North American News
US stocks close mixed. A mixed day seems like a result
- Nasdaq up. Dow and S&P close lower
The major US indices are ending the day mixed with the Dow and S&P down, while the Nasdaq is closing higher. It is getting to the point where a mixed day is a good day.
Looking at the closing levels:
- Dow fell -125.82 points or -0.41% at 29135.At the low the index fell -1.03%.
- S&P fell -7.72 points or -0.21% at 3647.30.At the low the index fell -0.91%
- Nasdaq rose 26.59 points or +0.25% at 10829.51. At the low, the index fell -0.57%
- Russell 2000 rose 6.62 points to 0.4% at 1662.50
US treasury auctions off $44 billion and 5 year notes at a high yield of 4.228%
- WI level at the time of the auction was 4.202%
- High yield 4.228% vs. a WI level of 4.202%
- Tail 2.6 basis points vs. six-month average of 0.6 basis points
- bid to cover 2.27X vs. a six-month average of 2.40X
- Directs 18.7% vs six-month average of 19.0%
- Indirects 59.6% vs six-month average of 61.9%
- Dealers 21.7% vs. six-month average of 19.1%
Atlanta Fed GDPNow unchanged at +0.3%
- No change to the GDP tracker
- Sept 20 estimate was also +0.3%
Commodities
Gold bears move in at a key 61.8% ratio
- Gold is attempting to recover but the bears are lurking below $1,640.
- A 61.8% resistance ratio could be the catalyst for the next bearish impulse.
The gold price is higher on the day as we head into the close of Wall Street. The yellow metal gained ground on Tuesday as bulls moved in at the lowest levels in more than two years scored on the back of a surging US dollar and bond yields that are both making multi-year highs. At the time of writing, the gold price is trading 0.38% higher having climbed from a low of $1,621.91 and reaching a high of $1,642.45 after falling a day earlier to the lowest since March 2020.
The gold price is trading below pandemic-era levels and as rates markets are now pricing the potential for higher interest rates to persist for some time, while a steady stream of Fedspeak is likely to hammer this point home, analysts at TD Securities argue that gold prices could still have further to fall in the next stage of the hiking cycle.
”Indeed, the increase in inflation’s persistence suggests that a restrictive regime may last longer than historical precedents, which argues for a more pronounced weakness. The combination of surging real rates and USD, continued outflows from money managers and ETF holdings are all adding pressure on family offices and prop shops to finally capitulate on their length,” the analysts explained.
A chorus of Fed speakers advocated more interest rate hikes even at the risk of slowing economic growth on Tuesday. Late in the day, a voter in 2023, Philadelphia Federal Reserve President Patrick Harker on Friday said he believes the US central bank can bring down inflation without triggering a deep recession and hefty unemployment.
“We don’t want to do this in a way that squashes the job market right now,” Harker told Bloomberg TV from Jackson, Wyoming, where Fed officials have gathered for a conference. “If there is a recession, it would be shallow,” he said.
Federal Reserve policymakers St. Louis Fed President James Bullard and Chicago Fed President Charles Evan advocated more interest rate hikes even at the risk of slowing economic growth. Later in the day, Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday said in a WSJ Live interview that central bankers are united in their determination to do what needs to be done to bring inflation down, and financial markets understand that. “There’s a lot of tightening in the pipeline,” Kashkari said.
Meanwhile, the benchmark S&P 500 erased gains of up to 1.7% by early afternoon trading to hit lows last seen in late November 2020. It is headed for a negative close. The US dollar, as measured by the DXY index, is back to trading in the 114 area below 114.47 as the highs of the day.
US says 190k/bpd of oil production shut down in the Gulf of Mexico ahead of hurricane Ian
- The storm is set to hit Florida tomorrow
The US offshore regulator says 190,358 barrels per day of production is shut down in the Gulf of Mexico on hurricane disruptions. In addition 184m bcf is shut. A total of 14 platforms or rigs have been evacuated.
The storm is headed for Tampa Bay, Florida and could be catastrophic to that city. The latest forecasts show a faster-moving storm, which means it will hit sooner but won’t have as much time to deliver rain, which is certainly positive news.
EU News
European equity close: Bounce fades late as bonds implode again
- Closing changes for the main European equity bourses
It’s been a rough ride and it didn’t get much better today. At the moment, UK bonds are puking again too, now up 27 bps on the day to above 4.5%.
- Stoxx 600 flat
- German DAX -0.6%
- French CAC -0.1%
- Italy MIB -0.6%
- Spain IBEX flat
Other News
Fed’s Harker: The FOMC is working to stabilize inflation
- What’s priced in for the Fed
This is nothing new but we’ll monitor for more comments from Harker.
The terminal tip that’s priced in now is 4.56% now in March, which is down from earlier in the month. The current Fed funds rate of 3.00-3.25% is 70% priced to rise by 75 bps with the remainder at 50 bps.
Cryptocurrency News
Bitcoin gave up a huge early gain today to leave a Concerning candle
- Bitcoin finishes back at $19,000
The early rally in bitcoin today was a convincing indication of a bounce in risk sentiment but after another day of bond selling it cracked.
From the high of $20,378, bitcoin has sank back to $19,034 to finish down about $80 on the day.