Round up of today’s market news

North American News

US Equities Rebound After Friday’s Decline

Market Recap:

• S&P 500: +1.2%
• Nasdaq Composite: +1.1%
• Dow Jones Industrial Average (DJIA): +1.2%
• Russell 2000: +0.4%

Market Dynamics:

• Rebound Context: US stocks staged a recovery today, driven by gains in mega-cap and semiconductor shares. Despite this rebound, the gains were insufficient to fully offset the sharp declines experienced last Friday and throughout last week.
• Bond Yields:
  • 10-year Note Yield: Down 1 basis point to 3.70%
  • 2-year Note Yield: Up 2 basis points to 3.67%

Upcoming Economic Data:

• August NFIB Small Business Optimism Survey: Scheduled for release on Tuesday at 6:00 ET. This survey will provide insights into small business sentiment and could influence market expectations.

Market Movers:

• Rebound Drivers: The recovery was supported by strong performances in mega-cap stocks and the semiconductor sector.
• Market Rates: Rising market rates have added some pressure, though they have not derailed the rebound.

Investors should keep an eye on Tuesday’s NFIB survey for further signals on economic sentiment and potential impacts on market movements.

Atlanta Fed GDPNow growth estimate for Q3 comes in at 2.5%

• Higher than 2.1% in its last estimate.

The Atlanta Fed GDPNow growth estimate for Q3 growth rises to 2.5% from 2.1% last. In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2024 is 2.5 percent on September 9, up from 2.1 percent on September 4. After recent releases from the US Census Bureau, the Institute for Supply Management, the US Bureau of Labor Statistics, and the US Bureau of Economic Analysis, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 3.2 percent and 0.0 percent, respectively, to 3.5 percent and 1.2 percent, while the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth decreased from -0.37 percentage points to -0.40 percentage points.

New York Fed: 1 year inflation expectations unchanged at 3.0%.3-year up to 2.5% from 2.3%

• New York Fed inflation expectation survey

Inflation

• Median inflation expectations remained unchanged at 3.0% (one-year) and 2.8% (five-year).
• Three-year median inflation expectations increased from 2.3% in July to 2.5%.
• Disagreement among respondents on inflation expectations widened at all three horizons.
• Inflation uncertainty remained unchanged for one-year and declined for three- and five-year horizons.
• Median home price growth expectations increased to 3.1% from 3.0%.
• Year-ahead expected price changes:
  • Gas: Increased by 0.1 percentage point to 3.6%
  • Rent: Increased by 0.2 percentage point to 7.3%
  • Medical care: Increased by 0.4 percentage point to 8.0%
  • Food: Decreased by 0.3 percentage point to 4.4%
  • College education: Decreased by 1.3 percentage points to 5.9%

Labor Market

• Median one-year-ahead expected earnings growth rose to 2.9% from 2.7%, notably for households earning less than $50,000 annually.
• Mean unemployment expectations increased to 37.7% from 36.6%.
• Mean perceived probability of job loss in the next 12 months fell by 1.0 percentage point to 13.3%.
• Mean probability of voluntarily leaving a job in the next 12 months decreased to 19.1% from 20.7%.
• Mean perceived probability of finding a job if current job lost decreased slightly to 52.3%.

Household Finance

• Median expected household income growth increased by 0.1 percentage point to 3.1%.
• Median household spending growth expectations increased by 0.1 percentage point to 5.0%.
• Perceptions of credit access improved compared to a year ago, with more respondents expecting easier credit conditions.
• Probability of missing a minimum debt payment in the next three months rose by 0.3 percentage point to 13.6%, the highest since April 2020.
• Median expected year-ahead change in taxes at current income levels declined to 3.9%.
• Median expected growth in government debt decreased to 9.1% from 9.3%.
• Mean perceived probability that savings account interest rates will be higher in 12 months increased by 1.5 percentage points to 26.6%.
• Perceptions of current financial situations slightly deteriorated; however, optimism remains higher than a year ago.
• Mean perceived probability of higher U.S. stock prices in 12 months remained unchanged at 39.3%.

US July consumer credit outstanding +25.45B vs +2.0B expected

• US consumer lending continues to rise

• Prior was +8.93B (revised to +5.23B)

US wholesale sales +1.1% vs +0.2% expected

• US wholesale sales and inventories for July 2024

• Prior was -0.6% (revised to -0.3%)
• Inventories +0.2% vs +0.3% expected
• Prior inventories -0.6%

US August employment trends 109.04 vs 109.61 prior

• Employment trends data from The Conference Board

Citigroup CFO Mason: Feels good about consumer and corporate balance sheets

Citigroup CFO Mark Mason is speaking on the state of banking and with it the economy.

He says:

• Feels good about consumer corporate balance sheets
• Expect a soft landing with the decline in rates consumer payment rates are coming down
• Have seen a pickup and revolving credit and credit card customers
• Credit card customers are moving from discretionary to spending on staples
• He sees Q3 market revenue down -4% year on year and net interest income guidance looks modestly down YoY as well

Bank of America expect an extended series of Federal Reserve and Bank of Canada rate cuts

• FOMC to cut at its next 5 meetings, BoC to cut at every meeting ‘for the foreseeable future’

Analysts at Bank of America see a huge flip to dovish for the US Federal Reserve and the Bank of Canada:

Forecast a 25bp rate cut at the next five Federal Open Market Committee (FOMC) meetings:

• September 17-18, 2024
• November 6-7, 2024
• December 17-18, 2024
• January/February 31-1, 2025
• March 21-22, 2025

And, for the Bank of Canada:

• 25bp cuts at every meeting in the foreseeable future
• policy rate to 3.75% by end-2024
• 3.00% by April 2025
• back of core inflation still trending down
• bar to cut 50bp is high (2Q growth rebound & BoC expect growth will strengthen further in 2H)
• bar to skip a meeting is also high

Goldman Sachs forecasts 25bp Fed rate cuts in September, November and December

• Three in a row coming up says Goldman Sachs

Goldman Sachs chief economist Jan Hatzius spoke on CNBC after the jobs report on Friday.

• said “there is a rationale” for a 50bp rate cut
• but 25bp is more likely
• forecasts three consecutive cuts beginning this month

One caveat:

“the Fed leadership is open to 50bp cuts at subsequent meetings if the labor market continues to deteriorate.”

Yellen says no red lights flashing for financial risks, & US economy reached soft landing

• Yellen spoke over the weekend

US Secretary of the Treasury Janet Yellen spoke over the weekend at on Saturday at the Texas Tribune Festival.

Bloomberg (gated) summarised her comments:

• “For the US, the kinds of metrics that we would monitor that would summarize risks — whether it’s asset valuations or a good degree of leverage — things look good, I don’t see red lights flashing”
• “While there are risks, it really has been amazing to be able to get inflation down as meaningfully as we have” while maintaining strong growth
• “This is what most people would call a soft landing.”
• “I’m attentive to downside risks” on employment, she said, adding that job growth is solid.

BlackRock warns that a 50bp FOMC rate cut might signal worries, not confidence

• Jeffrey Rosenberg is a senior portfolio manager at BlackRock, warns a hefty Federal Reserve rate cut could backfire

BlackRock’s Jeffrey Rosenberg spoke with Bloomberg TV (gated) in response to Friday’s August jobs report. He made a cautionary note on the upcoming meeting. Rosenberg expressed concern should the Federal Reserve choose to cut the Fed Funds rate by 50bp:

• that might signal that the FOMC has worries over the state of the economy
• a 25bp rate cut, on the other hand, would signal that policymakers are taking measured, timely actions

JP Morgan Chief US Economist Feroli thinks a 50bps FOMC rate cut ‘the right thing to do’

• Sees headwind to headwind to consumer spending growth

JP Morgan’s Chief US Economist Michael Feroli on the US consumer:

• slower income growth could prove a headwind to consumer spending growth
• this has been the engine powering the economy in recent quarters
• policy is restrictive
• downside employment risks are growing
• upside inflation risks are ebbing

Recommends a 50bp Fed Funds rate cut:

we still think cutting 50bp at the September meeting is the right thing to do

Commodities

Gold Rises Ahead of US Inflation Data as Traders Anticipate Fed Rate Cut

Current Gold Status:

• Price: $2,502
• Change: +0.23%

Market Overview:

• US Dollar Strength: Despite the broad strength of the US Dollar, Gold has managed to gain ground. The US Dollar Index (DXY) is up over 0.30%, reflecting the Greenback’s strength against six major currencies.
• Fed Rate Cut Speculation: The CME FedWatch Tool indicates a 73% probability of a 25 basis point (bps) Fed rate cut, shifting from earlier speculation of a 50 bps move. This adjustment follows last Friday’s Nonfarm Payrolls (NFP) report, which showed a decrease in the Unemployment Rate from 4.3% to 4.2%.

Upcoming Data:

• Consumer Price Index (CPI): Traders are closely watching the upcoming release of the August CPI. Expectations are for a decrease from 2.9% to 2.6% year-over-year (YoY), while core CPI is anticipated to remain steady at 3.2%.
• Economic Reports:
  • New York Fed Inflation Expectations: Prices are anchored around the 3% mark, slightly above the Fed’s 2% target.
  • NFP Report: The economy added 142K jobs in August, below the 160K expected, though the decrease in the Unemployment Rate provided some support to the Greenback.

Fed Commentary:

• Dovish Statements: Fed officials have recently expressed support for a rate cut. New York Fed President John Williams and Fed Governor Christopher Waller both suggested easing could be beneficial, while Chicago Fed President Austan Goolsbee noted a strong consensus for reducing borrowing costs.

Additional Notes:

• China’s Gold Purchases: China’s central bank has paused its Gold purchases for the fourth consecutive month in August, which might influence global Gold demand.

Daily Market Movers:

• Gold prices are climbing as traders prepare for the US CPI release and adjust expectations for the Fed’s rate cut path. The anticipated lower inflation reading could support further Gold gains if it aligns with a 25 bps rate cut scenario.

Investors should monitor the CPI release closely as it will provide critical insights into the Fed’s future policy decisions and further influence Gold price movements.

NHC warns of life-threatening storm surge and hurricane winds for Louisiana and Texas

• Heads up for oil traders

NHC:

• NHC says disturbance expected to become a tropical storm later today, risk of life-threatening storm surge and hurricane-force winds along the Louisiana and upper Texas coasts by mid-week.
• NHC says risk of life-threatening storm surge and hurricane-force winds along the Louisiana and upper Texas coasts by mid-week.

Trafigura hints at possible $60 oil

• More oil news

• Trafigura exec says oil market is more concerned about foreign policies under next US president.
• Trafigura exec says no secret Trump is not a fan of Iran.
• Trafigura exec says oil market likely to be more volatile if Trump was to become president.
• Trafigura exec says shadow fleet still moves large amounts of Russian oil, while Iranian oil continues to flow.
• Trafigura exec says a portion of the market thinks China probably has more stimulus plans held in reserve depending on US election outcome.
• Trafigura exec says oil prices may fall to $60 a barrel sometime and relatively soon.

Russia’s coal exports to China drop 8% in H1 2024, rebound expected in 2025

• Russian energy ministry

• Russia coal exports to China down 8% y/y to 45 million tons in H1 2024, no sharp growth expected, TASS cites Russia Energy Minister saying.
• Russian Energy Ministry expects coal exports to China to increase to at least 100 million tons starting 2025, TASS reports.

Goldman Sachs: OPEC to implement moderate production hikes in coming quarters

• OPEC and Oil

• Goldman Sachs says OPEC will go ahead in next few quarters (not Q4) with gradual and moderate production increases.
• Goldman Sachs says 7 million BPD of financial demand was lost over the last two months, with positioning at an all-time low.

BofA downgrades energy to market weight from overweight in US equity strategy

• BofA equity strategy update

U.S. Equity Strategy: BofA Global Research cuts energy sector to market weight from overweight.

China’s central bank didn’t buy any gold in August

• The PBOC says reserves remain at 72.80 million troy ounces

China’s central bank didn’t report any gold purchases in August, saying that reserves remain at 72.80 million troy ounces. Reported buying halted in May after many months of accumulation.

Reports afterwards suggested the PBOC had grown price sensitive.

• in February the PBOC bought 390,000 ounces
• in March, 160,000
• in April, 60,000

S&P Global expects OPEC+ to begin oil output increases in 2025

• That’s should put a dampener on the minor oil bounce we’ve had during the session

S&P Global expects OPEC+ to start oil output increases next year

This’ll be the first time in a couple of years.

Reuters reporting on comments from Jim Burkhard, vice president of research at S&P Global Commodity Insights. He was speaking at the APPEC conference:

“There’s a lot of pressure in some of these countries to increase production, and again, some are already producing above,”

EU News

Major European indices close higher to start the trading week

Major European indices are closing the day higher, led by the UK’s FTSE 100.

A snapshot of the closing levels shows:

• German DAX, +0.71%
• France’s CAC +0.99%
• UK’s FTSE 100 +1.09%
• Spain’s Ibex +0.89%
• Italy’s FTSE MIB +0.90%

EU Sentix Index -15.4 vs -12.5 expected

• Data for September 2024

EU Sentix Index: -15.4 vs -12.5 expected

Greece plans €8-10 billion bond issue in 2025 aims for early bailout repayments

• Greece fiscal news

• Greece to raise 8 billion to 10 billion euros from bond markets in 2025, sources say.
• Greece will pay ahead of schedule 8 billion euros of first bailout loans in December, say sources.
• Greece to continue early repayments of first bailout loans in 2025, sources say.

Swiss sight deposits dip slightly to 447.258 billion SFR in latest week

• Swiss sight deposit update

• Swiss sight deposits of domestic banks at 447.258 bln SFR in week ending September 6 versus 448.564 bln SFR a week earlier.
• Swiss total sight deposits at 455.903 bln SFR in week ending September 6 versus 456.724 bln SFR a week earlier.

Swedish Housing Prices 47% vs 43% prior

• Data for September 2024

• Swedish housing price: 47% vs 43% prior
• Swedish housing price increase: 58% vs 55% prior
• Swedish housing price decrease: 11% vs 12% prior

German Finance Minister backs Draghi’s growth focus but not joint EU borrowing

• German Finance Minister Lindner on Draghi report:

• We need to work on mobilizing the growth forces of the private sector.
• Welcome all of Mr. Draghi’s proposals that point in this direction.
• However, joint borrowing by the EU will not solve the structural problems.

Draghi urges EU to boost spending by €750B and calls for joint debt issuance

• EU fiscal news

Mario Draghi: The EU must spend an additional €750B/year to compete globally. Mario Draghi calls for the EU to move towards regular joint debt issuance.

Monthly UK jobs market report showed a significant slowdown in August

• Job placements declined sharply

Info comes via the monthly Report on Jobs, produced by the Recruitment and Employment Confederation and KPMG in the UK.

• survey reported a significant slowdown in the labour market in August
• job placements declining sharply – permanent job placements dropped at their fastest rate in five months
• wage growth easing – wage growth for new permanent employees fell to its lowest level in five months, marking one of the weakest performances since early 2021
• salaries increased last month at a rate of growth that was the slowest since March

Asia-Pacific-World News

China to issue up to €2 billion in euro sovereign bonds in Paris on September 23rd

• China bond news

China’s Finance Ministry: Will issue up to 2 billion euros of euro sovereign bonds in Paris on Sept 23.

China seeks public input on carbon trading plan for cement steel and aluminium sectors

• Carbon news

China’s Ministry of Ecology and Environment: Solicits public opinion on work plan for national carbon emission trading market covering cement, iron and steel, electrolytic aluminium sectors.

China’s Xi urges stronger ties and fair business environment with Spain

• China’s Xi meets with Spanish Prime Minister in Beijing – Chinese state media.

China’s President Xi, in talks with Prime Minister of Spain:

• China and Spain should build long-term and stable relationship full of strategic determination, and push bilateral relations to a higher level – state media.
• Hopes Spain will continue to pay interest to Chinese enterprises, invest and develop businesses, and provide a fair, safe, and non-discriminatory business environment – state media.
• Hopes Spain will continue to play a constructive role in diplomatic relations between China and the EU – state media.
• China is willing to expand cooperation with Spain, strengthen communication and cooperation in international organizations such as the G20 – state media.

China August passenger car sales down 1.1% y/y to 1.92 million CPCA reports

• China car sales

China Auto Industry Body CPCA: China sold 1.92 million passenger cars in Aug, down 1.1% y/y.

China’s consumer inflation picked up but was below expectations

• CPI rose for a 7th consecutive month, but not as quickly as expected

Recap:

• consumer inflation picked up, rose for a seventh consecutive month
• CPI was below expectations
• the month saw supply constraints caused by abnormal weather
• but concern persists over limp demand

PBOC sets USD/ CNY reference rate for today at 7.0989 (vs. estimate at 7.0951)

• PBOC CNY reference rate setting for the trading session ahead.

In open market operations (OMOs):

• PBOC injects 91.5bn via 7-day RR, sets rate at 1.7%
• 3.5bn mature today
• thus a net injection of 88bn yuan

China August 2024 CPI +0.6% y/y (expected +0.7%)

• Chinese inflation data, both CPI and PPI, for August 2024

• The m/m PPI is -0.7% (prior -0.2%)

The CPI is a slight miss on both the y/y and m/m. Core CPI (strips out food and energy prices) rose 0.3% y/y, a second consecutive month of slower rise (July was 0.4, June was 0.6, May was 0.6).

As for PPI, factory-gate prices in August fell for a 23rd straight month of contraction, at a much faster than expected pace.

Weekend – China to remove restrictions on foreign investment in the manufacturing sector

• The new version of China’s negative list for foreign investment access will take effect from November 1, 2024

On Sunday China’s ‘state planer’, the National Development and Reform Commission (NDRC), issued a joint statement with the Ministry of Commerce (MOC).

In a nutshell, the bombshell announcement is of the complete removal of restrictions on foreign investment in the manufacturing sector.

This will happen on November 1, in the form of the release of the 2024 version of the negative list for foreign investment access:

• zero restrictions on the manufacturing sector
• the total number of items on the negative list, or restricted sectors for foreign investment, will be reduced from 31 items to 29

The previous version of the negative list came into effect way back on January 1, 2022.

At the margin, this is going to be a positive for the Chinese economy and yuan.

RBC expect the RBA to cut its cash rate in February 2025 (previously forecast May 2025)

• Reserve Bank of Australia forecast

RBC has been looking for a rate cut from the Reserve Bank of Australia at the May 2025 meeting, citing:

• inflation in Australia remaining elevated, above RBA target
• slower growth not a reason for the RBA to cut this year
• RBA didn’t hike as much as the Fed or ECB so the RBA easing path is going to be a lot more gradual

Japan economy watchers poll 49.0 vs 47.5 prior

• Data for August 2024

Japan economy watchers poll: 49.0 vs 47.5 prior

Japan (revised) Q2 GDP +0.7% q/q (preliminary was +0.8%)

• A slight trimming of growth

Buried in the details is a little further discouragement. The contribution from domestic demand was trimmed to +0.8%q/q vs. the +0.9% in the preliminary release:

private consumption similarly trimmed, +0.9% q/q vs. +1.0% in the prelim.

Japan chief cabinet secretary Hayashi cites BOJ’s Ueda saying more rate hikes ahead

Japan Chief Cabinet Secretary Hayashi:

• Monetary policy should be considered, judged by BOJ, when asked about market expectations of further rate hikes by BOJ
• I remember BOJ governor Ueda has already said, with some conditions, BOJ is ready to go in that direction
• If economic situation requires stimulus, I would prefer increasing expenditure, payouts rather than tax reduction

Japan’s Takaichi says strategic fiscal spending to boost jobs income and tax revenue

• Japan ruling LDP lawmaker Takaichi:

• Strategic deployment of fiscal spending will increase jobs, household income, and boost tax revenue without raising tax rate.
• Says inflation is still weak when excluding external factors
• Cannot say Japan has stably achieved BOJ’s 2% inflation target.

Cryptocurrency News

Bitcoin Bounces Back, Surges Above $56,500

Current Bitcoin Status:

• Price: $56,700
• Friday’s Low: $52,500
• Friday’s High: $56,995

Market Dynamics:

• Recovery: Bitcoin has erased its decline from Friday, rallying to $56,700. The rebound comes after a dip to $52,500, driven by buying interest over the weekend and continuing into Monday. This upward movement nearly retraces back to Friday’s high of $56,995, which may present some resistance.
• Risk Sentiment: The recent pattern shows that Bitcoin’s gains on positive risk days haven’t been sufficient to offset losses on negative risk days. This imbalance has led to persistent selling pressure, highlighting a volatility in market sentiment.

Technical Outlook:

• Resistance Levels: The area around $56,995 is expected to offer resistance. If Bitcoin can break through this level with sustained buying interest, it could signal a potential reversal in the current downtrend.
• Future Prospects: A continuation of the rally in the coming days would help mitigate the negative pressure seen on risk-off days and could pave the way for a more stable upward trend.

Investors should watch for late strength and follow-through in Bitcoin’s trading activity to gauge whether this recovery can sustain and potentially reverse the recent downtrend.

Ethereum ETFs Face Heavy Outflows as Whales Shed Holdings

Current Ethereum Status:

• Price: $2,400 (Resistance Level)
• Monday’s Change: +2.5%

Market Dynamics:

• ETF Outflows: Ethereum ETFs experienced significant net outflows totaling $98.1 million last week. Grayscale’s ETHE led this trend with $111 million in outflows, reflecting persistent selling pressure from ETF investors.
• Whale Activity: Ethereum whales, holding more than 10,000 ETH, have been reducing their positions since July. Recent movements include:
  • Hong Kong-based asset manager Metalpha deposited 10,000 ETH (worth $23 million) to Binance and has transferred a total of 23,580 ETH in the past three days.
  • A potential Ethereum Foundation wallet sold 450 ETH for 1.029 million DAI in the past 24 hours, aligning with the Foundation’s history of selling at market peaks.
• Network Growth: Despite the outflows and whale distribution, Ethereum saw a boost in network activity, with a four-month high in new wallet additions—126,210 new wallets on Sunday.

Technical Outlook:

• Resistance Levels: Ethereum is encountering resistance around the $2,400 mark. A rejection at this level could lead to further price pressure.

Investor Insights:

• The recent outflows and whale selling signal a cautious outlook for Ethereum in the short term. However, the uptick in network growth suggests continued interest and potential for recovery if selling pressure subsides.

Investors should monitor the resistance at $2,400 and watch for further whale activity or changes in ETF flows to gauge Ethereum’s near-term prospects.

Ripple’s XRP: Key Developments and Market Impact

Current XRP Situation:

• Price: $0.5289
• Binance Reserve Decline: XRP reserves on Binance have decreased by 167 million tokens from August to early September. This reduction in reserves could be indicative of lower selling pressure, potentially stabilizing or even increasing the token’s price.

Key Events:

• Binance Reserve Data: According to CryptoQuant, the decline in XRP reserves on Binance suggests fewer tokens available for sale. This typically reduces selling pressure and might be beneficial for XRP’s price stability.
• Ripple CEO Meeting: Brad Garlinghouse, Ripple’s CEO, engaged with Japanese lawmaker Taira Masaaki on September 6. The discussion focused on blockchain technology’s potential and Japan’s role in fostering innovation. Garlinghouse highlighted the importance of clear regulatory frameworks to promote blockchain advancements in Japan.

Market Implications:

• XRP’s Price Movement: The slight decline in XRP’s value to $0.5289 reflects market sensitivity to the broader crypto environment and internal developments. The reduction in Binance reserves could mitigate some negative pressure on the price, but broader market trends and regulatory news will continue to influence XRP’s performance.
• Future Outlook: With fewer XRP tokens available for sale on major exchanges, and Ripple’s ongoing engagement with global regulators, the market may see reduced selling pressure and potential stabilization in XRP’s price. However, further developments, such as regulatory changes or market sentiment shifts, could impact future price movements.

Investors and traders should keep an eye on upcoming regulatory news, market trends, and Ripple’s strategic initiatives as they could significantly affect XRP’s market performance.

Follow our recently launched pages. Join our community and never miss a beat in the dynamic world of trading.

https://www.facebook.com/BilalsTechLtd

https://www.linkedin.com/company/bilals-tech/

https://t.me/Market_Moving_News