North American News
Broader US stock indices close lower. Dow industrial average snaps 4 day losing streak
- S&P and NASDAQ close lower for the 5th consecutive day
The US major indices are closing with mixed results. The Dow industrial average closed higher for the 1st time in 5 trading days. The S&P and NASDAQ both closed lower for the 5th consecutive day. The Russell 2000 of small-cap stocks also rose modestly.
For the S&P index a close below the 3600 level which is where the 200 week moving averages located.
The final numbers are showing:
- Dow industrial average rose 35.78 points or 0.12% at 29238.67
- S&P index -23.71 points or -0.66% at 3588.69
- NASDAQ index -115.90 points or -1.0% at 10426.20
- Russell 2000 up 0.99 points or 0.06% at 1692.92
Looking at the S&P sectors:
- real estate +1.06%
- consumer staples +0.92%
- healthcare +0.56%
On the downside:
- communication services -1.63%
- technology -1.54%
- financials -1.3%
- discretionary’s -0.83%
US treasury auctions off $40 billion of 3 year notes at a high yield of 4.318%
- WI level at 4.310%
US treasury auctions off $40 billion of 3 year notes at a high yield of 4.318%
- High yield 4.318%
- WI level 4.31%
- Tail 0.8 basis points vs. six-month average of 0.2 basis points
- Bid to cover 2.57X vs. six-month average of 2.49X
- Directs 19.55% vs. six-month average of 19.6%
- Indirects 53.4% vs. six-month average of 57.5%
- Dealers 27.05% vs. six-month average of 22.9%
Commodities
Silver drops below the 50-DMA on risk-on impulse
- Silver stumbles on Tuesday, despite a broad US dollar weakness.
- Fed officials kept to the hawkish script, opening the door for further rate hikes.
- US T-bond yields remain heavy, even though market participants expect another 75 bps rate hike by the Fed.
Silver price extends its losses to five consecutive days after reaching a fresh three-month high at $21.23 a troy ounce. Since then has lost 8.50% due to overall US dollar strength, underpinned by elevated US T-bond yields.
At the time of writing, the XAG/USD is trading at $19.45, after hitting a daily high during the Asian session at around $19.71, before printing the day’s low of $19.19.
Investors sentiment improved as US equities bounced off the lows and trade positive. Earlier, the mood was sour, on fears spurred by expectations of worldwide economic slowdown and the Fed’s aggressive tightening, but stocks are getting a respite, despite that fundamentals have not changed.
During the last couple of days, Fed officials maintained their hawkish rhetoric, with Cleveland’s Fed President Mester saying that the Fed will need to keep raising rates until they see clear signs that inflation is indeed approaching the Fed’s goal. Meanwhile, Chicago’s Fed President Charles Evans said that he expects the Federal funds rate (FFR) to peak at around 4.50% in early 2023.
Elsewhere, Fed’s Vice Chair, Lael Brainard, said, “monetary policy will be restrictive for some time to ensure that inflation moves back to target over time.” She confirmed that the pace and size of further moves would be data-dependent.
In the meantime, the US Dollar Index, a gauge of the greenback’s value vs. a basket of peers, edges down 0.39%, below 113.000 for the first time in the week. Additionally, US Treasury bond yields are easing from weekly highs, with the US 10-year bond yield at 3.890%, down seven bps. Even though, US bond yields and the greenback remain on the backfoot, the white metal has been unable to capitalize.
Early morning, the International Monetary Fund reported that the US economy would grow at 2.7% in 2023, below the 2.9% projected in July. According to the IMF chief Economist Pierre-Olivier Gourinchas, “The worst is yet to come, and for many people, 2023 will feel like a recession.”
Saudi foreign minister: OPEC+ decision was purely economic and taken unanimously
- Comments from the Saudi oil minister
Comments on Al-Arabiya:
- Members of OPEC+ acted responsibly and made the appropriate decision
WTI crude oil futures settle at $89.35
- Down $-1.78 or -1.95%
The price of WTI crude oil futures are settling at $89.35. That’s down -$1.78 or -1.95%.
The low for the day reached $80.38. The high for the day traded up to $91.33
US warned Saudi Arabia that output cuts would be seen as siding with Russia
- More on the blowback in Saudi Arabia
The WSJ is out with a report highlighting Saudi Arabia’s defiance to the US.
US officials warned Saudi leaders that a cut would be viewed as a clear choice by Riyadh to side with Russia, the report says. Saudi officials dismissed the request, beliving it was related to US mid-terms.
EU News
BOE’s Bailey: Message to pension funds is ‘you have three days left to get this done’
- Comments from Bailey
- We saw quite a serious crystallisation of risk; that remains a live issue
- Very important to make clear gilt purchases are a financial stability intervention
- Pensions funds have the resources they need, bringing them over is the challenge
- LDI has increased its leverage
- We have unprecedented volatility in the long end of the gilt market
- The BoE “will be out [of the market] by the end of the week”
Other News
Markets recoil as the Bank of England ends hopes for emergency program extension
- Pure rub pull
There goes everything.
The grind back for risk assets has quickly come unwound after Bank of England Governor Andrew Bailey said the emergency BOE program to provide liquidity to the long end of the gilt market will end Friday as planned.
IMF warns that financial stability risks ‘significantly skewed’ to the downside
- Highlights of the IMF financial stability report
- IMF warns that property downturn in China has deepend with a heightened risk of spillovers to banking, corproate and local government sectors
- Global stress tests shows up to 29% of emerging market banks would be underacapitalized in a severe economic downturn
- Warns of heightened risk of rapid, disorderly repricing in financial markets, amplified by existing vulnerabilities and poor liquidity
Cryptocurrency News
Cardano price triggers a worst-case scenario, prompting 40% crash for ADA
- Cardano price has sliced through the descending triangle’s base at $0.400, triggering a bearish breakout.
- The setup forecasts a 40% correction to $0.241 that could knock ADA down to levels last seen in January 2021.
- A daily candlestick close above $0.482 will create a higher high and invalidate the bearish thesis.
Cardano price shows a lack of willing buyers that have pushed it below significant support, triggering a bearish market structure break. This development has a small window to recovery, failing to do so could result in a sell-off.
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