The AUD is the strongest and the CHF is the weakest as the North American session begins. The USD is mostly stronger with declines only vs the GBP (-0.12%) and the AUD (-0.13%). The strongest gain has been in the NZD (0.24%) and the JPY (+0.19%).
Yields are little changed/mixed to start the trading week in the US. US stocks are lower after strong gains on Friday. Major indices were positive for the 2nd week in a row and each of the major indices all closed back above their 100 day MAs (and the highest of the 50 and 200 day MAs). Bullish.
This week the US CPI will be a key release when it is released on on Tuesday. It is expected to show a 0.1% monthly increase, with September’s CPI rising unexpectedly by 0.4% due to higher rental costs. Year-on-year, consumer prices are predicted to rise by 3.3%, down from 3.7% the previous month. The core CPI, which excludes volatile items like food and energy, is projected to increase by 0.3% monthly and 4.1% annually. Both measures are still above the 2.0% target from the Fed. This data is crucial for the Fed as it considers its final rate decision of 2023 in December. Fed Chair Jerome Powell has expressed concerns about the ability of current borrowing costs to bring inflation down to the central bank’s 2% target, but there is a lot of tightening by the Fed (and by the market in the longer end), that gives traders some cause for pause with regard to future policy actions. Having said that, the chatter last week from US Fed members was that inflation is not fully solved and the Fed may have to continue tightening bias.
Other key events this week include:
Australia wage price index (Wednesday)
China industrial production (Wednesday)
UK CPI (Wednesday)
US PPI (Wednesday)
US Empire State Manufacturing index (Wednesday)
US retail sales (Wednesday)
Australian employment (Thursday)
US initial jobless claims (Thursday)
UK retail sales (Friday)
UK GDP (Friday)
The earnings calendar is over with most of the big names but there will be a few big box retailers reporting this week:
Home Depot will report on Tuesday, Target on Wednesday, Walmart, and Macy’s on Thursday.
Investors are interested in these reports for insights into the outlook for recent consumer spending and expectations for the future as we head into the closely watched holiday shopping season. Recent data has shown a decline in U.S. consumer sentiment and concerns about inflation. US retail sales for October will be released on Wednesday.
IN geopolitical news this week, U.S. Pres Biden and Chinese President Xi are scheduled to meet face-to-face during a summit in San Francisco. The main focus of the meeting, according to White House National Security Adviser Jake Sullivan, is to re-establish communication and ties between the U.S. and Chinese militaries to prevent mistakes or miscommunication. Additionally, discussions are expected to cover various global topics, including Taiwan, the Israel-Hamas conflict, the development of artificial intelligence, and trade.
A snapshot of the markets as the NA session gets underway shows:
Crude oil is trading up $0.13 or 0.17% at $77.30. At this time on Friday, the price was trading at $76.74.
Spot gold is trading down $-2.70 or -0.14% at $1935.33. At this time on Friday, the price was trading at $1946.20.
Spot silver is trading down $0.17 or -0.75% at $22.08. At this time on Friday, the price was trading at $22.51.
Bitcoin is trading at $36,957. On Friday, the price was trading at $37,103. Over the weekend the price traded as high as $37,422 and as low as $36,673
In the US stock market, the major indices are trading marginally lower. The NASDAQ snapped its nine-day winning streak on Thursday while the S&P’s 8 day streak was ended on the same day. However, each of those indices closed sharply higher on Friday and all 3 indices closed above their 100 day moving averages.
Dow Industrial Average futures are implying a decline of -36 points. On Friday the index rose 391.16 points or 1.15%. It’s 100 day moving averages out 34266.16
S&P index futures are implying a decline of -8.0 points. On Friday the index rose 67.87 points or 1.56%. It’s 100 day moving averages at 4402.54
NASDAQ futures are implying a decline of -36 points. On Friday the index rose 276.66 points or 2.05%. It’s 100 day moving averages down at 13618.08
In the European equity markets, the major indices are trading marginally higher
German DAX, +0.18%
France’s CAC, +0.23%
UK’s FTSE 100, +0.56%
Spain’s Ibex, -0.12%.
Italy’s FTSE MIB, +0.90% (10 minute delay)
In the Asia Pacific market, major indices closed mostly higher
Japan’s Nikkei index, +0.05%.
China’s Shanghai Composite Index, +0.25%
Hong Kong’s Hang Seng index, +1.30%
Australia’s S&P/ASX index, -0.40%
In the US debt market, yields are mixed with the two-year down marginally and the longer end higher
US 2Y T-NOTE: 5.060% -0.2 basis points at this time on Friday, the yield was at 5.007%
US 5Y T-NOTE: 4.676% +1.1 basis points. At this time on Friday, the yield was at 4.618%
US 10Y T-NOTE: 4.643% +1.8 basis points at this time on Friday, the yield was at 4.600%
US 30Y BOND: 4.759% +2.7 basis points. At this time on Friday, the others at 4.725%
2 – 10-year spread is at -41.4 basis points. This time on Friday, the spread was at -41.2 basis points
2 – 30 year spread is at – -30.0 basis points. This time on Friday, the spread was at -26.9 basis points
In the European debt market, benchmark 10-year yields are higher: