North American News
Solid drive to the upside in the major US indices today
- Gains over 2.25% led by the Dow industrial average up 2.66%
The major US stock indices are ending the day was solid gains. The major indices all rose by more than 2.25% led by the Dow industrial average which gain 2.66%.
The final numbers are showing:
- Dow industrial average up 765.36 points or 2.66% at 29490.88
- S&P index up 92.83 points or 2.59% at 3678.44
- NASDAQ index up 239.83 points or 2.27% at 10815.44
- Russell 2044 up 44.15 points or 2.65% at 1708.87
Atlanta Fed GDPNow Q3 growth targeted at 2.3% versus 2.4% last
- GDP now model dips to 2.3%
The Atlanta Fed GDPNow estimate for Q3 growth has been cut to 2.3 percent from 2.4% after the data released earlier today. The estimate has been all over the place with a high of 2.7% back in the beginning of September and a low of around 0.3% as late as September 27. The revisions to the final GDP in the second quarter contributed to the big jump in the models estimate for the third quarter last week.
In their own words for the current estimate:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 2.3 percent on October 3, down from 2.4 percent on September 30. After this morning’s construction spending release from the US Census Bureau and the Manufacturing ISM Report On Business from the Institute for Supply Management, a decrease in the nowcast of third-quarter real personal consumption expenditures growth from 1.0 percent to 0.7 percent was slightly offset by an increase in third-quarter real gross private domestic investment growth from -4.2 percent to -4.1 percent.
US September ISM manufacturing 50.9 vs 52.5 expected
- US September 2022 manufacturing PMI from ISM
- Prior was 52.8
- Prices paid 51.7 vs 51.9 expected (prior 52.5)
- Production 50.6 vs 50.4 prior
- Employment 48.7 vs 54.2 prior
- New orders 47.1 vs 51.3 prior
- Order backlog 50.9 vs 53.0 prior
- New export orders 47.8 vs 49.4 prior
Commodities
Gold bulls coming up for air into critical daily structures
- Gold bulls move in on a critical technical area on the daily chart.
- US data sink the US dollar further in a weaker US yield environment.
The gold price exploded in the New York trade around the disappointment in the US data. Gold has travelled between a low of $1,696.26 and $1,697.13 and is higher by some 2.13% on the day. The price is homing in on a 78.6% Fibonacci retracement on the daily chart, as illustrated below having already breached the golden 61.8% ratio in trade today.
US data missed expectations despite a September beat in S&P Global Manufacturing PMI. The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) arrived at 50.9 vs 52.2 expected and the prior 52.5 which was the catalyst for the sell-off in the greenback that was already being weighed by softer US yields. Boosting safe-haven demand for metals, U.S. manufacturing activity grew at its slowest pace in nearly 2-1/2 years in September. In turn, gold shot through resistance triggering stops along the way no doubt, exuberating a move into 270 pips to the highs of the day.
The US dollar has eased, helping demand for the greenback-priced bullion among overseas buyers. DXY, an index that measures the greenback vs. a basket of currencies is now down some 0.2% after falling from a high of 112.543 to a low of 111.470. This softness in the safe-haven currency has afforded gold some respite that has staged a mini-recovery after dropping to its lowest since April 2020 on Sept. 28. The benchmark US 10-year Treasury yields have also fallen and are now making an advance on key support structure
Silver climbs more than 1.30%, back above $20.30
- On Monday, silver is climbing solid, courtesy of falling US Treasury bond yields, meaning US bond real yields are down, a tailwind for precious metals.
- The US Dollar is also down by more than 0.50% after US manufacturing activity dropped but remained above recessionary territory.
- Traders are focused on Tuesday’s data ahead of Friday’s US Nonfarm Payrolls report.
Silver price rallies sharply as the fourth quarter begins, amidst a risk-on impulse in the financial markets, due to overnight news that the newest UK government has backpedaled with some tax cuts, easing traders’ fears. Demand for US Treasures jumped, so yields edged lower, meaning higher precious metals prices. At the time of writing, the XAG/USD is trading at $20.35 a troy ounce in the North American session.
US equities portray a positive sentiment across the board. The Institute for Supply Management (ISM) reported that manufacturing activity grew at the slowest pace in 2 and half years in September, dropping to 50.9, below August 52.8, but staying in expansionary territory, negating the “technical recession” in the US, as 2022 Q1 and Q2 GDP showed negative readings. In the same report, New Orders dropped to 47.1 from 51.3, while prices paid edged lower.
The US data began to flash the effects of the Fed’s tightening monetary conditions. Since Fed officials remained with their hawkish rhetoric throughout the last week, market players should expect additional rate hikes by November’s meeting, namely 75 bps.
Meanwhile, the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, edges down by 0.57% down at 111.546, while the US 10-year Treasury bond yield collapses 25 bps to the 3.582% threshold, a headwind for the greenback.
Therefore, the fall in US 10-year TIPS yield, a proxy for real yields, is down at 1.45%, after reaching a YTD high at 1.70%, further explaining the appreciation of precious metals.
OPEC+ cancels tomorrow’s technical meeting – report
- Reuters with the report
It’s an interesting week in the oil market with OPEC set to respond to falling oil prices and recession worries with an output cut. Talk started at 500k bpd and has escalated to triple that. For me, it will be the signaling mechanism that’s important. Where do they want a floor for prices?
Beyond that, the big questions are what happens after SPR releases and what happens to Russian oil in December.
EU News
European equity close: A better start to Q4
- Closing changes in the main European markets
- Stoxx 600 +0.7%
- FTSE 100 +0.2%
- German DAX +0.7%
- French CAC +0.6%
- Italy MIB +1.4%
- Spain IBEX +1.4%
Other News
Bank of England says it stands ready to buy GBP5 billion of gilts at each reverse auction
- Comments from the Bank of England
Today’s buyback operation from the BOE didn’t go well and UK yields jumped. The BOE is now reiterating that it will buy bonds until October 14 in last week’s hastily-arranged QE operations.
Cryptocurrency News
Dogecoin’s 4-month long consolidation set to drive investors away unless DOGE reclaims this level
- Since May 2022, short-term traders have been the only cohort to profit off Dogecoin, but they have even been at a loss lately.
- Lack of volatility could create apprehension among newer investors as the risk-adjusted returns for DOGE is terrible.
- Dogecoin’s market value is suffering, and lack of growth could result in Polkadot flipping DOGE to replace it as the tenth biggest cryptocurrency.
Dogecoin is surprisingly still holding its charm despite having made no major development in months. However, the lack of improvement might create an environment of concern among investors who are joining the network in the fourth quarter.
Dogecoin investors looking for profits
November 2021 was the last time the crypto market noted actual bullishness, but in the case of some cryptocurrencies like Dogecoin, even November was not the best while. Having marked its all-time high in May 2021, DOGE has been in a constant downtrend, falling from $0.6903 to currently trading at $0.0604.