The strongest to the weakest of the major currencies
The USD is the strongest of the major currencies (for the 2nd consecutive day to start the week). Yields moved higher yesterday which helped to push the USD higher. Today, rates are modestly lower, but the dollar is still ticking to the upside. German industrial production data surprised to the downside with a decline of -1.4% (vs expectations of -0.1%). That marked the 5th consecutive decline in that release indicative of a slowing from the largest economy in the EU.
The AUD is the weakest of the major currencies after the RBA of Australia raised rates by 25 basis points to 4.35% but tweaked a few words that indicated a potential softening of the policy stance going forward (see post here).
In October, China experienced unexpected growth in imports, providing a glimmer of hope for a recovery in domestic demand amid ongoing challenges. Import numbers defied expectations by expanding 3%, surpassing forecasts of a 4.8% decline and showing improvement compared to September’s 6.2% drop. This suggests that various support measures implemented by Beijing might be aiding a tentative revival. However, China still grapples with challenges stemming from a lingering real estate crisis and a relatively subdued global economic environment. Although imports surprised, Chinese exports declined by 6.4% year-on-year in October, missing projections for a 5.4% drop and worsening from the previous month’s 6.2% decrease. Recent business activity data also indicated that local firms, especially those in manufacturing, were feeling the effects of weakening overseas demand due to higher interest rates and persistent inflation pressures faced by foreign importers.
There are a number of Fed officials scheduled to speak today. Minneapolis Fed president Neil Kashkari has already spoken and said:
- Believes inflation and labor data should guide the Fed.
- The right policy stance will be determined by the economy
- If inflation starts to rise, it suggests the Fed’s job is not done
- No discussion at Fed about rate cuts
- Sees no evidence of the economy weakening.
- The economy is hot which makes me question if we’ve done enough
- The economy will tell us what the right level policy stances
Also scheduled to speak today includes:
- Fed President Goolsby
- Fed Governor Barr
- Fed Governor Waller
- Fed President Logan
The markets will be focused on the view that the Fed has done enough.
A snapshot of the markets as the NA session gets underway shows:
- Crude oil is trading down $1.15 or -1.42% at $79.70. At this time yesterday the price was trading at $81.64
- Spot gold is trading down $-19.22 or -0.97% $1958.62. At this time the price was trading at $1984.95
- Spot silver is trading down $0.49 or -2.12% at $22.51. At this time yesterday the price was trading higher at $23.14
- Bitcoin is trading at $34,738. This time yesterday the price was trading at $35,235.
In the US stock market, the major indices are trading modestly lower. The NASDAQ has been up 7 consecutive days. The S&P and Dow have been up for 5 consecutive days. Those strings are in jeopardy today
- Dow Industrial Average futures are implying a decline of -89.82 points. Yesterday the index rose 34.54 points or 0.10%
- S&P index futures are implying a decline of -9.9 points. Yesterday the index rose 7.64 points or 0.18%.
- NASDAQ futures are implying a decline of -7 points. Yesterday the index rose 40.5 points or 0.30%
In the European equity markets, the major indices are trading higher
- German DAX, -0.20%.
- France’s CAC, -0.54%
- UK’s FTSE 100, +0.01%
- Spain’s Ibex, -0.21%
- Italy’s FTSE MIB, -0.58% (10 minute delay)
In the Asia Pacific market, major indices closed mostly lower:
- Japan’s Nikkei index, -1.34%. On Monday the index rose +2.37%
- China’s Shanghai Composite Index, -0.04%. On Monday the index rose +0.91%
- Hong Kong’s Hang Seng index, -1.65%. On Monday the index rose +1.71%
- Australia’s S&P/ASX index, -0.29%. On Monday the index rose +0.28%
In the US debt market, yields are moving marginally higher:
- US 2Y T-NOTE: 4.944% +0.4 basis points. At this time yesterday, the yellows at 4.886%
- US 5Y T-NOTE: 4.582% -2.7 basis points. At this time yesterday, the yield was at 4.543%
- US 10Y T-NOTE: 4.626%, -3.5 basis points. At this time yesterday, the yield was at 4.603%
- US 30Y BOND: 4.796% -3.4 basis points. At this time yesterday, the others at 4.787%
- 2 – 10-year spread is at -31.6 basis points. This time yesterday, the spread was at -27.8 basis points
- 2 – 30 year spread is at -14.7 basis points. This time yesterday, the spread was at -9.7 basis points
In the European debt market, benchmark 10-year yields are mostly higher:
