- US stocks were choppy and the major indices ultimately finished little changed on the day amid a lack of any fresh major macro catalysts and with participants tentative as they continued to await Israel's response to Iran. Sectors were mixed following a deluge of earnings with Industrials and Materials the laggards as the former was weighed on by disappointing GE Aerospace and Lockheed Martin earnings, while Consumer Staples was the notable outperformer. Furthermore, geopolitics remained in the spotlight with sources noting the Israeli army has completed its preparations to attack Iran and it seems that it will be within days.
- USD eked marginal gains in which the DXY reclaimed the 104.00 level amid slight upside in yields and touted ongoing Trump trade heading into the US election in two weeks, although price action was quiet with a lack of fresh catalysts and a light calendar.
- Looking ahead, highlights include Japanese Chain Store Sales & Singapore CPI, Supply from Australia.
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LOOKING AHEAD
- Highlights include Japanese Chain Store Sales & Singapore CPI, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were choppy and the major indices ultimately finished little changed on the day amid a lack of any fresh major macro catalysts and with participants tentative as they continued to await Israel's response to Iran. Sectors were mixed following a deluge of earnings with Industrials and Materials the laggards as the former was weighed on by disappointing GE Aerospace and Lockheed Martin earnings, while Consumer Staples was the notable outperformer. Furthermore, geopolitics remained in the spotlight with sources noting the Israeli army has completed its preparations to attack Iran and it seems that it will be within days.
- SPX -0.05% at 5,851, NDX +0.11% at 20,384, DJIA -0.02% at 42,925, RUT -0.37% at 2,232
- Click here for a detailed summary.
NOTABLE HEADLINES
- JPMorgan (JPM) CEO Jamie Dimon privately supports Democratic presidential candidate Harris and would consider a role in a Harris administration, perhaps as Treasury Secretary but isn’t making his stance known publicly because he’s fearful that if Trump wins, he could retaliate against the people and companies who publicly opposed his run and his associates, according to New York Times.
DATA RECAP
- US Richmond Fed Comp. Index (Oct) -14.0 (Prev. -21.0)
- US Richmond Fed Mfg Shipments (Oct) -8.0 (Prev. -18.0)
- US Richmond Fed Services Index (Oct) 3.0 (Prev. -1.0)
FX
- USD eked marginal gains in which the DXY reclaimed the 104.00 level amid slight upside in yields and touted ongoing Trump trade heading into the US election in two weeks, although price action was quiet with a lack of fresh catalysts and a light calendar.
- EUR remained pressured with EUR/USD trickling beneath the 1.0800 level amid a plethora of ECB speakers whereby several continued to point to more cuts ahead.
- GBP was ultimately flat on the day following with price action in GBP/USD choppy on both sides of the 1.3000 level.
- JPY mildly softened with USD/JPY back above the 151.00 level owing to the slight upside in US yields.
FIXED INCOME
- T-notes were choppy and ultimately extended on recent declines amid a lack of fundamentals and as yields continued to edge higher.
COMMODITIES
- Oil prices were underpinned by geopolitical updates with Israeli PM Netanyahu reported to hold consultations on Tuesday night to discuss Israel’s response to Iran’s missile attack and there were also reports that Iranian embassy officials were involved in the drone attempt on Netanyahu and his abode, while Israeli media noted that Israel’s army completed its preparations to attack Iran and it seems that it will be within days.
- Private inventory data (bbls): Crude +1.6mln (exp. +0.3mln), Distillate -1.5mln (exp. -1.7mln), Gasoline -2mln (exp. -1.2mln), Cushing -0.2mln.
GEOPOLITICAL
MIDDLE EAST
- Israel’s army completed its preparations to attack Iran and it seems that it will be within days, according to Israel's Channel 12 citing two sources.
- Israeli PM Netanyahu will hold consultations tonight with a specific number of his cabinet ministers at the headquarters of the Ministry of Defence in Tel Aviv, according to Al Jazeera citing Israeli media.
- Israeli PM Netanyahu said whoever pressured him to make irresponsible concessions on the hostages actually wanted him to endanger Israel's security. Netanyahu added that residents of the north will return to their homes which is a mission he has taken upon himself and no pressure, whether local or external, will move him away from it, according to Al Jazeera.
- Israeli PM Netanyahu said in a meeting with US Secretary of State Blinken that there is a need to lead to a security and political change in the north, which would allow Israel to return its residents safely to their homes. Netanyahu added that the killing of Hamas leader Sinwar may have a positive effect on the return of Israeli hostages, the achievement of all the goals of the war, and the day after.
- US Secretary of State Blinken, in meeting with Israeli PM Netanyahu, underscored the need to capitalise on Israel's action to bring Sinwar to justice by securing a hostage release and ending the conflict in Gaza. Furthermore, Blinken sought during his meeting with Israeli PM Netanyahu to soften the response to Iran, according to Al Jazeera citing Israel's Channel 13.
- US Secretary of State Blinken and Israeli PM Netanyahu discussed the concrete steps to capitalise on the death of Hamas leader Sinwar, a senior US official told Reuters. Blinken made it clear that Israel's humanitarian aid steps so far have not been sufficient and Israeli leaders committed to act upon US requests laid out in Blinken's letter on the need for more humanitarian aid. Furthermore, Blinken will no longer go to Jordan on Wednesday but he will be traveling to Saudi Arabia.
- Israel Broadcasting Corporation reported that ministers in the Political Security Council and the security system stated that the Israeli response to the Iranian attack after the attempt to target Netanyahu will be more severe, according to Al Jazeera.
- Israel will continue to attack Hezbollah even after the end of the operation in Lebanon until it withdraws behind the Litani, according to Sky News Arabia citing comments by Galant to Blinken.
- White House said Israel must respond to the Iranian attack and it will not review what they will do, according to Al Jazeera.
- Pentagon said it cannot provide information regarding the Israeli attack on Iran and it is consulting with partners in the region in order to de-escalate, according to Al Jazeera.
- IRGC commander Jafari said Israel is not likely to make a significant move against Iran and may carry out "a limited and small attack", according to SNN.
- Hezbollah claimed full responsibility for the attack on Netanyahu's residence, according to Sky News Arabia. It was separately reported that Hezbollah’s media chief said they do not have captives from Israel but came close, and it will not be long before they have Israeli captives, while the Islamic Resistance claimed responsibility for Caesarea operation and targeting Netanyahu's house.
- Officials at the Iranian embassy in Beirut were reportedly involved in the assassination attempt on PM Netanyahu as the Israeli investigation showed Iranian involvement in launching the drone towards Netanyahu's house, according to Kan's Kai on X citing Saudi Al-Hadath channel.
OTHER
- Turkey reportedly barred the export of US military-linked hardware to Russia which follows on from the US warning Turkey of consequences if the trade was not halted, according to FT citing sources.
ASIA-PAC
NOTABLE HEADLINES
- TSMC (2330 TT) notified the US that one of its chips was in a Huawei device after a Tech Insights teardown, according to Reuters citing sources.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves is reportedly considering changing the current system of business rates which would "level the playing field" for retailers and target large names such as Amazon (AMZN) to aid smaller firms, according to Bloomberg.
- UK Treasury is to slash overseas aid in the Budget as asylum seeker costs rise, according to FT.
- BoE Governor Bailey said there is a need for new surveillance tools for non-banks.
- BoE's Greene reiterated that rate cuts should remain cautious and gradual, while she added it is more likely that policy will need to bear down on inflation and would not put too much weight on the latest declines in UK CPI as they may be driven by more volatile components.
- ECB's Lagarde said inflation numbers are relatively reassuring but cannot jump to the conclusion that the disinflationary process is a done deal and have to be cautious. Lagarde said the pace of easing will be determined at a later date and she does not know where neutral is, while she added that rates will be restrictive for as long as is needed.
- ECB's Centeno said he still expects inflation to tick up and inflation probably won't be seen above the 2% mark much, while he noted that undershooting the EZ inflation target is a new risk and could stifle growth.
- ECB's Holzmann said disinflation was faster than expected and that a rate cut was appropriate with others to follow.
- ECB's Knot said the financial system held up in the face of aggressive central bank rate rises and falling interest rates should ease debt burdens.
- ECB's Nagel said regarding the upcoming strategic review, that the ECB needs to improve how policy intentions are communicated but added that a "dot plot" style system is not desirable.
- ECB's Rehn said the growth outlook has weakened and this could increase disinflationary pressures. Rehn added that rate cuts are coming with the speed and scope to be decided later.
- ECB's Villeroy said there is a risk that inflation undershoots the 2% target, especially if growth is weak and inflation could be at target in early 2025, while the economy is still on course for a soft landing but no take off is in sight.
