North American News
US Major Indices Close Higher Amid Strong Job Data
US stocks experienced a notable rise, buoyed by strong employment figures and the successful negotiation of a tentative agreement between striking dockworkers, which prevented a prolonged closure of key ports.
Closing Levels:
- Dow Industrial Average: +341.16 points (+0.81%) at 42,352.75
- S&P 500 Index: +51.13 points (+0.90%) at 5,751.07
- NASDAQ Index: +219.37 points (+1.22%) at 18,137.85
- Russell 2000: +32.65 points (+1.50%) at 2,212.79
Weekly Performance:
- Dow Industrial Average: +39.75 points (+0.09%)
- S&P 500 Index: +12.90 points (+0.22%)
- NASDAQ Index: +18.26 points (+0.10%)
- Russell 2000: -11.90 points (-0.53%)
Closing Summary:
The stock market finished the week on a positive note, with the Dow Jones Industrial Average achieving a fresh all-time high. The market’s upward trajectory was primarily driven by the September Employment Situation Report, which indicated stronger-than-expected hiring, a decrease in unemployment, and a rise in average hourly earnings. This aligns with the prevailing narrative of a soft landing for the economy and contributed to a recalibration of rate cut expectations, suggesting that the Federal Reserve may not need to be as aggressive moving forward.
The likelihood of a 50 basis points rate cut at the upcoming November FOMC meeting fell dramatically to 0.0%, down from 32.1% the previous day and 53.3% a week ago, according to the CME FedWatch Tool.
Despite rising Treasury yields—with the 10-year yield settling 13 basis points higher at 3.98% and the 2-year yield up 22 basis points at 3.93%—investors remained undeterred, reflecting strong buy-the-dip interest after recent losses. The market-cap weighted S&P 500 increased by 0.9%, while the equal-weighted version rose by 0.8%.
Sector Performance:
- Financials and Consumer Discretionary sectors both gained 1.6%.
- Real Estate sector saw the largest decline at -0.7%.
- Semiconductors and mega-cap stocks also contributed positively, with the Vanguard Mega Cap Growth ETF (MGK) rising 1.1% and the PHLX Semiconductor Index (SOX) climbing 1.6%.
Year-to-Date Performance:
- NASDAQ Composite: +20.8%
- S&P 500: +20.6%
- Dow Jones Industrial Average: +12.4%
- S&P Midcap 400: +12.1%
- Russell 2000: +9.2%
Economic Data Summary:
- September Nonfarm Payrolls: 254K (Consensus: 135K)
- Nonfarm Private Payrolls: 223K (Consensus: 125K)
- Average Hourly Earnings: 0.4% (Consensus: 0.3%)
- Unemployment Rate: 4.1% (Consensus: 4.2%)
- Average Workweek: 34.2 hours (Consensus: 34.3 hours)
The key takeaway from this report underscores the labor market’s robust position, which is likely to sustain the US economy’s growth trajectory.
US September non-farm payrolls +254K vs +140K expected
- September 2024 US employment data from the non-farm payroll’s report
- Two-month net revision: +72K vs -86K prior
- Unemployment rate: 4.1% vs 4.2% prior
- Unrounded unemployment rate: 4.0510% vs 4.220% prior
- Participation rate: 62.7% vs 62.7% prior
- Private payrolls +223K vs 118K prior
- Prior private payrolls +118K revised to +114K
- U6 underemployment rate: 7.7% vs 7.9% prior
- Average hourly earnings: +0.4% vs +0.3% m/m expected
- Prior avg hourly earnings: +0.4% (revised to +0.5%)
- Average hourly earnings: 4.0% vs +3.8% y/y expected
- Average weekly hours: 34.2 vs 34.3 prior
- Change in manufacturing payrolls: -7K vs -24K prior
- Household survey: +430K vs +168K prior
- Government jobs: +31K vs +24K prior
- Full time: +631K vs -438K prior
- Part time: -201K vs +527K prior
Fed’s Goolsbee: Will have discussions about what rate we need to ultimately settle on
- Comments from Goolsbee
- The end of the port strike is another piece of very good news
- The Fed does not want to react too much to one data point
- If we get more jobs reports like this, we will be more confident we are settling at full employment
- Strong jobs report is likely to mean strong GDP
- We are still a ways off from having to sort out where neutral rate is
- We have time and runway to figure out where the settling point on the Fed policy rate is
- We need to try to maintain conditions like they are now
- It’s hard to say where the neutral rate is but it’s definitely higher than zero
- The bulk of FOMC participants see it in the 2.5-3.5% range. We’re still a ways off from having to sort that out
- Contacts mostly say ‘steady as she goes’ not a re-acceleration and not a drop-off
- If productivity keeps booming, that implies higher growth, higher neutral rate but only because the economy can handle it
- A broad set of data shows the labor market is cooling
- The problem with a soft landing analogy is that it implies stopping; the economy keeps going
- If we could keep unemployment at 4% to 4.5% with inflation around 2%, that’s exactly what the Fed wants, everyone should be happy
- External shocks have derailed a soft landing many times
- Our goal is to keep inflation, unemployment almost exactly where they are right now
- We will get a bunch more data before the next Fed meeting
JPMorgan now sees the Fed cutting by 25 basis points
- Had seen 50 bps
Given the momentum, can expect all the Fed watchers to shift to 25 bps.
Bank of America now sees Fed cutting 25 bps in November from 50 bps
- Bank of America sees the Fed lowering rates by 25 basis points
The market is pricing in just a 6% chance of a cut. Pricing in Fed fund futures shows 25.9%.
End of the US dock strike
- Return to work until January 15 agreed to
Adding in some detail now via various news outlets:
- dock workers and port operators have reached a tentative deal ending a three-day strike affecting East Coast and Gulf Coast ports
- agreement includes a wage increase of approximately 62% over six years, raising wages from $39 to about $63 per hour
- the union, International Longshoremen’s Association (ILA) originally sought a 77% raise, while employers, the United States Maritime Alliance (USMX) previously offered nearly 50%
- both parties agreed to extend their master contract until January 15, 2025, to continue negotiations on outstanding issues.
- The strike was the largest of its kind in nearly 50 years, impacting ports from Maine to Texas
- the strike caused significant disruptions, such as around 45 container vessels waiting to unload as of Wednesday, compared to three before the strike
- the strike affected 36 ports, including major ones like New York, Baltimore, and Houston
- reports are that consumer prices were unaffected due to earlier shipment acceleration, but prolonged strikes could increase food prices, particularly perishables like bananas, fruits, seafood, and coffee
Goldman Sachs preview US nonfarm payroll data Friday, October 4: +165K /jobless rate 4.2%
- Goldman Sachs are above consensus for the jobs added
Goldman Sachs are estimating that headline nonfarm payrolls rose 165k in September.
From the note, in brief:
On net, Big Data indicators indicate a pace of job creation above the recent payrolls trend.
We assume above-trend (albeit moderating) contributions from the recent surge in immigration and catch-up hiring.
We suspect August payroll growth will be revised higher, as has been typical over the last decade, though revisions so far this year have been disproportionately downward.
We estimate that the unemployment rate was unchanged on a rounded basis at 4.2%, reflecting a flat labor force participation rate and firmer household employment growth.
We estimate average hourly earnings rose 0.2% (month-over-month, seasonally adjusted), which would lower the year-over-year rate by 0.1pp to 3.7%, reflecting waning wage pressures and modestly negative calendar effects.
JP Morgan say a 2nd Trump Presidency would be “more interesting” for Fed independence
- JP Morgan ahead of the US election
A note from JPM US chief economist Michael Feroli, his take on Federal Reserve independence under a second Trump term.
U.S. port employers are preparing almost 62% pay increase offer to striking dockworkers
- Update on the US east coast/Gulf dock worker strike
Wall Street Journal with the update, citing “people familiar with the matter”. In brief:
- U.S. port employers are preparing an almost 62% pay increase to get striking dockworkers back to work
- offer is an increase from an earlier proposed raise of 50%
- offer would raise the base hourly rate for ILA port workers from $39 to $63 over six years
- the union has asked for an increase of 77%
Link to the WSJ is here, gated:
Commodities
Gold Decline’s Amid Strong US Jobs Report
Gold prices have retraced to $2,643, falling by 0.40% following a robust US jobs report that alleviated pressure on the Federal Reserve (Fed) to cut rates aggressively. The US Dollar Index surged to mid-August highs of 102.58, further limiting gold’s upward potential.
Strong Labor Market Data:
The US Bureau of Labor Statistics (BLS) reported an impressive 254K increase in Nonfarm Payrolls for September, far exceeding the projected 140K and surpassing the revised 159K for August. The Unemployment Rate dropped to 4.1%, while Average Hourly Earnings rose 0.4% month-over-month, slightly below the previous month’s 0.5% but above forecasts. Year-over-year earnings growth stood at 4%, exceeding estimates.
This labor market strength diminishes the urgency for the Fed to maintain low borrowing costs, potentially locking in a 25-basis-point rate cut for the upcoming November meeting. A minimal number of investors anticipate that the Fed will keep rates unchanged.
Geopolitical Tensions Support Gold:
Despite the decline in prices, geopolitical risks, particularly surrounding the Israel-Iran conflict, are expected to support gold, with some analysts suggesting it could challenge the $2,700 mark if tensions escalate further. Chicago Fed President Austan Goolsbee, although not a voting member in 2024, stated that more positive labor market reports could reinforce confidence in achieving full employment, hinting at expected rate decreases over the next 18 months.
Upcoming Economic Indicators:
Market participants are also awaiting upcoming economic indicators, including inflation data, jobless claims, and the University of Michigan Consumer Sentiment index, which could influence Fed policy in the near term.
Market Sentiment and Projections:
Currently, the odds of a 25 bps rate cut stand at 95%, while the likelihood of maintaining the current rates is at just 5%, according to data from the CME FedWatch Tool. The strong labor market report has led to fading recession fears, further impacting gold’s appeal as a safe-haven asset.
Crude Oil Prices Rise Amid Geopolitical Tensions and Economic Data
Crude oil prices are settling the day up $0.67 or 0.91% at $74.38, following President Biden’s comments regarding potential military action against Iranian oil fields. After reaching a high of $75.53 today—the highest level since August 30—the price remains $0.50 higher than the previous day.
Weekly Performance:
For the trading week, crude oil is up $5.79, marking an 8.42% increase. Earlier this month, the price dipped to a low of $65.29 during the week of September 9, indicating a significant recovery. Today’s price is also approaching the falling 100-day moving average of $76.11, signaling potential resistance.
Geopolitical Developments:
President Biden indicated ongoing discussions with Israel regarding possible strikes on Iranian oil installations. This has prompted a risk premium to be factored into oil prices, particularly in light of escalating tensions in Lebanon. The market is reacting to concerns that an attack on Iranian facilities could disrupt oil supplies, thereby influencing prices over the weekend and into the following week.
Economic Impact:
The positive US Jobs Report, showing Nonfarm Payrolls increasing by 254,000, has diminished expectations for aggressive Federal Reserve rate cuts. This economic data has raised concerns that heightened demand for oil might not sustain its previous momentum, as fewer cuts could temper oil price increases.
Potential Market Drivers:
There is speculation that oil prices could surge further if Israel responds to Iran’s missile attack on oil-related infrastructure from October 1. Analysts from Bloomberg Intelligence warn that retaliation by Iran, particularly concerning the Strait of Hormuz, could push crude prices above $100 per barrel.
As the situation evolves, the oil market remains sensitive to geopolitical events and economic data, creating an environment of volatility and potential price surges in the coming weeks.
Baker Hughes oil rig count -5 at 479
- Weekly Baker Hughes rig count data
The weekly Baker Hughes rig count shows:
- Oil rigs -5 at 479
- Natural gas rigs +3 at 102
- Total rigs -2 at 585
EU News
European equity close: Decent finish but down on the week
- Closing changes in the main European bourses
On the day:
- Stoxx 600 +0.7%
- Germany DAX +0.6%
- France CAC +0.9%
- UK FTSE 100 flat
- Spain Ibex +0.3%
- Italy FTSE MIB +1.3%
On the week:
- Stoxx 600 -1.8%
- Germany DAX -2.2%
- France CAC -3.2%
- UK FTSE 100 -0.5%
- Spain IBEX -2.6%
- Italy’s FTSE MIB -2.2%
Eurozone September construction PMI 42.1 vs 41.4 prior
- Latest data released by HCOB – 4 October 2024
- Construction PMI 42.1 vs 41.4 prior.
Key findings:
- Construction activity falls across all monitored countries and sectors.
- Employment and purchases scaled back further.
- Expectations regarding outlook remain severely downbeat.
Comment:
Commenting on the PMI data, Dr Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank, said:
“The Eurozone’s construction sector shows no signs of easing. While the HCOB PMI for the construction sector saw a slight uptick from the previous month, it remained firmly in contraction territory at 42.1 points in September. Among the subsectors, civil engineering saw the steepest month-on-month decline, though the residential real estate sector remains the most deeply entrenched in crisis.
Among the major Eurozone economies, the “red lantern” has passed from Germany to France, which has hit one of its lowest readings in a decade. Prices continue to rise. Despite the severe weakness in demand, input prices are still growing, although the pace of growth has slowed slightly compared to the previous month. The only positive sign is that subcontractor prices have now started to decline slightly.
There’s no room for optimism right now. Order intakes are shrinking alarmingly, and purchasing volumes are in the doldrums. It’s hardly surprising that the outlook for future activity remains pessimistic. Consequently, French construction firms are increasingly laying off staff. A monetary policy boost from the ECB would be more than welcome to revive the construction sector, but the ECB’s recent communications hardly seem to lift spirits in the industry.”
Germany September construction PMI 41.7 vs 38.9 prior
- Latest data released by HCOB – 4 October 2024
- Construction PMI 41.7 vs 38.9 prior.
Key findings:
- Further sharp, albeit slower, fall in total industry activity.
- Rate of job shedding quickens.
- Input costs continue to fall.
Comment:
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“The construction sector is starting to show some faint signs of life again, but we should not get carried away. The headline index rose in September to its highest level since May of last year. That said, the sector is still shrinking – just not as quickly as it has been over the previous 15 months.
The uptick is largely due to impulses from residential and commercial construction, while civil engineering has taken a bigger hit compared to the previous month. Overall, things still look pretty bleak in the construction sector. Construction companies are still grappling with the fact that month after month, they are receiving fewer orders. This drought has been dragging on for over two and a half years now.
The only silver lining is that the drop in orders has not been quite as steep as it was last year. Still, the data clearly shows that the recession in the construction industry will likely continue for quite a while, and most companies seem to share this outlook. In fact, the index for future activity fell to a nine- month low in September. A lot of companies say it is because of the weak order situation, the overall economy, and political uncertainty.
For subcontractors, the tough times are far from over. They are getting hit on two fronts: demand for their services is shrinking and – unsurprisingly – they are having to offer discounts. On the flip side, this has contributed to a drop in construction costs. In fact, purchase prices have been falling for six months now. If this trend continues, many building projects that have been cancelled or delayed due to high costs could still get the green light. This would also be helped by the European Central Bank’s apparent shift to a path of lowering interest rates.”
UK September construction PMI 57.2 vs 53.3 expected
- Latest data released by S&P Global – 4 October 2024
- Construction PMI 57.2 vs 53.3 expected and 53.6 prior.
Key findings:
- Output growth led by steepest rise in civil engineering activity since June 2021.
- New orders grow at strongest pace for two-and-a- half years.
- Cost pressures intensify in September.
Comment:
Tim Moore, Economics Director at S&P Global Market Intelligence, said:
“UK construction companies indicated a decisive improvement in output growth momentum during September, driven by faster upturns across all three major categories of activity. A combination of lower interest rates, domestic economic stability and strong pipelines of infrastructure work have helped to boost order books in recent months.
New project starts contributed to a moderate expansion of employment numbers and a faster rise in purchasing activity across the construction sector in September. However, greater demand for raw materials and the pass-through of higher wages by suppliers led to the steepest increase in input costs for 16 months.
Business optimism edged down to the lowest since April, but remained much higher than the low point seen last October. Survey respondents cited rising sales enquires since the general election, as well as lower borrowing costs and the potential for stronger house building demand as factors supporting business activity expectations in September.”
French industrial production beats expectations in August
- French industrial production up 1.4% in August, surpassing forecasts of 0.3%
French Industrial Production (MoM) (Aug) Actual: 1.4% Expected: 0.3% Previous: 0.2%
Spanish Industrial Production (YoY) (Aug) Actual: -0.1% Expected: 0.1% Previous: -0.4%
- Spanish Industrial Production (YoY) (Aug)Actual: -0.1% Expected: 0.1% Previous: -0.4%
Spain Spanish Industrial Production (YoY) (Aug)
- Actual: -0.1%
- Expected: 0.1%
- Previous: -0.4%
Switzerland Unemployment Rate (Sep): Actual: 2.5% Expected: 2.4% Previous: 2.4%
- Switzerland’s jobless rate for September exceeds forecasts at 2.5%
Switzerland Unemployment Rate n.s.a. (Sep)
- Actual: 2.5%
- Expected: 2.4%
- Previous: 2.4%
(s.a.)
- Actual: 2.6%
- Expected: 2.6%
- Previous: 2.5%
ECB’s Centeno: Inflation is controlled
- Remarks by the Bank of Portugal governor Mario Centeno
- Inflation is controlled.
- Inflation today is very close to 2%.
- The dynamic of the labour market is cooling a little bit.
BoE’s Pill says need for caution points to a gradual withdrawal of policy restriction
- Comments from BoE’s Pill
- says ample reason for caution in assessing the dissipation of inflation persistence.
- says need for such caution points to a gradual withdrawal of monetary policy restriction.
- says further cuts in bank rate remain in prospect but it will be important to guard against the risk of cutting rates either too far or too fast.
- says I remain concerned about the possibility of structural changes sustaining more lasting inflationary pressures.
- Current wage and services price inflation are a source of continued concern.
- I do not think the level of interest rates is having more than a marginal impact on UK business investment.
ECB’s De Guindos says inflation to near 2% by 2025 but too early for victory laps
- ECB De Guindos comments:
- By end of 2025 ECB expects inflation and core inflation to hover around 2%, but too early to declare victory in fight against inflation.
- Recent inflation data have been good, represented a positive surprise, but growth still reflects risks to the downside.
- In general ECB is in favour of cross-border consolidation in the Euro Zone.
EU Moves Forward with Tariffs on Chinese EVs Following Member Vote
- EU imposes tariffs of up to 45% on Chinese electric vehicles for unfair subsidies, sparking potential retaliation from Beijing for the next five years.
EU Moves Forward with Tariffs on Chinese EVs Following Member Vote
The European Commission announced it has secured enough support to impose tariffs of up to 45% on imports of Chinese-made electric vehicles, marking a significant trade decision that could provoke retaliation from Beijing.
The tariffs, aimed at countering what the EU considers unfair Chinese subsidies, will be in place for the next five years following a year-long anti-subsidy investigation.
In the vote, 10 EU members supported the tariffs, while five opposed and 12 abstained.
Sweden to abstain on EU tariffs for Chinese EVs seeks special deal for Volvo
- EV and Volvo news
- Sweden to abstain in vote on EU tariffs on Chinese electric vehicles – Trade Minister.
- Sweden says has received positive signals from Commission about possibility for special deal for Volvo Cars in EV dispute – Trade Minister.
UK vehicle traders and manufacturers want strong fiscal incentives from government
- Measures proposed include halving value added tax on new EV purchases
The UK’s Society of Motor Manufacturers and Traders (SMMT) has warned targets will be missed on 2024 EV sales:
- called on the new Labour government to introduce incentives for private buyers to speed up the switch to EVs
- calls to halve the tax on new EV purchase for three years for private customers and reduce VAT on public charging
UK new car sales rose 1.1% year-on-year in September, the SMMT separately said.
- sales of battery electric vehicles at a new record, makingg up for 20.5% of the overall market powered by fleet purchases
There is a Reuters article expanding on all this
- “September’s record EV performance is good news, but look under the bonnet and there are serious concerns as the market is not growing quickly enough to meet mandated targets”
Consensus for an October European Central Bank rate cut basically locked in
- 25bp rate cut expected from the ECB on October 17
A note from Commerzbank on what is expected from the European Central Bank on October 17. TLDR is a 25bp rate cut.
The analysts argue that the primary driver behind the European Central Bank’s (ECB) current stance is the collapse of eurozone inflation expectations. Market participants recognize that this gives the ECB a solid rationale for maintaining loose monetary policy. Commerz say the ECB will have to revise its projected rate path lower.
And, on the euro, they say that subdued inflation supports the euro by slowing the erosion of its domestic purchasing power, but on the other hand, low interest rates remain a negative factor. Overall, though, they conclude that the outlook for the euro appears bleak. The downward revision of inflation expectations heightens the risk of Europe slipping back into a state of ‘lowflation,’ which could compel the ECB to keep interest rates as low as possible without trigger a pick up in inflation.
Asia-Pacific-World News
China urges EU to delay EV tariffs and avoid trade tensions
- Chinese chamber of commerce on EV tariffs
- Chinese Chamber of Commerce in EU releases statement after EU vote on tariffs on China-made electric vehicles.
- Chinese Chamber of Commerce in EU: Urges EU to act prudently, delay implementation of tariffs, avoid escalation of trade frictions.
- Chinese Chamber of Commerce in EU: Expresses strong dissatisfaction with EU for promoting ‘trade protectionism’ measures.
More from China regarding EU EV tariffs:
- Chinese Commerce Ministry releases statement after EU vote on tariffs on China-made electric vehicles.
- Chinese Commerce Ministry, after EU vote on EV tariffs: China firmly opposes EU’s ‘unfair’, ‘non-compliant’, ‘unreasonable’ protectionist practices.
- Chinese Commerce Ministry, after EU vote on EV tariffs: ‘Protectionist practices’ of EU seriously violate rules of WTO.
- Chinese Commerce Ministry, after EU vote on EV tariffs: EU practices disrupt normal international trade order, hinder China-EU trade and investment cooperation.
Key vote on EU tariffs for Chinese EVs sparks trade contention
- EU faces pivotal vote on tariffs for Chinese Electric Vehicles, amid risks of retaliation from Beijing. Germany’s stance against tariffs divides region’s major car producers.
EU governments face pivotal vote on Chinese EV tariffs
European Union members face a pivotal vote on Friday on whether to impose tariffs of up to 45% on imports of Chinese-made electric vehicles in the bloc’s highest profile trade case, which risks retaliation from Beijing.
The EU’s proposal can be blocked if a qualified majority of 15 EU members, representing 65% of the EU population, vote against it. But that is a high hurdle.
Reuters reported on Wednesday that France, Greece, Italy and Poland would vote in favour, enough to avert a blocking majority against tariffs.
The region’s top economy and major car producer, Germany, will vote against the introduction of tariffs, – abstained before.
German carmakers, for which China represents almost a third of their sales, have been particularly vocal against tariffs.
Volkswagen said they were “the wrong approach”.
Goldman Sachs lifts Turkey inflation forecast to 44% and delays rate cut to Jan
- GS on Turkish monetary policy
- Goldman Sachs raises its year-end Turkey inflation forecast to 44% from 40% after September CPI data.
- Goldman Sachs says now expects first Turkey rate cut in January, from November previously.
Australian housing finance data, August 2024: Home loans +0.7% m/m (prior +2.9%)
- Home loans data from Australia
Reserve Bank of New Zealand rate cut next week, 97% chance of a 50 basis points
- A 50bp rate cut from the RBNZ is all but priced in
The latest Reuters poll (conducted September 30 – October 3) shows:
- 17 of 28 expect the RBNZ to cut its official cash rate by 50 basis points to 4.75%
- remaining 11 predicted a 25 basis point cut
Boosting Wages to Combat Rising Costs: Japanese Government’s Economic Strategy
- Japanese Prime Minister Shigeru Ishiba announces fresh economic package to tackle rising living costs, including minimum wage increase to 1,500 yen per hour.
Japanese Prime Minister Shigeru Ishiba formally instructed his ministers on Friday to compile a fresh economic package to cushion the blow to households from rising living costs, as the new government makes its top priority an exit from deflation.
“We would need to support people suffering from rising costs right now until a positive growth cycle with wage increases outpacing inflation and driving capital expenditures is established,”
The fresh package will include payouts to low-income households and subsidies to local governments, he said in the policy speech. Among other economic policies, Ishiba also pledged to make efforts to boost the minimum wage to 1,500 yen ($10.24) an hour this decade, versus 1,055 yen now.
Japan economy minister Akazawa says aims to overcome deflation under Ishiba’s leadership
- Follows earlier comments on fiscal support from Hayashi and Kato
- says aims to overcome deflation under Ishiba’s leadership
- says he is carefully considering gas subsidies situation
- no change in interpretation of govmt – BOJ accord taregetting 2% inflation
- Prime minister and BOJ share the view that exit from deflation is Japan’s top priority
- Timing of monetary policy change is important, must align with Japan’s broader goal of exiting deflation
Japan chief cabinet secretary Hayashi – PM Ishiba wants a comprehensive economic package
- Japan, more stimulus
Japan chief cabinet secretary Hayashi:
- says PM Ishiba has instructed the compilation of a comprehensive economic package
- a supplementary budget will be compiled after the lower house election
Japan finance minister Kato wants to boost support for low-income households
- More fiscal stimulus flagged for Japan
- focus on price relief
- measures to boost economic growth
- assistance for low income households
US and South Korea reach tentative agreement on defense cost-sharing plan
- US and South Korea move closer to agreement on defense cost-sharing plan, as per Yonhap.
- U.S., South Korea tentatively reach deal on defense cost sharing plan – Yonhap.
- United States and Republic of Korea have reached consensus on proposed text of a new five-year Special Measures Agreement.
The United States and South Korea on Friday agreed on a new five-year plan on sharing the cost of keeping American troops in South Korea, South Korea’s foreign ministry and the U.S. Department of Statement said.
For 2026, the nations agreed to raise defence cost by 8.3% to 1.52 trillion won ($1.13 billion), South Korea’s foreign ministry said in a statement.
Cryptocurrency News
Ethereum Surges Above $2,395 Amid September Revenue Growth
Ethereum has reclaimed the $2,395 support level, showing resilience as it climbs over 3% on Friday. Recent reports highlight a notable increase in on-chain revenue for Ethereum in September, significantly outpacing that of Solana, where Ethereum’s revenue was approximately 4 times larger after the Fed rate cut.
Current Context: Ethereum’s annual inflation rate has reached a two-year high of 0.74%, raising investor concerns amid this growth. Analysts suggest that if Ethereum can maintain momentum and surpass the 100-day SMA, it could potentially rally to $2,595.
Monthly Revenue Growth: September saw Ethereum’s revenue rise again after experiencing a decline in on-chain activity following the market crash in August. According to a report from Swiss crypto bank Sygnum, this resurgence in revenue is attributed to the Fed’s recent rate cut of 50 basis points, which has revitalized market activity.
- Ethereum vs. Solana: Ethereum’s revenue share has significantly surpassed that of Solana since the March Dencun upgrade, which led to a gradual cannibalization of Ethereum’s market by its Layer 2 solutions.
- Layer 2 Implications: While Layer 2 protocols can divert some business from Ethereum, Sygnum notes that these scalable networks could ultimately lead to increased transaction and revenue growth for Ethereum as they settle final states on the main chain.
Inflation Concerns: Despite the positive revenue growth, Ethereum’s inflation rate rising to 0.74% has raised alarms among investors. Analysts from Binance Research highlighted that Ethereum’s issuance is at a two-year high, correlating with the migration of market share to Layer 2 solutions and a reduction in on-chain activity that has lowered gas fees and slowed down the burn rate.
Market Sentiment: Compounding the challenges, Ethereum ETFs experienced outflows of $3.2 million on Thursday, as per data from Farside Investors. The interplay of rising inflation and shifting market dynamics poses significant questions for investors navigating Ethereum’s evolving landscape.
Coinbase Plans to Delist Non-Compliant Stablecoins by December Amid EU Regulation Changes
Coinbase has announced its intention to delist stablecoins that fail to comply with the European Union’s Markets in Crypto Assets (MiCA) regulations, with the delisting process set to begin on December 30, 2024, according to a report by Bloomberg. This move aligns with the EU’s ongoing efforts to tighten regulatory controls within the digital asset industry.
Compliance with MiCA Laws:
Coinbase’s decision reflects the EU’s commitment to strengthen its regulatory framework for digital assets, particularly focusing on stablecoins. From December 31, new guidelines for crypto exchanges and other operators within the EU will be implemented. A spokesperson for Coinbase confirmed the company’s dedication to compliance, stating, “We intend to restrict the provision of services to EEA users in connection with stablecoins that do not meet the MiCA requirements by December 30, 2024.”
Options for Users:
Users in the European Economic Area (EEA) will have the opportunity to convert their non-compliant assets into stablecoins that adhere to MiCA regulations, such as Circle’s USDC. This transition aims to ensure that Coinbase’s offerings remain aligned with the evolving regulatory landscape in Europe.
Implications for Stablecoin Issuers:
This announcement could significantly impact Tether, the issuer of USDT, which reportedly has not yet achieved compliance with MiCA laws. Other cryptocurrency exchanges, including OKX, Binance, Bitstamp, and Uphold, have already begun taking measures to align with EU regulations by discontinuing support for non-compliant stablecoins like USDT for their European customers.
MiCA Regulation Overview:
The European Commission expanded the MiCA regulations to include oversight of stablecoin issuers on June 30, mandating that these entities acquire an e-money license from at least one EU member state. This initiative aims to enhance regulatory oversight and ensure that stablecoin providers operate within legal frameworks in the region. Currently, only Circle’s USDC and EURC tokens have secured the necessary MiCA licenses to continue their operations under EU laws.
This regulatory environment marks a significant shift in how stablecoins are managed and monitored within the EU, as exchanges and issuers adapt to comply with the new standards.
XRP Unlock Sparks Concerns Over Price Recovery
Ripple has unlocked 1 billion XRP tokens on October 1, coinciding with significant unlocks across the cryptocurrency market, raising concerns about the potential impact on XRP’s price recovery. Solana and Arbitrum are also set to unlock over $100 million in tokens this month.
Current Price: XRP is trading at $0.5328, holding steady above the support level of $0.5200 but struggling to regain the psychologically important $0.60 level.
Daily Market Movers: XRP has seen a slight increase of 2% on Friday, influenced by several key factors:
- The SEC’s decision to appeal the final ruling in the ongoing lawsuit against Ripple.
- The $1 billion token unlock that occurred on October 1.
- Additional token unlocks in October, including Solana (SOL) and Arbitrum (ARB), which are set to unlock $74 million and $51 million worth of tokens, respectively.
Legal Context: Ripple’s executives are currently deliberating whether to file a counter-appeal, having 14 days from October 3, when the SEC filed its appeal regarding the ruling. The SEC’s appeal contests the ruling where Ripple was fined $125 million for selling XRP tokens to institutions. Judge Analisa Torres upheld her July 2023 ruling that provided legal clarity, classifying XRP as a non-security in transactions on crypto exchanges.
Market Sentiment: The ongoing legal battle with the SEC continues to be a focal point for XRP holders. The sentiment among XRP traders remains negative, as indicated by the Crypto Fear & Greed Index on CryptoEQ.io. This week’s scheduled unlock of 1 billion XRP has influenced Ripple holder sentiment amid broader market concerns.
Standard Chartered says Bitcoin not a safe haven against geopolitical risk – gold is
- Analysts at Stan Chart say Bitcoin is likely to weaken below $60K, but should buy the dip
Standard Chartered say that gold is a hedge against geopolitical risk, whereas Bitcoin is is a hedge against TradFi issues such as bank collapses or de-dollarisation/U.S. Treasury issues.
Analysts at the bank like buying BTC/USD on a dip under USD60K
JP Morgan favour gold and Bitcoin – the “debasement” trade
- Traditional financial markets less desirable with geopolitical and US election uncertainty
JPMorgan analysts see gold and Bitcoin as beneficiaries of uncertainty in regular financial markets, citing rising geopolitical tensions, and the upcoming U.S. election.
JPMorgan say gold and BTC will benefit from this “debasement trade”.
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