Forexlive Americas FX news wrap: Bonds buy Bessent, Middle East peace hopes weigh on oil

• Israel and Lebanon agree to terms of a ceasefire – report
• Geopolitics: Israel government has reservations about details of agreement on ceasefire
• ECB’s Nagel: increasingly confident over disinflation
• Fed’s Goolsbee: Interest rates will be lower by the end of 2025
• US sells 2-year notes at 4.274% vs 4.292% WI
• ECB’s Lane: Gradualism is not a universal principle, some times require stronger response
• Dallas Fed manufacturing business index -2.7 vs -3.0 prior
• Chicago Fed November national activity index -0.40 vs -0.28 prior
• OPEC+ reportedly set to hold December meeting online
• It’s all about Scott Bessent today. Five things to know about the incoming Treasury Sec
• How did Scott Bessent stack up as a fund manager?
• Scott Bessent understood that Japanese easing was a negative for the yen, but little else
• Belgian business confidence -11.1 vs -12.8 prior
• Jack Smith asks judge to dismiss the election interference case against Donald Trump

Markets:

• Gold down $85 to $2627
• US 10-year yields down 14 bps to 4.26%
• WTI crude oil down $2.17 to $69.07
• S&P 500 up 0.2%, Russell 2000 up 2%
• CHF leads, USD lags

Today was all about incoming Treasury Secretary Scott Bessent and the market is clearly happy to have an FX guy in the room (as anyone would be) and also an adult in the room. He’s seen as a moderating force against tariffs and other policies that could stabilize markets. It was certainly a great start for him as stock markets and bond markets cheered.

The losers on the day weren’t about the Treasury Dept but rather about the State Dept as it looks as though Israel and Lebanon will announce a ceasefire tomorrow. That’s great for world peace but not so great for gold and oil, which sold off hard on the news, likely adding to the rally in Treasuries.

Finally, the strong 2-year auction underpinned real money demand for short-dated notes paying around 4.3%, which isn’t bad but is still impressive on a day where the Russell 2000 rallied 2% to a closing record. That was helped by banks and expectations of looser regulations around holdings.

In FX, the dollar sagged in Asia and Europe but recovered some ground in the US, despite yields falling further. The euro and pound both gave back around 50 pips and USD/JPY bounced strongly from 153.50 before stalling 100 pips higher. Commodity currencies were less volatile as their gains were tempered by weakness in commodities.

This article was written by Adam Button at www.forexlive.com.