Reeves to put her stamp of authority, watch the bond market and sterlings reaction.

Stocks rose yesterday, as they do almost without fail, the week into Thanksgiving. It’s been quite a recovery for the S&P 500 over the past couple of days, though, strangely, not driven by Nvidia for a change. Nvidia is apparently beginning to lose some of its lustre. When one player gains a dominant position, it seems to charge what it wants; eventually, competition and the natural forces of economics take over. Meta is in discussions to use Google’s chips — known as tensor processing units, or TPUs — in its data centres in 2027, suggesting Google may be a credible alternative to Nvidia’s AI accelerators for training and operating today’s complex large language models. Do I really understand all this? No, not really, but it does mean Nvidia’s once apparently unrivalled position is being threatened.

What excuse are the market commentators giving for the sudden return of confidence, with investors dipping their toes back into the market? Basically, the renewed expectation is that the Fed will cut rates on the 10th of December, and there is increasing speculation about who will take over from Jerome Powell as Chairman in a few months’ time.

The market continues to get drip-fed the backlog of data. Now that the Government is back open again, yesterday’s September retail sales report and producer price index were a mixed bag and will probably have little impact on the Fed’s decision. Core Producer Prices advanced 0.1% on the month in September, a relatively moderate read.  September’s retail sales rose only 0.2%, as consumers may have held back in anticipation of Black Friday deals, which appear to be on us everywhere.

Obviously, today’s focus will be the budget; all leave will be cancelled in trading desks across London as we wait to see what Ms Reeves has in store for us. Surely she must do something that the market and the population of this country will applaud. My bet is something to do with Stamp Duty. Mansion taxes seem to be a given, although it will apparently only raise a few hundred million. Then what is being described as a smorgasbord of tax rises, which will probably make our tax system more complicated than it already is. All eyes will be on the bond market and sterling’s reaction.

Yesterday, Ms Reeves approved increases in the minimum wage above the rate of inflation, and for those who are still teenagers, way above. This may make good headlines for the government, but in reality, it just pushes up employers’ costs, and, as has been the case since they came to power, fewer people get paid more as wages will rise across the spectrum. It also makes it that much harder to get inflation back down to the Banks 2% target.