North American News
US major indices close with modest declines
- Some selling into the close snap 2 day up streak
The US major indices staged a formidable recovery into the last hour of trading but could not hold onto gains. The indices close lower for the 1st time in 3 trading days, but the declines were modest, and certainly better than the lows that the major indices experienced intraday.
The final numbers are showing:
- Dow industrial average -42.47 points at -0.14% at 30273.88
- S&P index -7.63 points at -0.20% at 3783.29
- Nasdaq indes index-27.76 points or -0.25% at 11148.65
- Russell 2000 -13.07 points or him-0.74% at 1762.69
The US major indices – led by the Nasdaq – got off to a weak start today. The RBNZ hiked by 50 and did not follow the RBA lead. The dollar moved higher. Interest rates moved higher as well.
The US yields remain up on the day. The USD is still higher on the day, but the stocks have erased all their gains and trades in positive territory. For the Nasdaq that means it erased a decline of -2.38%. Pretty impressive.
The employment numbers will still need to be released on Friday. Needless to say that data point will need to show some modest weakness in jobs. That would be the best case scenario for higher stock prices as yields can moderate, and some of the tightening fear can come Out. If the number is stronger than expectations, That would hurt the the prospects for more upside continuation.
Atlanta Fed GDPNow rises to 2.7% from 2.3%
- The Atlanta Fed GDP model for 3Q growth
For this report, in their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 2.7 percent on October 5, up from 2.3 percent on October 3. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the Institute for Supply Management, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 0.7 percent and -4.1 percent, respectively, to 1.1 percent and -3.6 percent, respectively, while the nowcast of the contribution of net exports to third-quarter real GDP growth increased from 2.21 percentage points to 2.24 percentage points.
ISM US September services PMI 56.7 vs 56.0 expected
- September 2022 US service sector survey from the Institute for Supply Management
- Prior was 56.9
Details:
Prices paid 68.7 vs. 71.5 last month
Employment 53.0 vs. 50.2 last month
New orders 60.6 vs. 61.8 last month
Supplier deliveries 53.9 vs. 54.5 last month
Inventories 44.1 vs. 46.2 last month
Backlog of orders 52.5 vs. 53.9 last month
Exports 65.1 vs. 61.9 last month
Imports 51.3 vs. 48.2 last month
Commodities
Gold bears burst the gage as US yields tear higher
- Gold is back under pressure in a resurgence in the US dollar.
- DXY has been as high as 111.735, making gold more expensive for international buyers.
- The yield on the US 10-year note was up a high of to 3.78%, bearish for gold since it offers no interest.
The gold price was down some 0.7% by midday in New York, trading below the highs of the day of $1,727.84 and reaching as low as the psychological $1,700 level. The greenback has caught up with the robustness in US yields which is putting a barrier up against gold’s recent resurgence.
The yellow metal broke the $1,700 level at the start of the week as investors started to discount the Fed premium due to poor manufacturing data that was accompanied by a massive miss in the JOLTS data ahead of this week’s showdown event in Nonfarm Payrolls. ”With money manager positioning skewed short, the easing of rates and the USD, amid weaker US economic data, sparked a bout of short covering in precious metals,” analysts at TD Securities said.
US weekly EIA crude oil inventories -1356K vs +2052K expected
- Weekly US oil inventory data
- Prior was -215K
Details
- Gasoline -4728K vs -1334K expected
- Distillates -3443K vs -1367K expected
- Refinery utilization +0.7% vs 0.4% expected
- Implied gasoline demand 9.47m vs 8.50m last week
- SPR draw of 6.2m vs 8.414m prior
- Total oil demand +1.832 mbpd w/w
OPEC+ agrees to production cut of 2 million barrels per day
- That didn’t take
WTI crude oil is trading up about $1 on the day to $87.40.
The talk beforehand was 1-2mbpd and that’s been rising in the last week but by the looks of it, 2mbpd was mostly priced in.
This will take a significant amount of oil out of the market. If it’s based on quotas, it should cut about 1.2mbpd in actual production as a number of countries are producing materially below quota.
There’s also talk of voluntary additional Saudi cut but that would be a surprise.
EU News
European equity close: Declines of around 1%
- Closing changes in Europe
Closing changes in the main bourses:
- Stoxx 600 -1.0%
- German DAX -1.2%
- UK FTSE 100 -0.5%
- French CAC -1.0%
- Spain IBEX -1.4%
- Italy MIB -1.7%
Other News
White House: Biden will continue to direct SPR releases as appropriate
- White House statement on the OPEC decision
If only there was a pipeline that could improve North American energy security and production. Just yesterday the White House said it wasn’t considering a further SPR release but that might have been a carrot to extend to OPEC in order not to cut production.
Statement from National Security Advisor Jake Sullivan and NEC Director Brian Deese
The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine. At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices.
The President’s work here at home, and with allies around the world, has helped to bring down U.S. gas prices: since the beginning of the summer, gas prices are down $1.20 – and the most common price at gas stations today is $3.29/gallon. At the President’s direction, the Department of Energy will deliver another 10 million barrels from the Strategic Petroleum Reserve to the market next month, continuing the historic releases the President ordered in March. The President will continue to direct SPR releases as appropriate to protect American consumers and promote energy security, and he is directing the Secretary of Energy to explore any additional responsible actions to continue increasing domestic production in the immediate term.
The President is also calling on U.S. energy companies to keep bringing pump prices down by closing the historically large gap between wholesale and retail gas prices — so that American consumers are paying less at the pump.
Cryptocurrency News
Ethereum price sees its dreams of $1,400 shattered
- Ethereum price enters a dangerous technical setup as price action fails to make new highs for October.
- ETH price is at risk of dropping back to $1,243 later this week.
- Expect to see pressure building on $1,243 with another leg lower towards $1,100.
Ethereum (ETH) price action has been printing some nice gains with 7% on the docket in just two trading days this week. This third trading day indicates a change in sentiment that could see bearish pressures mounting. There is a risk that all gains from this week will be lost, and no new highs for the month will be printed. Further, bears may have an opportunity to break back below $1,200 by the end of the week if dollar strength kicks in.