-manager of Alliance Bernstein, sees it this way. According to him, corporate defaults are expected to rise next year, but the market has already factored in that risk. In other words, bond investors can continuously secure high yields and coupons without having a big impact on the market during that time.

U.S. Bank of Japan, Funding Costs Remain “Permanently” High - Apollo's Mr. Slock
Torsten Slock of Apollo Management pointed out that in the wake of the turmoil in March, which brought agitation to the financial sector and markets, US and regional banks remained “permanently” high compared to major banks. Chief economist Mr. Throck analyzed in his report on the 21st that 8 months have passed since the management collapse of Silicon Valley Bank (SVB), but “major banks continue to enjoy fundraising costs far below regional banks, and as a result, profit margins continue to rise.”