North American News
US stocks sink at the close and sink even further afterwards on earnings
- Closing changes
- S&P 500 -0.6%
- Nasdaq Comp -1.6%
- DJIA +0.6%
- Russell 2000 +0.1%
About half the loss in the S&P 500 was directly due to the 25% decline in Meta and the news is even worse after hours with Amazon down 20%. That’s knocked Nasdaq futures down another 2%.
US treasury auctions off $35 billion of 7 year notes at a high yield of 4.027%
- WI level at the time of auction 4.016%
- High yield 4.027%
- WI level at the time of auction 4.016%
- Tail 1.1 basis points vs. six-month average of -0.4%
- bid to cover 2.43X vs six-month average of 2.57X
- Directs 22.72% vs. six-month average of 19.1%
- Indirects 63.17% vs. six-month average of 69.0%
- Dealers 14.1% vs. six-month average of 11.9%
Sovereign selling likely contributed to the recent rout in bonds
- New York Times reports on sovereign selling
The rout in bonds that culminated with a rise to 4.40% in US 10s last week was curious because it wasn’t supported by moves in other markets and was particularly strange when gilt yields fell.
We speculated about FX intervention and sovereign selling as reasons and now there’s more evidence. The New York Times today reports that “bankers said China, Japan and India had sold Treasuries in recent weeks to help support their currencies.”
Commodities
Gold bulls are backed into a corner as US dollar corrects
- The gold price is under pressure, forced back into a neutral zone on the daily chart.
- The hourly charts show that the price is balanced at a critical juncture.
- Investors look ahead to tomorrow’s PCE and next week’s Fed.
The price of gold has been pressured on Thursday in a resurgence in the US dollar that is correcting hard from a key daily supporting trendline as illustrated below by the DXY, an index that measures the greenback vs. a basket of major currencies. At the time of writing, the yellow metal is trading at $1,658 and down some 0.4% on the day. Gold has travelled between a high of $1,670.84 to a low of $1,654.89 so far., crucially failing to hold above a key resistance level on the daily chart.
The dollar index regained ground to above 110, boosted from the lowest level in over a month from both a technical basis in a move that started to show up on the charts ahead of key growth data from the US economy and the European Central Bank meeting. Gross Domestic Product data for the US has shown that the US economy is faring better than expected. It grew an annualized 2.6% on quarter in the three months to September of 2022, more than market expectations of 2.4% and rebounding from a contraction in the first half of the year. This has ended two straight quarterly decreases in output, which had raised concerns that the economy was in recession.
Meanwhile, the ECB raised all of its key policy rates by 75bp. The main refinancing rate is now at 2.0%. ”That is a level some officials at the ECB think approximates with longer-run neutrality, assuming inflation over time will return to 2.0%,” analysts at ANZ Bank argued. ”But inflation is miles from that currently and further rate rises will be warranted. We are currently forecasting an additional 150bp of hikes. We think the ECB may dial down to 50bp hikes from December.”
Additionally, Lagarde’s gloomy outlook for the economy has boosted an appetite for the US dollar as being regarded as the cleanest shirt in the laundry basket of currencies. The data and ECB falls ahead of tomorrow’s PCE and next week’s Federal Reserve meeting whereby the central bank is expected to raise rates at its Nov. 1-2 meeting by 75 basis points to 1.5%, a 13-year high. It is also likely to reel in a key subsidy to commercial banks.
Silver capped below a key resistance area at $19.60/70
- Silver prices tick down after failing to breach the $19.60/70 resistance area.
- The 100-day SMA and 50% Fibonacci retracement are putting a lid on XAG/USD’s recovery.
- The near-term bias remains positive, with downside attempts limited at $19.30.
Silver prices have ticked lower on Thursday, as the recovery from Tuesday’s low at $18.80, failed about 100 pips higher, capped by an important resistance hurdle.
Silver bulls, capped at the 100-day SMA
The XAG/USD seems unable to break above the resistance area at $19.60/70, where the 100-day SMA and the 50% Fibonacci retracement of the October 4 to 14 decline are posing a significant resistance to the white metal’s recovery.
The pair seems to have lost momentum on Thursday, weighed by a somewhat firmer US dollar, although it maintains the near-term positive bias, with downside attempts limited above the 38.2% Fibonacci retracement, at $19.30 and the 50-day SMA, at $19.10.
On the upside, a confirmation above $19.70 would face another key resistance area in the vicinity of the $20.00 psychological level (September 9, 12, and 21 highs and the 61,8% Fib level of the aforementioned decline) before aiming at $20.85 October 6 and 7 highs.
A bearish reaction below the 50-day SMA, at $19.10 would negate the positive trend and set the pair aiming towards, $18.80 (Oct 25 low) and October 14 low at $18.10.
WTI crude oil futures settle at $89.08
- Up $1.17 or 1.33%
WTI crude oil futures are settling at $89.08. That’s up $1.17 or 1.33%. The high price reached $89.78. The low price extended to $87.35. Looking at the hourly chart, the high for the day reached $89.78. The low price extended to $87.35. The high price tested the swing area between $89.72 and $90.05. Sellers leaned against the area and rotated the price back down into the settlement.
EU News
Europe stocks end the session mostly higher
- France’s CAC declines
The major European stock indices are ending the day mostly higher after the ECB rate decision saw the central bank raise rates by 75 basis points, but hint of less hikes.
The one exception is France’s CAC which fell -0.51% on the day.
A look at the closing levels shows:
- German Dax, up 0.12%
- France’s CAC, down -0.51%
- UKs FTSE 100, up 0.25%
- Spain’s Ibex, +0.64%
- Italy’s FTSE MIB, +0.90%
ECB sources: Three officials wanted 50 bps instead of 75 bps
- Fresh ‘sources’ report
The report says the 75 bps hike wasn’t unanimous and that three doves only wanted to hike by 50 bps. The report notes that ECB comments about ‘progress’ weren’t meant to imply slower hiking.
It’s the latter remark that’s moving the market with the euro bouncing on the potential for another 75 bps hike.
Other News
Putin: The west is saying its world view should be universal
- Comments from Putin
- Global events have grown into systemic crisis
- Sooner or later the west will ahve to start talks about our common future
- The west tries to contain development of other civilizations
- Our opponents are trying to expand their markets for their products
- The west is saying its world view should be universal
- Western authority is diminishing, the west is losing the trust of others
- Every time the west tries to enforce hedgemony, it will increasingly pay a large price
- We tried to set up relations with the west and NATO and make friends with them, we received a negative reply
- Russia is not challenging the west, it seeks the right to develop
- Russia believes it is inevitable that international finance will open up, cannot depend on one single governance centre
- We need a new global financial structure and moves to settle currencies in national currencies will dominate
- They have effectively pocketed our assets
- We face the most-dangerous decade since WWII
- Period of western domination is over
- Russia will only use nuclear weapons defensively
More from Putin: Relationship with China is unprecedently open and effective
- Putin and Xi team up
More from Russia’s Putin:
- Relations with China are unprecedently open and effective
- Russia’s trade with China has been rising
- Calls China’s Xi a friend
- Considers China to be a close friend
- We will develop relations with Saudi Arabia
- Saudi Arabia’s Bin Salman should be respected
- Predictability and stability is important on oil markets
Cryptocurrency News
Dogecoin price: DOGE climbs 20% overnight, whale transactions hit two month peak
- Dogecoin rose above $0.072 for the first time in 10 weeks alongside Ethereum’s breakout over the past two days.
- Whale transactions and trading volume hit August levels, resulting in a spike in on-chain activity by large wallet investors in Dogecoin.
- Analysts predicted a 12.8% rally in Dogecoin price, setting a bullish target of $0.088.
Meme coin Dogecoin witnessed its price rally in the tail end of Ethereum’s massive breakout over the past two days. Both Dogecoin transactions and trade volume climbed to levels seen in August. The meme coin yielded double-digit gains for holders.
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