Round up of today's market news *

North American News

Equity Markets Struggle to Sustain Momentum, S&P and NASDAQ Post Their Most Challenging Weekly Performance Since March

NASDAQ falls 3.62% for the week

The major US stock indices traded above and below unchanged today in up-and-down trading, but each of the indices is ending the day in the red. A snapshot of the closing levels shows:

Dow industrial average -106.60 points or -0.31% at 3393.83
S&P index -9.96 points or -0.23% at 4320.05
NASDAQ index -12.19 points or -0.09% at 13211.80

For the trading week, all major indices closed lower. The Dow industrial average has now declined 2 of the last 3 trading weeks.The S&P and NASDAQ index closed lower for the 3rd consecutive week.

For the NASDAQ index, the move lower this week was the largest decline since March 6.For the S&P index, it also had its worst week since March 6.

For the trading week:

Dow industrial average fell -1.89%
S&P index fell -2.93%
NASDAQ index fell -3.62%

Hurting the tone in stocks are:

Higher rates
Concerns about government shutdown
Higher energy prices
Auto strikes
Increased government debt

S&P global manufacturing PMI flash for September 48.9 versus 48.0 estimate

S&P global manufacturing and service PMI flash for September 2023

Prior month manufacturing PMI 47.9. Services PMI 50.5
Manufacturing PMI 48.9 versus 48.0 estimate
Services PMI 50.2 versus 50.6 estimate
Composite PMI 50.1 versus 50.2 last month

Mixed report vs expectations. Manufacturing remains below the 50 level indicative of contraction. Services remain just above the 50.0 level as it clings to growth.

The services PMI recent high came in at 54.9 in May.

Overview comments from S&P global

US businesses experienced widespread stagnation in output at the end of Q3.
Both manufacturers and service providers reported subdued demand.
September’s data showed the poorest performance in the private sector since February.
The service economy’s momentum continued to wane.
New orders saw their most significant decline of the year, with service demand notably contracting.
Manufacturers reported a decrease in new sales, though it was less severe.
Input costs increased, leading to heightened cost pressures.
The inflation rate of costs was milder compared to the three-year average.
Despite rising costs, firms struggled to raise selling prices due to weak client interest, maintaining the same pace as in August.

Feds Bowman: Further interest rate increases likely appropriate with inflation still high

FOMC voting member Bowman speaking

A second Fed governor is speaking. FOMC member Bowman is on the wires saying:

Further interest rate increases likely appropriate with inflation “still too high.”
Fed policy will need to be held at a restrictive level “for some time” to return inflation to 2% “in a timely way.”
Continued risk of further increase in energy prices could reverse some of the recent progress on lowering inflation.
Economy still growing at a “solid pace,” with robust consumer spending and solid job gains.
Bank lending standards have tightened but no sign of a “sharp contraction” of credit that would significantly slow the economy.
Expect progress on inflation is “likely to be slow” under current conditions, suggesting the need for even tighter policy.
It’s imperative that bankers provide feedback on recent plans to toughen bank rules.

Fed Collins: Fully Supports Guidance In Dot Plot

FOMC member Susan Collins of speaking
“Optimistic” inflation can fall with only a “modest” rise in unemployment, sees a “widened” pathway to that outcome.
Current policymaking requires “considerable” patience to get the right signal from data.
Despite “encouraging” recent data, inflation remains too high.
Key elements of inflation, such as core services excluding shelter, haven’t demonstrated “sustained” improvement.
Supports vigilance regarding inflation risks; believes it’s “too soon to be confident” that inflation is under control given the continued above-trend economic activity.
Cash levels are reverting to “pre-pandemic norms”; anticipates household and business spending to be more influenced by high interest rates.
Some inflation readings have been encouraging
Economic activity continues to be above trend
Rates Expected To Stay Higher For Longer
Current Phase Of Policy Requires ‘Considerable Patience’
Progress In Inflation Moderation Has Been Uneven
Economy Resilient, Pathway To Soft Landing Has Widened

This week the Federal Reserve Rates unchanged, but they also still see one more hike between now and the end of the year. These comments are consistent with that idea. They also raise the expectations for the end of 2024 rate from 4.6% to 5.1%. That still implies a decline of 50 basis points if they indeed to raise rates in 2023.

Shawn Fain: Biggest objective now is ending pay tiers

Shawn Fain speaking on CNBC
Have a lot of options with our strike strategy
Biggest objective now is ending pay tiers
Stallantis waited over a month to respond to our economic demands. This is all on them.
GM, Stellantis made the decision for us to strike
We want our workers to get their fair share
The companies own this, because they chose not to take care of the membership

As the UAW strikes increases at 38 parts and distributing plants impacting 20 states.

GM: We do have contingency plans, and will do what’s best for the company, and customers

GM responds to the increasing UAW strikes at parts and distribution centers
Escalation of a strike by UAW’s top leadership is unnecessary
We have now presented 5 separate economic proposals
We will continue to bargain in good faith with the union to reach an agreement as quickly as possible
We do have contingency plans and will do what’s best for the company, customers

Stallantis: We have a real solution on the table

Stallantis responds to the UAW strikes

Still have not yet received a response to Thursday’s offer
We have a real solution on the table.
Offer includes a long-term solution for Belvidere
The offer includes current full-time employees earning between $80,000 and $96,000 a year by the end of the contract

UAW to announce more strikes at GM and Stallantis parts and distribution centers

Strikes are expected at 38 parts and distribution centers in 20 states to go on strike at 12 noon today

The UAW will announce more strikes at ports in distribution centers at GM and Stallantis. The strikes will be at 38 ports and distribution centers in 20 states and will start at 12 noon today. The thinking is that strikes at these centers will hit at the heart of the automakers. Without parts for an extended period of time, production will also be impacted.

The UAW did not expand strikes against Ford.

The Fed’s Daly (non-voting member): We are closer to our destination

SF Fed president Mary Daly is speaking
We stood at this week on rates in recognition that we are closer to our destination.
We are holding rates steady to collect information to see if more is necessary.
Holding rates this week doesn’t predict what we will do next.
We need to go at a slower pace.
We’ve had a good set of data in last few months, inflation is coming down.
Labor market is gradually adjusting.
Unequivocally good news that inflation is coming down, and labor market adjusting gradually.
I’m not ready to declare victory.
We will not be satisfied until we are confident inflation is on a path back to stability.
We want to bring inflation to 2% as gently as we can.
We do not know if we need to hold rates here or do more.
Patience is a prudent strategy.
US economy has a lot of momentum
Labor market is still not in balance, but it is slowing and is a good sign for the economy.
Part of improvement on inflation has come from supply-side.
Demand is also slowing, creating opportunity for the terrific relief of inflation to come down
Banks are tightening credit, but that’s what we want banks to do to get drop in inflation that we need
The banking system is safe

Reuters sources: UAW expected to announce significant new strikes versus GM and Stallantis

The UAW did say that they have made significant progress with Ford

A Reuters sources saying that the UAW is expected to announce significant strikes versus GM and Stallantis. Earlier today, Reuters also reported that the UAW had made significant progress in labor talks with Ford.

Reuters: UAW will announce that it has made progress with Ford in current talks

There is a deadline for 12 PM today before increasing strikes

Reuters is reporting that a source is telling them that the UAW (United Auto Workers) will announce that it has made progress with Ford in current labor talks.

They will invite Biden to come to picket line. At the same time, Phil Lebau on CNBC is saying that he would not be surprised if UAW president Shawn Fain, president of the UAW, will announce further strikes at the 12 PM ET deadline

Hedge fund manager Ackman expects even higher long term US rates

Bill Ackman is the founder and CEO of Pershing Square Capital Management.

Some points he makes:

The world is a structurally different place than it was.
The peace dividend is no more.
The long-term deflationary effects of outsourcing production to China are no more.
Workers and unions’ bargaining power continues to rise. Strikes abound, with more likely to come as successful walkouts achieve substantial wage gains.
Energy prices are rising rapidly. Not refilling the SPR was a misguided and dangerous mistake. Our strategic assets should never be used to achieve short-term political objectives.Now we must refill the SPR while OPEC and Russia cut production.
The green energy transition is and will remain incalculably expensive.
And higher gas prices will raise inflationary expectations.

The bond market continues to hog the spotlight

10-year yields in the US touch 4.50%

That is the highest in 16 years as the rout in bonds continue to gather pace on the week. Traders were already on edge earlier this week but the Fed vindicated the selling momentum and has seen yields shoot higher as a result. As higher yields continue to reverberate across broader markets, it bodes ill for risk assets and equities in particular. And we already got another taste of that yesterday with US stocks falling hard.

Canada July retail sales 0.3% versus 0.4% expected

Canadian July 2023 retail sales data in the August advance report

Prior month +0.1% (was expecting 0.0%)
The July advanced estimate last month was for a 0.4% gain
Retail sales for July 0.3% versus 0.4% expected. Sales advanced in 7 of the 9 subsectors led by an increase in food and beverages of 1.3%
Ex Auto 1.0% vs 0.5% expected.
Prior month ex auto was -0.8% revised to -0.7%
August advanced estimate -0.3%
e-commerce sales were up 2.4% accounting for 6% of the total retail trade (compared with 5.9% in June)
July YoY sales 2.0% vs -0.6% prior
Sales ex Autos YoY 0.4% vs -3.3% last month

A look at the subsectors shows that 7 of the 9 were higher. Motor vehicles and part dealers were the biggest decline with a -1.6%. This was the 1st client for months. Lower sales of new car dealers -1.7% led to a decrease, followed by a used car dealers -3.1%.

Lower sales a gasoline stations and fuel vendors (-0.7% also weighed on retail sales in July. In volume terms sales decreased -1.0% for the month.

Commodities

Gold shines as us yields drop amid an upbeat market mood

Gold prices see a recovery, achieving gains of 0.25%, driven by a reversal in US bond yields, with the 10-year note coupon dropping from a 16-year high of 4.51% to 4.44%.
Federal Reserve officials express a cautious stance, emphasizing the need for patience despite the necessity for further rate hikes to control inflation.
The US Dollar Index (DXY) continues to print modest gains, sitting at 105.56, potentially impacting gold’s rally, with
Next week, US data includes Consumer Confidence, Durable Goods Orders, and Initial Jobless Claims to provide further direction.

Gold price recovers some ground after hitting a weekly low of $1913.99, though it remains shy of breaking solid resistance at around the 50-day moving average (DMA) at $1929.79.
Factors like dropping US T-bond yields and an upbeat market sentiment drive gold’s price toward the current spot at $1924.56, achieving gains of 0.25%.

WTI crude oil futures settle at $90.03

Up $0.40 or 0.43%

WTI crude oil futures settle at $90.03, up $0.40 or 0.43%. The high for the day reached $91.33. The low was at $89.31. Brent crude prices settled at $93.27 down $0.03 or -0.03%.

For the trading week, the price of crude oil is down marginally by -0.58%.

Looking at the daily chart, the price remains between retracement levels. On the downside, the broken 38.2% retracement of the move down from the June 2022 high, comes in at $86.72. On the top side, the 50% midpoint of the same move down comes in at $93.78. On the wide, those are the support and resistance levels for crude oil.

In other news:

HSBC raised its Brent forecasts, citing:
- Expected tight oil demand due to extended Saudi voluntary cuts.
- Anticipation of the cuts lasting until 2024.
- Continued record Chinese oil demand supporting prices in the near future.

Baker Hughes oil rig count versus last week

Baker Hughes rig count data for the current week
Total rigs 630 versus 641 last week. Down -11 on the week
Oil rigs versus 507 vs 515 last week. Down -8 on the week.
Gas rigs versus 118 vs 121 last week. Down -3 on the week.

There’s a Saudi put in the energy markets, oil heading to $100 / barrel

Comments come from Mark Fisher, founder and CEO of MBF Clearing Corp., a large futures commission merchant (FCM)

He was interviewed on CBNC on Thursday.

“There used to be the Greenspan put to the equity markets. I think there’s a Saudi put in the energy markets, to some degree,”
Adding that the floor could be around $75 top $80 a barrel

Crude-oil prices could rise above $100 a barrel due to global supply shortages

When it appeared the Federal Reserve was ready to backstop equities on signs of weakness by cutting interest rates, the so-called “Greenspan put.”

ICYMI – Russia is banning exports of gasoline and diesel

In recent months, Russia has suffered shortages of gasoline and diesel.This has seen wholesale fuel prices spiking higher, although the flow through to retail prices has been limited due to price caps.

The military demand for the fuels has jumped, of course.

Russia is halting exports of the products ahead of the winter heating months. Russia make an exception for exports to a small group of former Soviet countries.

Russia is one of the world’s biggest seaborne exporters of diesel.

EU News

European indices close mostly lower on the day. UK’s FTSE 100 ekes out a small gain

Indices move lower for the week

The major European indices are ending mostly lower. The one exception is the UK FTSE 100 which eked out a small gain. A snapshot of the closing levels shows:

German DAX fell -5.06 points or -0.03% at 15566.81
Frances CAC fell -23.49 points or -0.33% at 7190.42
UK’s FTSE 100 rose 13.43 points or 0.17% at 7692.06
Spain’s Ibex fell -42.82 points or -0.45% at 9506.09
Italy’s FTSE MIB fell -149.27 points or -0.52% at 28559.28

For the trading week, the major indices are all closing lower:

German DAX fell -2.06%, the largest decline since July 31 week
Frances CAC fell -2.55%, its largest decline since July 3 week
UK’s FTSE 100 fell -0.25%
Spain’s Ibex fell -0.46%
Italy’s FTSE MIB fell -1.17%

Eurozone September flash services PMI 48.4 vs 47.7 expected

Latest data released by HCOB – 22 September 2023

Prior 47.9
Manufacturing PMI 43.4 vs 44.0 expected
Prior 43.5
Composite PMI 47.1 vs 46.5 expected
Prior 46.7

Overall activity remains in contraction at the end of Q3 but at least it is some improvement to August. Demand conditions remain very weak however, with new orders experiencing its sharpest drop in almost three years. But the good news at least is that inflation pressures are also continuing to ease, so that will be helpful for the ECB. HCOB notes that:

“The numbers for PMI services in the Eurozone paint a grim picture, but it’s not all doom and gloom. Sure, activity has been reduced once again and new incoming business has been shrinking for three months in a row. However, companies are hiring in September at a somewhat faster pace than they did in August. Thus, companies still show some resilience and optimism in the face of lower demand. Having said this, we expect the eurozone to enter a contraction in the third quarter. Our nowcast, which incorporates the PMI indices, points to a drop of 0.4% compared to the second quarter.

“The Eurozone’s HCOB PMI figures for services are serving up a bitter pill for the European Central Bank to swallow. The input prices, where wages play an important role, have sped up in September for the second month in a row. Output prices continue to be on the increase as well, but upward pressure has softened a bit again. While the latter may bring some comfort to central bankers, the heat on input prices shows that the risk of a wage-price spiral must remain very much on the radar of the ECB.

“The main drag continues to come from manufacturing where the order situation deteriorated further. Companies keep reducing the stock of purchased goods. However, the declines in purchasing activity have lost some momentum. Thus, the destocking process may bottom out over the next few months in line with a worldwide trend. This will be an important precondition for the recovery of the manufacturing sector which we expect for the beginning of next year.

“In terms of the weakness in the manufacturing sector, France is catching up with Germany. Indeed, the French PMI heads further south while Germany’s PMI has marginally increased from a very low level. In the services sector, the French services sector is in a much worse state than the German one. At the same time there are signs of a stabilization in Germany services, but further deterioration in France. This may have to do with the fact the luxury goods business and services play a more important role in France than they do in Germany. When things go south, those are the first to feel it, way more than non-luxury business providers.”

Spain Q2 final GDP +0.5% vs +0.4% q/q prelim

Latest data released by INE – 22 September 2023

Germany September flash manufacturing PMI 39.8 vs 39.5 expected

Latest data released by HCOB – 22 September 2023

Prior 39.1
Services PMI 49.8 vs 47.2 expected
Prior 47.3
Composite PMI 46.2 vs 44.8 expected
Prior 44.6

The beats here, in particular the services sector, is some relief for the euro. But make no mistake, these are still rather poor readings when you take them at face value and the overall economy is still in contraction territory. Once again, faltering demand conditions are to blame and that isn’t likely to improve significantly in Q4. HCOB notes that:

“The German services PMI stopped its slump and nudged up near 50 in September. This is a pleasant surprise, to be sure. However, in terms of growth it means that activity remained broadly flat following the decline recorded in August. Therefore, our nowcast for services, which considers the PMI data, continues to signal a drag in the third quarter.

“It’s no secret that the German manufacturing sector has been going through the wringer lately. The HCOB PMIs, however, indicate that things aren’t going downhill as fast as before, with the decline in new orders slowing down. In addition, the reduction in purchasing activity is losing momentum.Still, our nowcast for manufacturing production, which includes the PMIfigures, is hinting at a drop of more than 2 percent compared to the second quarter.

“The goods sector is still jamming to that deflation tune of recent months, according to PMI numbers. Looking at manufacturing input prices, they keep heading south, just not as quick as before. Most probably this is due to energy prices which have spiked over the last few weeks. Factory output prices, by contrast, have been cut at a marginally faster rate than the month before.

“The HCOB Composite PMI confirms our view that Germany has entered once again into contraction during the current quarter, after the downturn at the tail end of 2022 and early 2023. Our nowcast points to a rather deep GDP slump of 1 percent compared to the quarter before. Having said this, some important sub-indicators like new business and backlogs of work, which appear to be reaching a bottom, offer hope of an end to this slump as we hit the new year.”

France September flash services PMI 43.9 vs 46.0 expected

Latest data released by HCOB – 22 September 2023

Prior 46.0
Manufacturing PMI 43.6 vs 46.0 expected
Prior 46.0
Composite PMI 43.5 vs 46.0 expected
Prior 46.0

HCOB notes that:

“The French economy is steering towards some choppy waters. Business activity has fallen sharply in both the service and manufacturing sectors in September, mainly due to a slump in demand for French products and services. As a result, French companies are drawing down their order backlogs.

“We think economic growth will be lower in 2024 than previously expected.Although companies in the service sector remain optimistic, they were far more optimistic a month ago. In September, manufacturers are more pessimistic than at any time since the pandemic began as growth expectations fell to their lowest since May 2020. In line with this, the French NationalBank has recently revised down its forecast for economic growth in 2024.

“Economic growth for this quarter steers in the direction of stagnation, with our nowcast model pointing to growth of just 0.2%. It is important to note however that this will be almost entirely driven by the public service sector. The private service sector is expected to fall, according to the nowcast, in line with the signal seen in the PMI survey.

“The employment situation remains tricky.Recently, France has achieved its lowest unemployment rate since 2008.However, manufacturers have reported job cuts for four successive months, while services companies are still hiring more workers. That said, September’s sharp decline in business activity in the services sector suggests that employment should fall in the future. Subsequently, unemployment should rise in the coming months, reversing the overall downward trend in unemployment for now.

“Inflation is still lurking, and the latest data shows rising input prices and output charges. This remains entirely services-driven however as prices continue to fall in the manufacturing sector. The French government had decided to impose price caps on certain food products beginning in July, but there is not much sign of an impact, particularly in the PMIs. Finance minister Le Maire announced further food price cuts, so it could well be that prices drop in the months after. We therefore expect overall inflation to have risen further in September to a rate of 5.5% before falling to a lower level.”

UK September CBI trends total orders -18 vs -18 expected

Latest data released by CBI – 22 September 2023
Prior -15

UK September flash services PMI 47.2 vs 49.2 expected

Latest data released by S&P Global – 22 September 2023

Prior 49.5
Manufacturing PMI 44.2 vs 43.0 expected
Prior 43.0
Composite PMI 46.8 vs 48.7 expected
Prior 48.6

The BOE did mention that they had gotten a glimpse of the data here and with the services reading falling to a 32-month low, you can understand more on why they decided to pause yesterday. It’s a big miss on estimates and the manufacturing slump is also still continuing with the reading still in contraction territory. S&P Global notes that:

“The disappointing PMI survey results for September mean a recession is looking increasingly likely in the UK.The steep fall in output signalled by the flash PMI data is consistent with GDP contracting at a quarterly rate of over 0.4%, with a broad-based downturn gathering momentum to hint at few hopes of any imminent improvement.

“Underscoring the severity of the UK’s deteriorating situation, September’s downturn is the steepest since theheight of the global financial crisis in early 2009 barringonly the pandemic lockdown months.

“The survey had warned that a revival of growth in the second quarter looked unsustainable, and the third quarter is indeed seeing a mounting toll on the economy from thereality of the increased cost of living and the recent rapidrise in interest rates.

“Despite higher fuel prices during the month, firms’ costs grew at a sharply reduced rate overall which, combined with collapsing pricing power amid weak demand, looks set to take further pressure off inflation in the coming months.

“A major concern in the inflation outlook has been wage growth, but with the survey now signalling the sharpest fall in employment since 2009, wage bargaining power is being eroded rapidly.

“With the Bank of England having had sight of the survey data prior to its latest policy decision, the worrying signals from the survey of heightened recession risk and coolinginflationary pressures are likely to have added to calls tohalt rate hikes.”

UK August retail sales +0.4% vs +0.5% m/m expected

Latest data released by ONS – 22 September 2023

Prior -1.2%; revised to -1.1%
Retail sales -1.4% vs -1.2% y/y expected
Prior -3.2%; revised to -3.1%
Retail sales (ex autos, fuel) +0.6% vs +0.6% m/m expected
Prior -1.4%
Retail sales (ex autos, fuel) -1.4% vs -1.3% y/y expected
Prior -3.4%; revised to -3.3%

It’s a slight miss on estimates but at least it is a bounce back after the poor showing in July. That being said, the divergence between retail sales volumes and values is continuing in the UK and that is not a good sign:

Looking at the details, fuel sales were down 0.1% on the month with non-store retailing also falling by 0.2% on the month. That is offset by a rise in non-food stores sales (+0.2%) and food store sales (+0.4%).

ECB’s de Cos: Underlying inflation is now easing

ECBs de Cos speaks

Underlying inflation is now easing
Inflation seems to be turning a corner
Current interest rate level – if maintained for sufficiently long – is broadly consistent with achieving the target
Too early to talk about Ray cuts
Would be cautious about discontinuing PEPP reinvestment
Selling bonds is not something the ECB is currently considering in the future

ECB’s Lane: 4% rate will do quite a bit to bring inflation to 2%

ECB’s Lane speaking on Yahoo finance interview
4% rate will do quite a bit to bring inflation to 2%
ECB is still very data dependent
expects rates to held sufficiently long at 4%
Key wage data will not be available until sometime in the 2024
Not seeing a toxic mix that will trigger a recession

Morgan Stanley sees no more BOE rate hikes for the rest of the year

This adds to the growing chorus from earlier

The firm sees the BOE keeping the bank rate steady at 5.25% until year-end before starting to cut rates in May 2024. They see the bank rate falling to 4.00% by the end of next year. They now join the likes of Goldman Sachs, BNP Paribas, and Barclays in making a similar call.

Barclays cuts BOE terminal rate forecast to 5.25% from 5.50% previously

The chorus grows in calling that the BOE will not be hiking rates anymore

They join the same ranks of Goldman Sachs and BNP Paribas, in adjusting their forecast for the terminal rate lower – all to 5.25%.

UBS joins in on the chorus, cuts BOE terminal rate forecast to 5.25% from 5.50% previously

The call now is that there will be no more BOE rate hikes

And so, that makes it Goldman Sachs, BNP Paribas, Barclays, Morgan Stanley, and now UBS going with the same call.

Other News

Moody’s have downgraded some Chinese property developer firms

Moody’s have downgraded several Chinese property developers

Moody’s recently lowered the outlook of the sector.

Has now downgraded the credit ratings of property developers including:

China Resources Land, China Overseas Land and Investment, China Vanke, Greentown China, Yuexiu Property, and China Jinmao to Negative

JP Morgan will include India in its widely tracked emerging market debt index

This is triggering a huge flow of funds into the Indian economy (the world’s 5th largest)

Reuters carry the news on JP Morgan announcing on Friday that it will include India in its widely tracked emerging market debt index.

India’s local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index and the index suite, benchmarked by about $236 billion in global funds according to JPMorgan.
JPMorgan said 23 Indian Government Bonds (IGBs) with a combined notional value of $330 billion are eligible.
“India’s weight is expected to reach the maximum weight threshold of 10% in the GBI-EM Global Diversified, and approximately 8.7% in the GBI-EM Global index,” said JPMorgan.

BoJ makes no change to its major policy planks, no change to forward guidance

BOJ maintains negative interest rate policy, applies -0.1% rate to financial institutions’ accounts at central bank

Some of the main points:

Maintains 10-year JGB yield target around 0%
Maintains band around its 10-year JGB yield target at up and down 0.5% each
Maintains offer to buy 10-year JGB at 1.0% daily through fixed-rate market operations
Maintains band around its 10-year JGB yield target at up and down 0.5% each
Maintains offer to buy 10-year JGBs at 1.0% daily through fixed-rate market operations
Makes no change to forward guidance
Japan’s economy recovering moderately
Japan’s economy likely to continue moderate recovery
Inflation expectations showing renewed signs of accelerating
Must watch financial and forex market moves and impact on Japan’s economic activity, prices

Japan September preliminary Manufacturing PMI 48.6 (prior 49.6)

Jibun Bank / S&P Global data

Manufacturing purchasing managers’ index (PMI) fell to a in September from 49.6 in August
- The manufacturing PMI is in contraction for the fourth straight month
- the rate of input price inflation hit a four-month high
The flash Services PMI for the month comes in at 53.3 in September from 54.3 in August
- an eight-month low
Composite PMI 51.8 in September from 52.6 in August

BOJ governor Ueda: Will not hesitate to take additional easing measures if necessary

Remarks by BOJ governor, Kazuo Ueda, in his press conference

We are yet to foresee inflation reaching 2% in a stable manner
Japan economy is recovering moderately
Wages and price setting behaviour has been more positive recently
Could consider easy policy exit when achievement of 2% inflation is in sight
We could consider ending yield curve control and modify negative interest rate policy
But only when we judge that achievement of 2% inflation is in sight
We are not in a situation now to decide on the order of change in policy tools
Sustainability of wage hikes the most important thing for inflation outlook
One of the most important factors to judge prices is strength of wage growth

Japan finance minister Suzuki says no comment on FX levels or moves

Gimme a break, this guy never stops commenting on FX moves

And, here we go, Suzuki comments on FX:

No comment on recent fx levels, moves
Last year’s fx intervention had its effect
Closely watching fx moves with high sense of urgency
Won’t rule out any options for response to excessive fx volatility
Closely contacting with overseas currency authorities

Japan August Inflation: CPI excluding fresh food & energy +4.3% y/y (prior +4.3%)

Core inflation, in at 3.1% vs. 3.0% expected and core-core (which strips away the effect of both volatile fresh food and fuel prices and is the closest to the US measure of core inflation) in at 4.3% vs. 4.3% expected) are both solidly well above the Bank of Japan 2% target.

core inflation was above the BOJ’s 2% target for the 17th straight month

LNG strikes – Australian media report that Unions have agreed to end dispute with Chevron

The media report doesn’t cite sources but says that the LNG union have agreed to endorse recommendations made by the industrial umpire to end dispute with Chevron. And that the Union will agree to call off strikes at Chevron facilities.

Australian preliminary PMIs for September: Manufacturing 48.2 & Services 50.5

An improvement from August for Services but not so for Manufacturing

New Zealand August exports NZD 4.99bn (prior $5.45bn) & Imports NZD 7.28bn (prior $6.65bn)

New Zealand trade balance data for August 2023.

Thats a very solid imports number and indicative of some strength in the economy.

Cryptocurrency News

Bitcoin downside likely after 20-week EMA culls bulls

Bitcoin price continues to retrace its January 2022 steps, hinting at a steep correction on the big picture.
A breakdown of the $25,229 support level will confirm and kickstart a bearish outlook for BTC.
If bulls fail to reduce the bearish pressure, the pioneer crypto could revisit the $20,431 support level.
A bullish scenario will develop if BTC flips the $30,000 psychological level into a support.

Bitcoin bearish price fractal, is underway, but the lack of volatility is causing ambiguity and doubt. Regardless, BTC might see a bit of an upside before the long-term bearish scenario plays out.

Bitcoin price delays bearish outcome as volatility dries up

Bitcoin trades at $26,628 after dropping 3.13% over the last 48 hours after rejection at the 20-week Exponential Moving Average (EMA) of $27,290 on September 18.The lack of volatility is another reason for the bearish fractal not progressing. Rejection at the 20-day EMA was also noted in March 2022, which was soon followed by a small correction and a sweep of the buy-side liquidity to the upside. If such a price action were to unfold again for Bitcoin, a revisit of the $25,762 could lead to a sweep of the $27,500 level and the buy side liquidity resting above it.

Arbitrum’s ARB price rallies after Chainlink CCIP mainnet launch

Arbitrum’s ARB price climbed nearly 2% since the announcement of Chainlink CCIP mainnet going live on Arbitrum One chain.
Chainlink’s oracle networks have enabled over $8 trillion in on-chain transaction value and could power a variety of use cases on Arbitrum.
Arbitrum ecosystem aims to improve web3 UX and encourage higher participation with Chainlink CCIP.

Arbitrum, one of the largest Ethereum Layer 2 chains, launched Chainlink Cross-Chain Interoperability Protocol (CCIP) mainnet on its Arbitrum One chain.

The protocol’s arrival on Arbitrum is key to the further development and growth in the ARB ecosystem as it is expected to improve the user experience and attract developers.

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Round up of today’s market news

ByBilals Tech