- US stocks ultimately closed in the red following a choppy session with underperformance seen in the Russell 2k as participants digested the latest data releases including firmer-than-expected consumer inflation and an increase in jobless claims. As such, the majority of sectors were on the back foot although energy outperformed as oil prices gained alongside the backdrop of the ongoing geopolitical tensions as participants await Israel's response to Iran.
- USD was ultimately flat after two-way price action amid mixed data including a jump in Initial Jobless Claims and firmer-than-expected CPI, while there were several comments from Fed speakers including Bostic who said he was comfortable with skipping a meeting if the data suggests it is appropriate and he suggested they should maybe take a pause in November following the CPI data.
- Looking ahead, highlights include New Zealand PMI & Food Price Index, Japanese Money Supply, BoK Rate Decision, Supply from Australia, Holiday Closure in Hong Kong.
More Newsquawk in 2 steps:
1. Subscribe to the free premarket movers reports
2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days
LOOKING AHEAD
- Highlights include New Zealand PMI & Food Price Index, Japanese Money Supply, BoK Rate Decision, Supply from Australia, Holiday Closure in Hong Kong.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks ultimately closed in the red following a choppy session with underperformance seen in the Russell 2k as participants digested the latest data releases including firmer-than-expected consumer inflation and an increase in jobless claims. As such, the majority of sectors were on the back foot although energy outperformed as oil prices gained alongside the backdrop of the ongoing geopolitical tensions as participants await Israel's response to Iran.
- SPX -0.21% at 5,780, NDX -0.13% at 20,242, DJIA -0.14% at 42,512, RUT -0.55% at 2,188.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Barkin (2024 voter) said inflation is headed in the right direction and the Fed is trying to balance risks to labour market and inflation. Barkin said inflation is down significantly but cannot declare victory and noted risks that low rates could boost housing demand.
- Fed's Bostic (2024 voter) said he is totally comfortable with skipping a meeting if the data suggests that’s appropriate, while he commented regarding the US CPI data that the choppiness is along the lines of maybe they should take a pause in November which he is definitely open to. Furthermore, he thinks they have the ability to be patient and wait and let things play out a little longer, according to an interview with WSJ.
- Fed's Williams (voter) said he expects the economy will allow the Fed to cut rates further with the pace and size of future cuts to be determined by economic data. Williams also commented that economic activity is largely balanced across the economy and the latest data has been consistent with recent trends, while he noted disinflation is pretty steady despite wiggles.
- Fed's Goolsbee (2025 voter) said inflation came in around expectations and with improvement on the housing front, while the overall trend is clearly that inflation has come down a lot and the job market has cooled to a level of full employment, according to CNBC.
DATA RECAP
- US CPI YY NSA (Sep) 2.4% vs. Exp. 2.3% (Prev. 2.5%)
- US Core CPI YY NSA (Sep) 3.3% vs. Exp. 3.2% (Prev. 3.2%)
- US Initial Jobless Claims w/e 258.0k vs. Exp. 230.0k (Prev. 225.0k)
- US Continued Jobless Claims w/e 1.861M vs. Exp. 1.83M (Prev. 1.826M, Rev. 1.819M)
FX
- USD was ultimately flat after two-way price action amid mixed data including a jump in Initial Jobless Claims and firmer-than-expected CPI, while there were several comments from Fed speakers including Bostic who said he was comfortable with skipping a meeting if the data suggests it is appropriate and suggested they should take a pause in November following the CPI data.
- EUR was choppy and reversed most of its early losses after bouncing off support at the 1.0900 level, while ECB Minutes provided little incrementally and noted continuing uncertainty meant that there were two-sided risks to the baseline outlook.
- GBP softened but was off today's worst levels as attention turns to a deluge of UK data including monthly GDP.
- JPY was firmer with USD/JPY back beneath the 149.00 handle amid the cautious mood, while BoJ Deputy Governor Himino reiterated the view that the BoJ will raise rates if the outlook for economic activity and prices is achieved.
- SNB vice-chairman said price stability is the key thing they do at the SNB and stated that the primary tool of the SNB is the interest rate and FX transactions are a secondary tool.
FIXED INCOME
- T-notes settled marginally lower with price action choppy owing to the US data, hawkish Bostic, and a strong 30yr auction.
COMMODITIES
- Oil prices climbed throughout the session amid the ongoing geopolitical situation with the Israeli security cabinet expected to approve Israel's response plan to Iran. However, oil prices pared some of the gains in late trade after a report that US President Biden and Israeli PM Netanyahu narrowed the gaps regarding the nature of Israel's response against Iran, while it was previously reported that Biden had asked Israel not to attack nuclear or oil facilities in Iran.
- US Gulf ports have begun to reopen following on from Hurricane Milton, according to the Coast Guard.
- Chile's Codelco copper production rose 10.1% Y/Y in August to 125.3k tons, Escondida output rose 15.5% Y/Y to 105.3k tons and Collahuasi output fell 11.3% Y/Y to 48.8k tons.
GEOPOLITICAL
MIDDLE EAST
- Israeli security cabinet is expected to approve Israel's response plan to Iran, according to NYT.
- US President Biden and Israeli PM Netanyahu narrowed the gaps regarding the nature of Israel's response against Iran, according to Walla News' Ravid citing three US officials. The officials noted that Netanyahu and Biden made significant progress during their phone call in achieving an understanding of the scope of Israel's retaliation against Iran, while the administration was "a little less worried" after the call, and another official said "We are moving in the right direction".
- US President Biden asked Israel not to attack nuclear or oil facilities in Iran, while Israeli PM Netanyahu said it is a historic opportunity, according to Israel's Channel 14.
- US President Biden realised that Israel is interested in a greater response to Iran than he expected, according to Al Arabiya citing Israel Broadcasting Corp.
- Gulf states are reportedly lobbying the US to stop Israel from attacking Iranian oilfields, via Reuters citing sources
- Senior Hezbollah figure Wafiq Safa reportedly survived an Israeli assassination attempt in Beirut, according to Reuters citing sources.
- Iran and Oman conducted joint army drills for the first time, according to IRNA.
- Russia’s Kremlin said President Putin is to discuss the Middle Eastern situation with Iran’s President, according to IFX.
OTHER
- Ukrainian Presidential Advisor Lytvyn denied earlier reports in Corriere della Sera that Ukrainian President Zelensky would be "willing to accept a ceasefire along the current line - without recognizing a new official border - in exchange for certain Western commitments". Furthermore, Russia's Kremlin also said they have not received any signals from Ukraine that it is ready for a ceasefire.
- NATO Chief Rutte said NATO is to hold an annual nuclear exercise, Steadfast Noon, from this Monday.
- China's Taiwan affairs office said Lai incited hostility and confrontation across the Taiwan Strait, while it added that constant provocations have deliberately exacerbated cross-strait tensions and seriously undermined peace and stability in the Taiwan Strait.
- China’s Foreign Ministry imposed sanctions against three US military firms and ten senior executives over US arms sales to Taiwan from Thursday.
ASIA-PAC
NOTABLE HEADLINES
- China's State Planner published draft guidelines on private economy promotion law and will be improving investment and the financing environment while reducing transaction costs.
- Republican Presidential candidate Trump said he will bar all Chinese autonomous vehicles from travelling on US roads.
- BoJ Deputy Governor Himino said they are witnessing record high corporate profits and record high wage increases in Japan, while he added if the outlook for economic activity and prices presented in the July report is achieved, the BoJ will accordingly raise interest rates.
EU/UK
NOTABLE HEADLINES
- French Budget is to cut spending and raise taxes to hit a 5% deficit in 2025, while the Budget bill is to raise EUR 2bln from the temporary tax increase on wealthy households and is to raise EUR 8bln with surtax on 440 largest firms.
- ECB Minutes stated that incoming data confirmed growth in global activity had been resilient, although recent negative surprises in PMI manufacturing output indicated potential headwinds to the near-term outlook. Furthermore, it stated that continuing uncertainty meant that there were two-sided risks to the baseline outlook, while there were scenarios in which it might be necessary to suspend the cutting cycle for a while.
