North American News
What a day! Major indices reverse sharply to the upside after initial CPI plunge
- NASDAQ and S&P snap a 6 day losing streak. All 30 Dow stocks close higher (best day since November 2020)
For the day, the S&P had its fifth-largest intraday reversal from a 52 week low. The low today was down -2.39%. That was a new 52 week low. At the close it was up 2.6%
For the NASDAQ index it was the 4th largest reversal from a 52 week low.. At the low it fell -3.15%. The index is closing up 2.23%.
- S&P and NASDAQ snapped 6 day losing streak
- All Dow 30 stocks close higher. Best day since November 2020
- All S&P 11 sectors close higher
- The Dow industrial average range was 1507 points or around 5%
- the NASDAQ index had a range of 608 points or about 5.70%
the final numbers are showing:
- Dow industrial average rose 827.87 points or 2.83% at 30038.71
- S&P index rose 92.85 points or 2.60% at 3669.89
- NASDAQ index rose 232.06 points or 2.23% at 10649.16
- Russell 2000 rose 40.64 points or 2.41% at 1728.41
US September CPI +8.2% y/y vs +8.1% expected
- US September 2022 consumer price index inflation data
- Prior was +8.5%
- +0.4% m/m vs +0.2% expected and 0.1% prior
Core CPI:
- +6.5% y/y vs 6.5% expected and 6.3% prior
- +0.6% m/m vs +0.5% expected and +0.6% prior
- Real weekly earnings -0.1% vs -0.1% m/m prior (revised to +0.2%)
- CPI energy -2.1% vs -5.0% prior
- Gasoline -4.9% m/m vs -10.6% prior
- New vehicles +0.7% vs +0.8% prior
- Used vehicles -1.1% vs -0.1% m/m prior
- Owners’ equivalent rent +0.8% m/m vs +0.7% prior
- Food +0.8% vs +0.8% prior
US treasury auctions off $18 billion of 30 year bonds at a high yield of 3.93%
- WI level 3.92%
- High yield 3.93%
- tail 1.0% vs. six-month average of -0.6 basis points
- bid to cover 2.39X vs 2.37X average over the last 6 auctions
- Directs 18.65% vs 17.4% over the last 6 auctions
- Indirects 69.1% vs 70.0% average over the last 6 auctions
- Dealers 12.2% vs 12.6% average of the last 6 auctions
Some Biden officials beginning to fear that plan to cap Russian oil prices may backfire
- Ya think?
Janet Yellen and the Treasury Department are championing the plan to use shipping insurance to put a cap on Russian oil prices but it’s turning into a disaster.
Now, there’s talk of dissent in the administration.
“Some Biden administration officials are growing concerned that their plan to cap the price of oil purchased from Russia may backfire, according to people familiar with the matter,” the report says.
Commodities
Gold picks up from lows
- Gold bounces up from $1,642 lows and returns to the $1,670 area.
- The US dollar pulls back after the post-CPI rally.
- XAU/USD remains weak, capped below $1.680.
Gold futures are retracing previous losses during Thursday’s US trading session, favored by a broad-based USD pullback. The yellow metal has bottomed at a two-week low of $1,642 before returning to 1,665 at the time of writing.
The dollar gives away gains after a post-CPI rally
The greenback is losing ground after the bullish reaction triggered by the release of US CPI data. Consumer prices increased at a 0.4% pace in September, beating expectations of a 0.2% rise, which boosted hopes of a 100 basis point rate hike by the Federal Reserve in November.
Federal Fund Futures priced in a 13% chance that the Federal Reserve could accelerate its hiking pace at the next month’s meeting. The Dollar Index (DXY) rushed higher, to hit a session high right below 114.00, nearing the recent 24-year high of 114.70.
The US dollar seems to have lost steam, as the market confronts the data with the slight dovish tilt observed in September’s FOMC minutes released on Wednesday.
EIA weekly crude oil inventories +9880K vs +1750K expected
- US weekly crude oil inventory data
- Lagest build since March 2021
- Prior was -1356K
- Gasoline +2023K vs -1825K exp
- Distillates -4853K vs -2050K exp
- SPR sales were 7700K last week
- Implied gasoline demand down 1189K w/w
- Total product supplied demand -1560K w/w
EU News
ECB staff model sees lower rate peak than market – report
- ECB sources report
An ECB report from Reuters cites a staff model forecast that sees rates peaking at 2.25%, citing four sources. That’s lower than the market-implied rate at just above 3%.
The model shows that 2.25% is needed to tame inflation or even less if it’s combined with QT.
Bank of England accepts £3.12B in inflation-linked bond purchase program
- Strong take up
- Rejected £56.4 million
This is another good takedown and will take some of the pressure off of gilts. We’re seeing that today in the market. We’ll get the reverse auction of regular gilts in an hour.
Other News
CPI report suggests the Fed could front-load rate hikes more than anticipated – CIBC
- Inflation data review from CIBC
Economists are digging through the CPI data for clues on what’s coming next and the consensus is that price rises are increasingly problematic.
“Broad based price increases in core services categories, coupled with still-brisk labor market activity, suggest that the Fed could front load rate hikes by more than previously thought at the early November FOMC,” write economists at CIBC.
They highlight the recent rise in gasoline prices as a problem in next month’s data as well food.
“With no signs of a levelling off in food prices, as the labor shortage in the transportation sector and extreme weather conditions continue, total monthly inflation is set to accelerate further in October, although base effects will result in a further easing of the annual rate,” they write.
Cryptocurrency News
Ethereum price is forecasted to slide by 25% and flirt with a $1,000 barrier
- Ethereum price action tanks massively as sticky inflation remains.
- ETH price action slips below $1,100 on the back of a stronger dollar.
- A continuation towards $1,000 is now possible, as liquidity gets squeezed out of the market.
Ethereum (ETH) price tanks massively on the back of stronger US inflation numbers, which clearly indicate that there is no end in sight for the Fed rate hike cycle. Following on from the positive surprise in the labour market last week, the inflation figures mean traders now see more and longer rate hikes in the future compared to before the data and this will mean a stronger dollar which is negative for cryptos. Risk assets are being slashed as they struggle to prosper in this macroeconomic environment, and are thus set to drop another leg lower.
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