Headlines:
- Zcash jumps after US-Iran deal hopes improve crypto market sentiment. What to watch next?
- Crude oil volatility increases amid conflicting reports over US-Iran negotiations
- Connecting the dots: How rising government bond yields could hurt your retirement savings
- European markets steady for now but widening bond yield spreads offer a warning
- Bitcoin rallies on US-Iran deal hopes amid increasingly positive reports. What’s next?
- Macro pulse: Is the BOJ about to raise interest rates at the worst possible time?
- Silver whipsaws on conflicting US-Iran deal reports as markets hope for breakthrough ahead of midterms
- European stock market open: Stocks tread cautiously as French bond market keeps the mood in check
- Chart of the day: Gold price eyes $4,100 support as $4,200 resistance keeps bulls in check
- Why Treasury yields move together but become more volatile further out the curve
- What are the main events for today?
- UK September CPI inflation rises to 3.5%, reinforces BOE November rate hike expectations
- Social unrest pressures European markets
- GBP/EUR Surge: Can the Rally Continue?
- FX option expiries for 21 October 10am New York cut
- BOJ policymaker Himino warns of upside inflation risks as Japan nears 2% target
- HOLA PRIME SIMPLIFIES PROP TRADING RULES WITH LAUNCH OF IT’S RULEBOOK
Markets:
- WTI crude oil up 2.18% to $99.95
- Gold up 0.06% to $4,126
- AUD leads, EUR lags
- S&P 500 up 0.21% to 7771
- US 10y Treasury yield up 1 bps to 5.127%
- Bitcoin up 0.48% to $83,343
We had a pretty quiet session with no major news releases. The main highlight was the UK CPI report where the headline CPI rose to 3.5% y/y in September, up from 3.1% and slightly above the 3.4% expected, driven mainly by higher energy costs. Core CPI also accelerated to 2.8% from 2.6%, while services inflation climbed to 3.7% from 3.4%. The data sealed expectations for a 25 bps BoE rate hike in November, which markets had already priced at around 96%.
Other than that, we haven’t got anything market-moving. There were some headlines about Putin signalling a willingness to improve relations with the US. He said Russia is interested in restoring economic ties and could increase fertiliser supplies to the US. He also said Moscow is ready to help resolve the Iran situation and thanked Trump for his attention to a potential settlement in Ukraine.
ECB’s Kazaks said further monetary tightening may be necessary if inflation remains elevated, while noting that higher yields are already providing some additional tightening and could slow economic activity. He also said he sees no current conditions for excessive wage demands, with limited concern about wage-driven inflationary pressures.
Finally, Iran’s Foreign Minister said to the Financial Times that Tehran remains open to a diplomatic solution with the US but has little trust in Washington. He added that since the US has shown no willingness to reach an understanding, there is little reason to expect progress now.
Despite such comments, markets retain some hope given the sudden increase of positive reports and the proximity to the midterm elections. Trump might want to secure at least a short-term deal to bring energy prices and Treasury yields lower, while boosting the stock market. Time will tell, but he will likely need to make some major concessions.
This article was written by Giuseppe Dellamotta at investinglive.com.