Market News

FUNDAMENTAL OVERVIEW

Silver has been under heavy pressure recently as Treasury yields and the US dollar have continued to rise amid a deteriorating geopolitical backdrop and renewed strength in oil prices.

Silver could come under further pressure in the coming days if oil prices extend their gains following reports from The Atlantic that the White House asked the Pentagon to develop military options for strikes against Iranian targets, potentially before the midterm elections.

Moreover, the Pentagon has reportedly instructed the US Central Command (CENTCOM) to complete preparations for potentially resuming major combat operations, according to Axios.

No final decision has been…

• Prior week 197K

• Initial claims: 197,000 vs 200,000 expected. Prior revised to 199,000 from 197,000.
• Initial claims four-week average: 198,000, down 2,500. Prior revised to 200,500 from 200,000.
• Continuing claims: 1.716 million vs 1.708 million expected. Prior revised to 1.699 million from 1.701 million.
• Continuing claims four-week average: 1.711 million, down 12,250. Prior revised to 1.72325 million from 1.72375 million.
• Insured unemployment rate: 1.1%. Prior 1.1%.

The US weekly claims report was mixed relative to expectations, with fewer new claims than forecast but continuing claims slightly higher than expected. Initial claims fell 2,000 to 197,000 for the week ending October 3, according to the US Department of Labor. The four-week average…

• Policymakers should strengthen core financial markets so they can absorb future shocks without amplifying them
• We must strengthen the resilience of core markets
• Greater absorbtion of government debt has come with greater fragility
• When shocks become more frequent, underlying growth is weaker and the succession of shocks leads to a higher level of gov't debt
• It's much harder to use the balance sheet to cusion a severe downturn
• We are seeing volatile markets
• Market moves are some way from normal but we are not seeing illiquidity or stress

When he's talking about core markets, I take that as meaning gilts and market plumbing.

What's striking is the sudden urgency. The rising in yields has sharpened central bankers to their core roles and highlighted…

In the morning Kickstart video above, I take a look at the three major currency pairs—EURUSD, USDJPY and GBPUSD—from a technical perspective. For each pair, I outline the bias, the risk-defining levels and the targets that would give either the buyers or sellers more control. With all three trading within 0.15% of unchanged, the focus is on what would trigger the next shove.

The bigger moves to start the North American session are in oil, bonds and stocks. Crude oil is sharply higher, Treasury yields are moving higher, and U.S. stock futures point to another lower opening.

The moves come as reports suggest President Trump is weighing renewed strikes on Iran, potentially ahead of the November midterm elections. Meanwhile, Fed Governor…

Markets:

• 10-year Treasury yields up 6 bps to 5.345%
• WTI crude up 4.1% to $92.60
• USD leads, AUD lags on the day
• Gold up 0.2% to $4,121
• European stocks lower; S&P 500 futures down 0.6%
• Bitcoin down 1% to $82,451

Once again, investors are dealing with the same old story in markets in European morning trade today.

The bond market continues to come under pressure and that is leading to a more negative risk backdrop while underpinning the dollar. At the same time, higher oil prices are only adding fuel to the fire in reigniting the "higher for longer" narrative amid worries about more persistent inflation risks.

The standout remains long-end Treasury yields, with 10-year yields rising further to above 5.34% after the brief fall in late US trading…

FUNDAMENTAL OVERVIEW

USD:

The US dollar has been supported recently despite a dovish repricing triggered by Fed’s Williams and Fed’s Jefferson comments that pushed back against expectations of a rate hike in October.

The main reason was surging Treasury yields and risk-off flows into the greenback supported also by European debt concerns. The focus has been particularly on France, where political uncertainty and concerns over the country's large fiscal deficit have pushed French government bond yields higher and widened the spread over German Bunds to its highest level since the eurozone debt crisis.

A stabilization in French spreads could allow some of the…

FUNDAMENTAL OVERVIEW

Zcash has come under heavy selling pressure in recent days, but there hasn’t been a major negative Zcash-specific catalyst behind the move. In fact, there was a broader crypto market selloff as rising oil prices, Treasury yields and the US dollar have pressured risk assets.

In terms of Zcash-specific news, there were actually some further positive developments during the selloff. The Winklevoss Asset Services filed an S-1 on October 6 for a proposed spot Zcash ETF that would hold ZEC directly, with Winklevoss Capital indicating non-binding interest in purchasing up to $100 million of shares. The filing adds another potential institutional-demand…

If you've been following China's messaging on the yuan over the past few months, the latest remarks from the PBOC today should sound rather familiar.

The central bank is once again reiterating that Beijing has neither the need nor the intention to weaken its currency in order to gain a competitive advantage in international trade. And let's not beat around the bush here, there is a subtle dig at the US and Trump buried in that message.

In any case, the key takeaway here isn't so much what is being said but rather how consistently Beijing is choosing to reinforce said message.

PBOC governor, Pan Gongsheng, has been making the same point for much of this year. He already did so back in March, before repeating it again in early September. As…

BOE monetary policy committee member, Megan Greene, is continuing to sound the alarm over persistent inflation risks in the UK, with her latest remarks today offering little reason to think that she will be backing away from her more hawkish stance.

• I do think UK will see some second-round effects from current inflation cycle
• Early indications are that UK wages will grow around 3.5% next year, and that worries me

Her remarks aren't exactly all too surprising, considering her recent policy leaning. As a reminder, Greene was among the three policymakers at the central bank who voted for a 25 bps rate hike in September. She argued that waiting for clearer evidence of persistent inflation could leave the central bank having to play catch-up down…

FUNDAMENTAL OVERVIEW

Crude oil is surging again as the risk of renewed US military action against Iran increases. Reports that the White House has asked the Pentagon to develop options for strikes against Iranian targets, potentially before the US midterm elections, have raised concerns that the recent period of relative de-escalation could be coming to an end.

The Pentagon has also reportedly instructed US Central Command (CENTCOM) to complete preparations for potentially resuming major combat operations. While no final decision has been made, the possibility of strikes on Iranian infrastructure, combined with the risk of retaliation against US or Gulf…

Ah, remember the days when borrowing money was almost ridiculously cheap? That did not seem too long ago but I think we can safely say that those days are looking rather distant now.

Judging by how bond yields have continued to surge to fresh highs in decades, it seems that one thing is rather clear. If you want investors to part with their money, then you're simply just going to have to pay up. And that is probably not something that governments want to hear right now.

But at the same time, I reckon we're all getting a rather uncomfortable reminder that money actually has a price. Now, what exactly does that mean?

Well, just imagine you want to borrow $100,000 to start a business. If the interest rate is at 2%, you're paying $2,000 annually…