Round up of today's market news *

North American News

S&P 500 and Nasdaq Hit 2023’s Lowest Point in September, 3Q Woes Continue

The broader stock indices are happy to see September come and go

The major indices are closing mixed today with the Dow Industrial Average average fearing the worst. The NASDAQ index eked out a small gain for the day. The S&P was lower.

A snapshot of the closing levels shows:

Dow industrial average fell -157.50 points or -0.47% at 33508.86
S&P index -11.46 points or -0.27% at 4288.23
NASDAQ index rose 18.04 points or 0.14% at 13219.31

For the month of September, all three major indices closed lower. The broader S&P and NASDAQ indices had the worst trading month in 2023 and worst month since December 2023. Looking at the month declines:

Dow industrial average fell -3.50%
S&P index -4.87%
NASDAQ index fell -5.81%

Today is also the closing level for the 3rd quarter, and each of the major indices closed lower

Dow Industrial Average fell -2.60%. That was the 1st negative quarter since the 3Q of 2022
S&P index fell -3.65%. That too was the 1st negative quarter since the 3Q of 2022
NASDAQ index fell -4.12%, which was the first negative quarter since the 4Q of 2022

For the trading year – with one more quarter to go:

Dow industrial average is up 1.09%
S&P index is up 11.68%
NASDAQ index is up 26.30%

Interest rates moved higher this quarter especially out the yield curve which helped to depress stock levels:

2-year yield rose 15.8 basis points or 3.22%
5-year yield rose 46.2 basis points or 11.10%
10-year yield moved up 73.8 basis points or 19.20%
30-year yield rose 84 basis points or 21.71%
The 2 – 10 year spread steepened by 58 basis points, but is still negative by -47 basis points
The 2 – 30 year spread steepened by 69 basis points, but is still negative by -35 basis points

In other markets:

Crude oil for the quarter rose $20.27 or 28.68%
Gold prices this quarter fell $-71.50 or -3.733%
Silver prices fell 59.6 cents or -2.62%.
Bitcoin fell $-3535 or 11.61%. Bitcoin still has another 2 days of trading before it’s month end.

September final UMich US consumer sentiment 68.1 vs 67.7 expected

Final UMich consumer sentiment data for September 2023
Prelim was 67.7
Prior was 69.5
Current conditions 71.4 vs 69.8 prelim (75.7 prior)
Expectations 66.0 vs 66.3 prelim (65.5 prior)
1-year inflation 3.2% vs 3.1% prelim (3.5% prior)
5-10 year inflation 2.8% vs 2.7% prelim (3.0% prior)

US August core PCE +3.9% y/y vs +3.9% expected

US August PCE report highlights

Prior was +4.2% (revised to +4.3%)
Core PCE +0.1% m/m vs +0.2% expected
Prior m/m +0.2%
Headline inflation PCE +3.5% y/y vs +3.5% expected (Prior +3.4%)
Deflator +0.4% m/m vs +0.5% expected (prior was +0.2%)

The inflation numbers are on the low side of expectations and that should take the pressure of bonds, while weighing on the US dollar.Moreover, it’s the first reading below 4% on PCE inflation in two years.

Consumer spending and income for August:

Personal income +0.4% vs +0.4% expected. Prior month +0.2%
Personal spending +0.4% vs +0.4% expected. Prior month +0.8% (revised to +0.9%)
Real personal spending +0.1% vs 0.2% prior

US advanced good trade balance for August -84.27B versus $-91.4 billion estimate

US advance good trade balance for August 2023

Prior $-91.18 billion
Advance goods trade balance for August 2023 -$84.27B vs $-91.4 billion estimate
Exports $168.9B vs. $164.8 billion last month
imports $253.1B versus $256.0 billion last month

US August advanced wholesale inventories -0.1% versus -0.2% prior

US wholesale and retail inventories for August 2023

Prior report -0.2%

Advance Wholesale Inventories
- Inventories vs $903.1 billion prior
- Change from Augurst 2022 % vs +0.5% prior
Advance Retail Inventories
- August inventories vs $784.1 billion prior
- Change from July 2023 vs +0.3% prior
- Change from July 2022 vs 4.5% prior

Feds Williams: Fed is at or near peak for federal funds rate

Feds Williams speaking

NY Fed President Williams is a speaking and says:

Monetary policy is having the desired effects on the economy
Fed is at or near peak for federal funds rate.
Fed will need restrictive policy stance for some time to achieve goals.
Sees inflation ebbing to 3.25% this year, heading to 2% in 2025.
Future is uncertain, data will drive future policy choices.
Will still take a while for full monetary policy tightening to affect economy
Unemployment to rise just over 4% next year.
GDP should moderate next year to about 1.25%.
Inflation is still too high, price stability essential for economy.
Job market strong, current unemployment rate matches long term trend.
Job market moving into better balance.
See sample signs at inflation pressures are waning

UAW to expand strike against Ford and GM

Says Ford and GM haven’t made meaningful progress
UAW says no further strikes at Stellantis

It’s really tough to handicap a strike but the notable headline here might be Stellantis, where the UAW said meaningful progress has been made.

Fed’s Barkin: FOMC has time to see data before deciding what’s ahead for rates, watching CPI

Federal Reserve Bank of Richmond President Thomas Barkin spoke earlier on “The New Job Hierarchy” before the Money Marketeers of New York University:

Fed holding steady at the September FOMC meeting was appropriate
Fed has time to see data before deciding what’s next for rates
The path forward depends on what happens with inflation
Will be watching the job market closely for clues
Cautions against reading too much into Federal Reserve forecasts
Says the job market has remained very healthy
Is not sure how the economy will perform over coming months
There is still a lot of uncertainty how the Fed’s balance sheet influences the economy

Treasury’s Brainard: Core inflation is now in pre-pandemic range

Comments from the former Fed governor

There are risks to the economy but it remains resilient
Economy is very resilient, the last thing we need is a government shutdown

US Senator Dianne Feinstein has died at 90 – report

Punchbowl report

California Senator Dianne Feinstein has clearly been ill for some time but she was still being rolled out to vote for key bills because the Democrats only have a one-vote majority.

Her death will allow California Governor Gavin Newsom to appoint a replacement.

There was a rumour that he will appoint Kamala Harris in a deal where he would have the opportunity to run as vice president but that’s just speculation. Adam Schiff is another possibility.

However Newsom himself said he would appoint someone who wasn’t going to run in the seat in the 2024 election.

“Yes. Interim appointment. I don’t want to get involved in the primary,” Newsom said. “It would be completely unfair to the Democrats that have worked their tail off. That primary is just a matter of months away. I don’t want to tip the balance of that.”

Hardline faction of US GOP plotting another coup – to depose Leader McCarthy next week

Shutdown shenanigans in the US House of Representatives look set to continue with chatter circulating (via Washington Post) Thursday evening (US time) that the radical hardline faction of the riven Republican Party is planning to remove House Speaker McCarthy in favour of one of his underlings. Majority Whip Tom Emmer the likely new puppet leader – presumably more compliant to their demands.

The move is expected to be taken early next week after the Party shuts down the US government.

Goldman Sachs not concerned that strikes could re accelerate wage growth, boost inflation

From a Goldman Sachs note on Thursday afternoon US time – are unconcerned about unionized workers getting wage hikes, saying these are a lagging indicator:

Recent strikes and reports of unions winning or demanding large wage increases have fueled concerns that wage growth could reaccelerate and boost inflation.
We instead see the recent wage gains for union workers as a lagging indicator—the final echo of last year’s inflation surge.
while recent large wage gains for union workers will directly boost overall wage growth a bit, the impact should be small because the unionized share of the workforce is modest
we expect overall wage growth to continue to decelerate toward 3.5%

Canada July budget deficit of $4.86 billion vs $3.87 billion a year ago

July budget data

April-July deficit of $1.24 bilion vs year-ago surplus of $6.33 billion

Canadian polls have strongly turned against Justin Trudeau and there’s a decent chance he steps down in short order.

Canada GDP month-to-month for July 0.0% versus 0.1% estimate

Canada GDP for July 2023. The advance estimate for August is for a 0.1% increase

The advanced GDP estimate was 0.0% last month
Prior -0.2%
Advanced GDP MoM 0.0% vs 0.1% estimate
Service producing industries rose 0.1% in the month
Goods producing industries that fell -0.3%
Overall 9 of 20 sectors posted increases
Manufacturing sector-1.5% which was the largest negative contribution in July. That was the largest decline since April 2021
Mining and oil and gas extraction was the biggest gainer with a +1.0% rise

Commodities

Gold accelerates losses into $1,850

The collapse in Gold prices continued on Friday with the XAU/USD down to $1,850.00.
Gold is set to close in the red for the fifth straight day as losses accelerate.
Gold is on pace to erase all of 2023’s gains, only 1.5% away from the year’s opening prices.

Gold saw ongoing losses accelerate through Friday trading, dipping to $1,850.00 and continuing to churn out new lows for the day to cap off a trading week that has seen only losses for Gold.

Gold spot prices are down almost 4% for the week and continuing to grind lower.Gold is in the red over 5% from the mid-September swing high just shy of $1,950.00.

The Federal Reserve (Fed) continues to make statements affirming their dedication to tighter policy moving forward, and tight monetary policy coupled with price pressures in US Treasury yields is seeing Gold prices utterly deflate on the charts.

Baker Hughes US oil rig count 116 vs 118 prior

Weekly US oil and gas rig data

Permian rigs -6 to 308
Gas rigs 502 vs 507

Baker Hughes Rig Count: Canada is up 1 to 191 rigs

Canada Rig Count is up 1 from last week to 191, with oil rigs unchanged at 115 gas rigs up 1 to 76.Canada Rig Count is down 22 from last year’s count of 213, with oil rigs down 29, and gas rigs up 7.

EIA: US overall crude oil production up 0.7% to 12.99M BPD in July. Highest since Nov 2019

EIA crude oil production for July

The EIA is reporting that:

U.S. overall crude production grew by 0.7% to 12.99 million barrels per day in July, the highest level since November 2019.
Texas experienced a 1.3% increase in crude production, reaching 5.63 million barrels per day in July, setting a new record.
New Mexico’s crude production rose by 0.6% to 1.78 million barrels per day in July, the highest since May.
North Dakota’s crude production increased by 1.2% to 1.17 million barrels per day in July, marking the highest level since December 2020.

The data is for July, but as Russia and OPEC throttle production, the US despite lower Baker Hughes data is growing.

OPEC+: Ministerial panel unlikely to recommend output policy change at October 4 meeting

This is as expected

According to Reuters, 4 sources are saying that:

OPEC+ ministerial panel unlikely to recommend output policy change at October 4 meeting

EU News

European equity close: A look at the day, week, month and quarter

European equity closing changes as the quarter ends

The month ended with some equity buying in Europe but it wasn’t a pretty picture for the week or September aside from the UK. I do love when a month ends on a Friday though, so it’s a clean slate for October.

On the day:

Stoxx 600 +0.5%
German DAX +0.5%
France CAC +0.4%
UK’s FTSE 100 +0.3%
Spain’s IBEX +0.1%
Italy’s FTSE MIB +0.4%

On the week:

Stoxx 600 -0.6%
German DAX -1.0%
France CAC -0.6%
UK’s FTSE 100 -0.8%
Spain’s IBEX -0.7%
Italy’s FTSE MIB -1.0%

On the month:

Stoxx 600 -1.5%
German DAX -3.4%
France CAC -2.3%
UK’s FTSE 100 +2.3%
Spain’s IBEX -0.6%
Italy’s FTSE MIB -1.7%

On the quarter:

Stoxx 600 -2.4%
German DAX -4.6%
France CAC 3.5%
UK’s FTSE 100 +1.2%
Spain’s IBEX -1.7%
Italy’s FTSE MIB +0.2%

Eurozone September preliminary CPI +4.3% vs +4.5% y/y expected

Latest data released by Eurostat – 29 September 2023
Prior +5.2%
Core CPI +4.5% vs +4.8% y/y expected
Prior +5.3%

UK August mortgage approvals 45.35k vs 45.00k expected

Latest data released by the BOE – 29 September 2023
Prior 49.44k; revised to 49.53k

It is four months in a row now that net borrowing of mortgage debt by individuals have increased, up by £0.2 billion on the month to £1.2 billion in August.Meanwhile, net consumer credit was at £1.6 billion in August, up from £1.3 billion in the previous month.Consumer credit growth did nudge higher to 7.6% year-on-year, up from 7.3% previously. That still shows that the economy is still holding up somewhat despite a slowdown in multiple sectors in Q3.

UK Q2 final GDP +0.2% vs +0.2% q/q prelim

Latest data released by ONS – 29 September 2023

This matches the initial estimate that the UK economy grew marginally in Q2. But amid the tailwinds in Q3 and leading into Q4, that is making it tough for the BOE to maintain a more hawkish conviction after their recent pause.

Germany September unemployment change 10k vs 15k expected

Latest data released by the Federal Employment Agency – 29 September 2023

Prior 18k
Unemployment rate 5.7% vs 5.7% expected
Prior 5.7%

Germany August retail sales -1.2% vs +0.5% m/m expected

Latest data released by Destatis – 29 September 2023
Prior -0.8%

Germany August import price index +0.4% vs +0.5% m/m expected

Latest data released by Destatis – 29 September 2023
Prior -0.6%

Switzerland September KOF leading indicator index 95.9 vs 90.5 expected

Latest data released by KOF – 29 September 2023
Prior 91.1; revised to 96.2

France September preliminary CPI +4.9% vs +5.1% y/y expected

Latest data released by INSEE – 29 September 2023

Prior +4.9%
HICP +5.6% vs +5.9% y/y expected
Prior +5.7%

ECB’s Villeroy: Recent volatility in long bonds has been somewhat excessive

Comments from the Bank of France leader
Data shows that headline and core inflation declining progressively across Europe
Today’s data shows that the ECB’s monetary policy is effective
Recent volatility in long bonds has been somewhat excessive
Data confirms that current level of our key interest rates is appropriate

ECB’s Vasle: We’re probably done with rate hikes

Remarks by ECB policymaker, Boštjan Vasle

The balance of favour now is leaning very much towards a pause by the ECB and markets have already come to terms with that. There are no more rate hikes priced in now and the latest set of inflation numbers this week will just allow the central bank to spin the narrative towards their viewpoint.

UK finance minister Hunt says GDP data once again proves the doubters wrong

Well, let’s see if he can say the same thing about when the Q3 numbers hit

There was a slight beat in the year-on-year reading, up to 0.6% from the 0.4% estimate in the preliminary report last month. That being said, I wouldn’t be too quick to cheer on any marginal growth in GDP considering the bleak outlook so far in the second-half of the year.

UK business confidence dropped back to 36 in September vs. 41 in August

UK data from the Lloyds Business Barometer (Sept) 36

prior was 41 (and an 18 month high)
gauge of pricing expectations higher in September
hiring intentions cooled

Other News

China’s official September PMIs are due over the weekend – expected to improve

Preview

ICYMI, China is out on holiday today and all of next week. If you’ve been waiting on the People’s Bank of China CNY reference rate I probably should have mentioned this earlier – none today or next week.

We will be getting the National Bureau of Statistics (NBS) official PMIs on Saturday though:

Via ING:

manufacturing activity contracted for five consecutive months between March and August
Recently released data on Chinese industrial profits showed a rise after five consecutive contractions, which might signal that the economy has stabilised to a certain extent.
We believe that the official manufacturing PMI for September will show a slight expansion reading of 50.2. With the improvement in recent activity data including retail sales, the non-manufacturing PMI may also increase slightly to 51.3.

Australian August Private Sector Credit +0.4% m/m (expected +0.3%)

Data from the Reserve Bank of Australia

For the m/m +0.3% was the consensus estimate, total credit growth came in higher at 0.4% m/m. Scanning that screenshot from the RBA website it looks like business credit the culprit.

RBA policy meeting next week – on hold expected

Reuters reporting on their poll of expectations for the Reserve Bank of Australia meeting on Tuesday, October 3 (statement due at 2.30pm Sydney time, which is 0330* GMT and 2330* US Eastern time):

All but two of 32 economists in a Sept. 27-28 poll expectedthe RBA to hold its official cash rate at 4.10% at the October meeting
- Two forecast a 25 basis-point hike.

Barclays expects a hike in November, following the official quarterly CPI data on October 25.

“One month’s higher inflation print especially driven by oil is unlikely to sway the RBA to hike. Indeed, trimmed inflation actually slowed…suggesting the Bank has more reason to be on hold,”
“Opposing trends in terms of rising services inflation, easing goods inflation, softer growth and relatively easier butstill tight labour markets will likely keep the RBA focused ondata. While we do expect one more hike from the Bank, it is a close call with the risk being the hiking cycle is over.”

17 of 30 predict the RBA would raise rates to 4.35% or higher by the end of 2023

remaining 13 forecast no change

RBA cash and inflation rates

Heads up for Australian markets switching to daylight saving this weekend

Daylight savings kicks in for Australia on October 1.

Major market centres of Sydney and Melbourne roll clocks forward one hour. Adjust your local times as needed if you are trading Australian markets and you are not in those centres.

Of note there are various little islands that have different time zones. And even on the mainland, there is an unofficial, but widely observed, timezone along part of one major highway, with a quarter-hour offset.

New Zealand consumer confidence up in September, inflation expectations down

ANZ’s survey of consumer confidence for September 2023 comes in at 86.4

prior 85.4

As part of the survey ANZ assesses consumer inflation expectations. Two-year ahead expectation came in at 4.2%

prior 4.6%
lowest reading since March of 2021

Japan data: August retail sales +7% y/y (+6.6% expected), industrial output beats as well

Retail sales +0.1% m/m in August

expected +0.4%, prior +2.2%
for the y/y +7.0% (expected +6.6%, prior +7.0%)

Japan’s (preliminary) factory output was flat in August from the previous month, i.e. 0% m/m

expected -0.8%, prior -1.8%
For the y/y, -3.8% (expected -4.6%, prior -2.4%)
Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 5.8% in September and increase 3.8% in October

No currency intervention by the Japan in the past month

As confirmed by the Japan ministry of finance

They confirmed that for the period of 30 August to 27 September, there were no currency interventions made. It is just confirming the obvious as if they did step into the market, we will definitely see a blip in the charts like we did last October.

BofA raises 10-year JGB yields forecast for the year to 0.90% from 0.75% previously

We already crossed the 0.75% mark this week

Japan September consumer confidence index 35.2 vs 36.2 prior

Latest data released by the Japanese Cabinet Office – 29 September 2023

Japan consumer sentiment dips further towards the end of Q3 with all categories also observing a drop. Here’s the breakdown:

Overall livelihood 32.0 (-0.9)
Income growth 38.7 (-0.3)
Employment 41.1 (-1.6)
Willingness to purchase durable goods 29.0 (-1.0)

BOJ to conduct unscheduled bond buying operation to tamp down rates

The Japanese central bank offers to buy ¥300 billion in JGBs outright from 2 October

Japan finance minister Suzuki won’t rule out any steps to respond to disorderly FX moves

Verbal intervention attempt from Suzuki. Not too much here to frighten traders too much:

Don’t have a ‘defence line’ in dealing with FX moves
won’t rule out any steps to respond to disorderly FX moves
closely watching FX moves with a high sense of urgency

Cryptocurrency News

Dogecoin price stuck in daily demand zone amid numb volatility

Dogecoin price is muddled in the demand zone at $0.0618, trying to push north but there is no driving volatility.
DOGE must break and close above the 100-day EMA at $0.0666 to activate a recovery rally, possibly triggering 10% climb.
A break below the $0.0604 level would put out the optimism, potentially kickstarting a downtrend.

Dogecoin (DOGE) price is trying to muster momentum to recover after a 25% fall that began on July 26.
The price is currently confined within a demand zone, an area populated by buyers. Accordingly, you would expect aggressive buying to drive DOGE up, but the absence of volatility seems to be limiting the upside potential for the king of meme coins.

Dogecoin price needs chaos to move

Dogecoin (DOGE) price is up almost 0.5% in the last 24 hours, which is more than what many in the crypto top ten can say.The token is trying to bud a recovery rally after a multi-week consolidation around the floor price of $0.0604. Technical indicators support the potential for more gains, but the absence of volatility leaves DOGE in paralysis.

3AC founder Su Zhu arrested in Singapore; sentenced to prison for four months

The founder of Three Arrows Capital, also known as 3AC, Su Zhu, has been arrested in Singapore following a committal order.
Zhu has been imprisoned for four months, and a similar sentence is issued for 3AC co-founder Kyle Davies, whose location is unknown.
Earlier this year, Zhu and Davies launched their crypto exchange named Open Exchange, announcing a native token, FLEX, as well.

Su Zhu, the founder of the bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC), has reportedly been arrested in Singapore at the Changi airport. As confirmed by Teneo 3AC’s joint liquidator, Zhu was apprehended for attempting to travel out of Singapore following a committal order granted by the court.

The order was issued following Su Zhu’s deliberate failure to comply with a court order that mandated him to cooperate with the liquidator’s investigations.

3AC founder arrested

As per reports, Zhu will now be held in prison for the next four months, serving his sentence issued under the committal orders. Akin to Zhu, another committal order that sentences the co-founder of 3AC, Kyle Davies, to prison for four months has also been granted. His whereabouts at the time of writing remain unknown, though.

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Round up of today’s market news

ByBilals Tech