Market News

FUNDAMENTAL OVERVIEW

Crude oil extended the gains yesterday as short-covering continued after Trump poured cold water on expectations of an earlier end to the Iran war. As a reminder, oil prices have been on a sustained downtrend recently on growing expectations of a de-escalation and improvements on Saudi Arabia oil pipeline and exports side. At the UN General Assembly, though, Trump repeated that the US would make a deal with Iran after the November elections.

Traders started to reprice earlier expectations and oil prices began rising again. This morning, we’ve also got a key technical breakout on WTI oil which increased the bullish momentum and opened the door for…

Williams is offering up a fairly straightforward assessment of the US economy and the policy outlook today. His key comments:

• The US economy has shown remarkable resilience
• The downside risks to achieve maximum employment have diminished
• The biggest obstacle now is inflation
• The Fed's aim is to return inflation to target promptly
• It seems "reasonable" to implement another rate hike by the end of the year
• The era of explicit and direct forward guidance is over
• We do not know if higher yields will continue to persist

The key takeaway for me is how Williams is framing the balance of risks. The Fed had already raised interest rates by 25 bps last week to 3.75% to 4.00%, reinforcing a "timelier" return towards returning inflation to the 2% target in…

FUNDAMENTAL OVERVIEW

Zcash extended the gains into new highs this week after the European asset manager 21shares has launched the first European ETP tied to Zcash. Moreover, on September 28, Grayscale's Zcash ETF (ZCSH) is scheduled to undergo a 3-for-1 share split, with split-adjusted trading beginning September 30. This could increase accessibility and retail trading activity, giving Zcash another boost.

On the macro side, the significant drop in oil prices on growing expectations of a de-escalation and an earlier end to the conflict supported risk assets recently. At the UN General Assembly, though, Trump poured some cold water on those expectations as he…

• Germany September Ifo business climate index 89.9 vs 89.1 expected
• Prior 88.8
• Germany September Ifo business expectations 90.4 vs 89.3 expected
• Prior 89.1; revised to 89.0
• Germany September Ifo current assessment index 89.5 vs 89.0 expected
• Prior 88.5

Things are looking on the up in Germany as the latest business climate index surveyed by Ifo rises further in September to its highest since May 2023.

Meanwhile, the outlook/expectations index also climbed further on the month in posting its fifth consecutive rise to the highest since February. That continues to underscore improving sentiment towards the German business outlook despite more challenging conditions from higher energy prices.

While the recent trend has been encouraging, it remains to…

Strong economic data is generally considered good news. When the economy is growing, consumers are spending, companies are producing more, employment is usually strong and corporate revenues and earnings have the potential to increase. It therefore seems logical that stronger economic growth should be positive for the stock market.

Yet financial markets do not always react that way and yesterday's US PMI data provided a good example. The Flash US Composite PMI showed that economic activity accelerated sharply in September, with growth reaching its strongest pace since 2021. At the same time, however, the survey showed renewed increase in price pressures, with input-cost growth reaching its highest level in almost four years. The…

The latest business and household confidence data released today:

• France September consumer confidence 86 vs 85 expected
• Prior 86
• France September business confidence 96 vs 97 expected
• Prior 98

French consumer sentiment is seen holding steady in September, although still keeping well below the long-term average reading of 100. The details reveal a slight rebound in households' opinion on future standard of living. The corresponding balance has risen by two points to -60, though also still well below the long-term average of -29. Meanwhile, unemployment prospects also showed an improvement with the corresponding balance there falling by three points to 55.

That is all offset by a drop in both current and expected saving capacity among consumers…

Stocks Hit as Oil and Yields Surge – Nasdaq down 1.1%

US equity markets came under significant pressure in trading yesterday as Treasury yields surged and oil prices rebounded sharply amid renewed geopolitical concerns surrounding Iran and the Strait of Hormuz.

The Dow Jones fell 0.68% to close at 51,151, while the S&P 500 declined 0.75% to 7,706. Technology stocks experienced the heaviest selling, with the Nasdaq dropping 1.13% to finish the session at 26,936.

US Treasury yields moved sharply higher across the curve. The policy-sensitive 2-year yield jumped 12.2 basis points to 4.897%, while the benchmark 10-year yield climbed 15.3 basis points to 5.114%, reaching levels not seen since 2007. The significant move higher in yields…

• Key policy rate 0%, as expected
• Prior decision

Statement details and updated forecasts to follow...

European equities are opening lower across the board today, as the latest surge in bond yields continues to weigh on broader risk sentiment. The opening changes:

• Eurostoxx -0.4%
• Germany DAX -0.6%
• France CAC 40 -0.4%
• UK FTSE -0.3%
• Spain IBEX -0.5%
• Italy FTSE MIB -0.5%

The losses are fairly broad-based, with the DAX leading the declines as European stocks take their cue from the more defensive mood in global markets.

The main drag at the moment is the bond market. 10-year Treasury yields have pushed back above the 5% mark, hitting 5.11% - its highest level since 2007. That is adding to concerns that financial conditions could tighten further if the selloff in bonds continues. That has already weighed on Wall Street in trading yesterday and the…

After a brief drop below the 158.00 level earlier in Asia trading, USD/JPY is finding itself pushing back to near three-week highs now at 158.30 levels.

The overnight high sits at 158.40, with the currency pair falling short of breaking a couple of key technical levels on the charts. The main catalyst for the drive to the upside is one that broader markets are also feeling, that being a break higher in Treasury yields.

The selloff in the bond market saw 10-year yields push beyond 5%, after having flirted with the question of a break all week. But yesterday, the bond vigilantes finally got a couple of catalysts to work with and ran with that.

The US flash PMI report for September came in much hotter than expected, with the composite reading…

●         Asian Stock Markets : Nikkei up 1.33%, Shanghai Composite down 0.93% Hang Seng down 0.50% ASX down 0.74%

●        Commodities : Gold at $4,318.76 (0.01%) Silver at $64.453 (-0.78%), Brent Oil at 102.18 (-0.86%), WTI Oil at 91.39 (-0.86%)

●        Rates : US 10-year yield at 5.116, UK 10-year yield at 5.3532, Germany 10-year yield at 3.4395

●        (USD)    Crude Oil Inventories   3.0M to 0.7M  expected

Stock futures were little changed Wednesday night after a sharp rise in Treasury yields triggered a market sell-off and increased expectations for another Federal Reserve rate hike.

S&P 500 futures edged up 0.02%, while Nasdaq-100 futures gained 0.08%. During…