MNI EUROPEAN OPEN: Risk Aversion Rises On Geopolitical Concerns

EXECUTIVE SUMMARY

• IRAN HELPED PLOT ATTACK ON ISRAEL OVER SEVERAL WEEKS - WSJ
• FED’S BOWMAN SAY SHE EXPECTS HIGHER RATES NEEDED TO CURB PRICES - BBG
• LAGARDE CONFIDENT ECB’S POLICY WILL BRING INFLATION BACK TO GOAL - BBG
• NEUTRAL UPDATE NEEDED AFTER FOURTH PAUSE - EX RBA - MNI
• JAPAN LIKELY WON’T INTERVENE TO REVERSE YEN DOWNTREND- EX-TOP CURRENCY DIPLOMAT SAYS - RTRS

Fig. 1: Oil Benchmarks Rebound On Middle East Geopolitical Uncertainty

Source: MNI - Market News/Bloomberg

U.K:

POLITICS: “Britain's opposition Labour Party is on course to win a landslide victory at a national election expected next year, according to an opinion poll published on Saturday.” (RTRS)

BANKING: Metro Bank Holdings Plc has clinched a £925 million ($1.1 billion) financing package, a deal that will impose a 40% haircut on some bondholders and see Colombian financier Jaime Gilinski take a controlling interest. (BBG)

EUROPE:

ECB: “The European Central Bank’s policy will help tame inflation, according to President Christine Lagarde. “We want to bring inflation to 2% and we will succeed,” Lagarde told La Tribune Dimanche in an interview, adding that an inflationary spiral “must absolutely be avoided.” (BBG)

ECB: “European Central Bank President Christine Lagarde said the IMF has cut its forecasts for the global economy. “The International Monetary Fund has revised down its growth projections worldwide, except for the United States,” Lagarde told La Tribune Dimanche in an interview, according to a transcript on the ECB’s website.” (BBG)

ECB/FISCAL: “Euro-area governments are choosing not to pursue budgetary policies that support the European Central Bank’s efforts to tame inflation, according to Governing Council member Klaas Knot.” (BBG)

GERMANY: "Voters in two German states used a pair of regional elections on Sunday to chastise the three parties in chancellor Olaf Scholz’s coalition, as projections showed an upsurge in support for the radical right." (FT)

ITALY: “The recent surge in Rome’s borrowing costs show investors are positioning for a combination of weak growth and high debt, outgoing Bank of Italy Governor Ignazio Visco told the Financial Times.” (FT)

U.S.

FED: “Federal Reserve Governor Michelle Bowman said she’s sticking with her call that interest rates will likely need to increase further to return inflation to the Fed’s 2% goal quickly.” (BBG)

LABOR: “The UAW International Union says 4,000 UAW members at Mack Trucks have voted to reject a tentative agreement, it says in a post on X, the platform formerly known as Twitter. (BBG)

OTHER

MIDDLE EAST: “Iranian security officials helped plan Hamas's Saturday surprise attack on Israel and gave the green light for the assault at a meeting in Beirut last Monday, according to senior members of Hamas and Hezbollah, another Iran-backed militant group.” (BBG)

ISRAEL: Israel’s army was still battling the final Hamas militants who remained on its territory on Sunday evening 36 hours after their devastating attack on the Jewish state. But the country’s leadership was already turning its attention to the next stage of the fighting. (FT)

JAPAN: “Japan likely won't seek to reverse the yen's downtrend with exchange-rate intervention as recent falls reflect economic fundamentals, former top currency diplomat Naoyuki Shinohara told Reuters.” (RTRS)

AUSTRALIA: The Reserve Bank of Australia is likely to revise its models on the relation between employment, wages and monetary policy to better reflect how the economy, particularly the labour market, has responded to higher rates, according to a former senior Reserve economist. (MNI)

CHINA

TRAVEL: “Spending and travel over China’s Golden Week holiday undershot official expectations for growth, adding pressure on policymakers to be more aggressive with stimulus.” (BBG)

PROPERTY: “Home sales in most cities declined during the Golden Week holiday, despite property developers promoting more discounted projects. The average daily transaction area in 35 major cities dropped by about 20% compared with the same period last year, data by China Index Academy showed.” (21st Century Business Herald)

INFRASTRUCTURE: “China’s local governments may add urban regeneration to the list of projects supported by special bond issuance, the China Securities Journal reported.” (CSJ)

CHINA MARKETS

MNI: PBOC Drains Net 299 Bln Via OMO Mon; Rates Unchanged

The People's Bank of China (PBOC) conducted CNY20 billion via 7-day reverse repo on Monday, with the rate unchanged at 1.80%. The operation has led to a net drain of CNY299 billion after offsetting the maturity of CNY319 billion reverse repos today, according to Wind Information.

• The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8000% at 09:29am local time from the close of 1.7577% before 7-day long holiday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 28 on last trading day before golden week holiday, compared with the close of 50 on the previous day. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

PBOC Yuan Parity Lower At 7.1789 Monday Vs 7.1798 Thursday (28th September).

The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1789 on Monday, compared with 7.1798 set before the golden week holiday. The fixing was estimated at 7.2975 by Bloomberg survey today.

MARKETS

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
09/10/2023	0600/0800	**		DE	Industrial Production
09/10/2023	0600/0800	**		NO	Norway GDP
09/10/2023	0800/1000			EU	ECB's de Guindos Speaks at Conference
09/10/2023	0900/0500	*		US	Business Inventories
09/10/2023	1315/0915			US	Fed's Michael Barr
09/10/2023	1500/1100	**		US	NY Fed Survey of Consumer Expectations
09/10/2023	1730/1330			US	Fed Vice Chair Philip Jefferson
09/10/2023	2000/2100			UK	BoE's Mann speaks at NABE