Source: MNI - Market News/Bloomberg
UK
FISCAL (BBG): “Chancellor of the Exchequer Rachel Reeves touted new funding for Britain’s National Health Service as an upside for voters in a crunch budget this week expected to be dominated by tax hikes and extra borrowing.”
FISCAL (BBC): “The Budget will embrace the "harsh light of fiscal reality" but "better days are ahead", Sir Keir Starmer has said in a speech ahead of Wednesday's announcement. Speaking in Birmingham, the prime minister said his government would take "tough decisions", opting to raise taxes in order "to prevent austerity and rebuild public services".”
PRICES (BBG): “The British Retail Consortium-NielsenIQ in London report the October shop price index. Food +1.9% y/y vs Sept. +2.3% y/y. Non-food -2.1% y/y vs Sept. -2.1% y/y”
EU
ECB (MNI BRIEF): Weaker growth prospects are weighing on the outlook for financial stability in the euro area, ECB's vice president Luis de Guindos said in a speech Monday, adding that "geopolitical risks and political uncertainty continue to raise the likelihood of tail events."
NATO (BBC): “North Korean troops have been deployed to Russia and are operating in the Kursk border region where Ukrainian troops have a foothold, Nato has said for the first time. The alliance's Secretary General, Mark Rutte, said he could confirm the deployment after weeks of intelligence reports, following a meeting with South Korean security and defence officials on Monday.”
US
ECONOMY (MNI INTERVIEW): Rising U.S. unemployment can be attributed to a slowdown in demand rather than to immigration or structural factors, and labor market tightness has returned to the more normal conditions that prevailed in the years leading up to the pandemic, Minneapolis Fed economist Simon Mongey told MNI.
CORP (BBG): “Ford Motor Co. said full-year earnings would be at the low end of its forecast as the carmaker struggles with warranty costs and supply disruptions tied to recent hurricanes.”
OTHER
GEOPOLITICS (RTRS): “The U.S. will not impose new limits on Ukraine's use of American weapons if North Korea joins Russia's war, the Pentagon said on Monday, as NATO said North Korean military units had been deployed to the Kursk region in Russia.”
ISRAEL (BBG): “Israel’s Knesset has passed a bill to sharply restrict the main United Nations organization supporting Palestinians, further threatening the already slow flow of humanitarian aid to displaced people in Gaza.”
NORTH KOREA (BBG): “North Korea sent its foreign minister to Russia for her third trip in less than a year just as its troops arrived in Russia’s Kursk region near the border with Ukraine, a move that NATO Secretary General Mark Rutte described as a “significant escalation” in the two-and-half year old conflict.”
JAPAN (BBG): “Japan’s labor market tightened in September, indicating sustained pressure on companies to raise wages ahead of the Bank of Japan’s policy meeting this week.”
CHINA
RRR (ECONOMIC INFORMATION DAILY): "The People’s Bank of China is likely to cut the reserve requirement ratio in Q4 to boost liquidity and stands ready to lower the medium-term lending facility rate further depending on financial data results, the Economic Information Daily reported, citing analysts."
FLOWS (BBG): "Investors yanked money out of exchange-traded funds that buy Chinese stocks last week, halting a streak of inflows as the latest stimulus measures failed to impress investors."
US/CHINA (BBG): "The Biden administration finalized restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and artificial intelligence. "
CHINA MARKETS
MNI: PBOC Net Injects CNY224.4 Bln via OMO Tuesday
The People's Bank of China (PBOC) conducted CNY382.8 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY224.4 billion after offsetting the maturity of CNY158.4 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7001% at 09:40 am local time from the close of 1.7216% on Monday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 45 on Monday, compared with the close of 44 on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1283 Tues; +2.68% Y/Y
The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1283 on Tuesday, compared with 7.1307 set on Monday. The fixing was estimated at 7.1289 by Bloomberg survey today.
MARKET DATA
UK OCT. BRC SHOP PRICE INDEX -0.8% Y/Y; EST. -0.5%; PRIOR -0.6%
NEW ZEALAND FILLED JOBS SEPT 0.0% M/M; PRIOR 0.0%
JAPAN SEPT. JOB-TO-APPLICANT RATIO 1.24; EST. 1.23; PRIOR 1.23
JAPAN SEPT. JOBLESS RATE 2.4%; EST 2.5%; PRIOR 2.5%
SOUTH KOREA SEPT. DEPARTMENT STORE SALES +0.3% Y/Y; PRIOR +4.4%
SOUTH KOREA SEPT. DISCOUNT STORE SALES -6.5% Y/Y; PRIOR +5.9%
SOUTH KOREA SEPT. RETAIL SALES +6.7% Y/Y; PRIOR +9.2%
MARKETS
US TSYS: Tsys Futures Edges Slightly higher, Ranges Narrow, Volumes Low
- Tsys futures have edged slightly higher throughout the session, ranges have been narrow, while volumes are well down on Monday's. It has been a very quiet session for headlines or economic data. Asian equities have seen some weakness over the past hour, however nothing major to note. TU is +00⅜ at 103-01⅞, while TY is +02 at 110-24+, key support is seen at 110-13 (61.8% retracement of the Apr - Sep bull cycle (cont))
- Cash tsys are little changed today, the 2yr is -1.2bps at 4.126%, while the 10yr is also -1.2bps at 4.270% while the 3-7yr tenors are unchanged for the session.
- Fed fund futures have remained steady over the past week, there is 24.1bps priced at the November meeting and 43.1bps priced by year-end.
- Betting markets continue to swing further in Trumps favor, with Polymarket now showing a 66.3 vs 33.7, Kalshi show 62 vs 38 both at or near widest levels, while RealClear Politics Poll average shows Trump with a slight lead of 48.6 vs 48.4 and although close, this is the highest Trump has been since June.
- Later today, Wholesale Inventories & Conf. Board Consumer Confidence is due out
JGBS: Futures Little Changed, Strong 2Y Auction, Light Local Calendar Tomorrow
JGB futures are little changed, -1 compared to settlement levels, after a choppy Tokyo session.
- Outside of the previously outlined labour market data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are ~1bps richer in today’s Asia-Pac session after yesterday’s sell-off extension. After a slow start to the week, US data and newsflow are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Cash JGBs are flat to 2bps richer across benchmarks beyond the 1-year (+2.1bps). The benchmark 2-year yield is 1.1bps lower at 0.452% after today’s supply.
- The 2-year bond auction displayed strong demand metrics today. The auction took place with an outright yield that was 5-10bps above last month’s level and just below the cyclical peak reached in early August - the highest level since 2009.
- Swap rates are flat to 2bps lower, with a flattening bias. Swap spreads are mixed.
- Tomorrow, the local calendar is light, with the Consumer Confidence Index as the sole release.
AUSSIE BONDS: Richer But Off Bests, Q3 CPI Tomorrow
ACGBs (YM +2.0 & XM +2.5) are richer but off Sydney highs on another data/newsflow light session.
- The move away from session cheaps was aided by cash US tsys, which are ~1bps richer in today’s Asia-Pac session. After a slow start to the week, US data and newsflow are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Australian Q3/September CPI data are released tomorrow and will be an important input into the November 5 RBA decision. Headline will be impacted by temporary government energy relief and so the trimmed mean will be the focus. There will also be continued attention on domestically-driven services.
- Cash ACGBs are 3bps richer with the AU-US 10-year yield differential at +18bps.
- Swap rates are 2bps lower, with EFPs slightly wider.
- The bills strip is slightly stronger across contracts, with pricing flat to +2.
- RBA-dated OIS pricing is flat to 3bps softer across 2025 meetings. A cumulative 4bps of easing is priced by year-end.
NZGBS: Cheaper But NZ-US 10Y Diff. Near YTD Low
NZGBs closed mid-range, with benchmark yields 2-3bps higher. Yields were 5bps higher early in the session as the local market played catch-up to the sell-off in US tsys after yesterday’s Labour Day holiday.
- The move away from session cheaps was aided by cash US tsys, which are ~1bps richer in today’s Asia-Pac session. After a slow start to the week, US data and newsflow are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Notably, the NZGB 10-year has outperformed its US counterpart, with the NZ–US yield spread narrowing by 6bps since Friday’s close to reach +17bps. This places the differential just above July's low of +13bps, the narrowest level since mid-2021.
- Swap rates closed 3-4bps higher.
- RBNZ dated OIS pricing closed flat to 3bps firmer across meetings. A cumulative 99bps of easing is priced by February, with 54bps by year-end.
- Tomorrow, the local calendar is empty.
- On Thursday, the NZ Treasury plans to sell NZ$175mn of the 3.0% Apr-29 bond, NZ$250mn of the 4.25% May-34 bond and NZ$75mn of the 1.75% May-41 bond.
FOREX: A$, NZD Weighed By Weaker Yuan, Yen Firms Modestly
AUD and NZD have underperformed, particularly against the yen, as the Tuesday Asia Pac session has unfolded. The break higher in USD/CNH above 7.1500 to fresh multi month highs, has weighed on the antipodeans.
- The USD BBDXY index is little changed, last near 1262.50. US equity futures are down a touch, while regional equity markets are mixed. US yields sit down a down, helping yen at the margins.
- The softness in China and Hong Kong equities has also likely weighed on the AUD.
- AUD/USD last sits at 0.6565/70 (off 0.25%), fresh multi month lows back to the first half of August. NZD/USD is near 0.5970, down 0.20%. Earlier data showed softer jobs filled for September.
- Commodity prices in the metals space are also down, copper off 0.6%, iron ore back to $102.45/ton/
- USD/JPY is back under 153.00, around 0.20% stronger in yen terms. Still, we remain comfortably within Monday's ranges. Better jobless data and further FX jawboning may have helped at the margin, but follow through has been limited.
- There were reports PM Ishiba is seeking a partial coalition with centrist party DPP (per Yomiuri), but a press conference with the DPP leader played down such prospects.
- Later US September trade, inventories, JOLT job openings, October consumer & Dallas Fed services confidence and August house prices print, as well as November German consumer confidence and UK September credit data. BoC’s Macklem and Rogers speak.
ASIA STOCKS: Equities Mixed Ahead Of Key Data & US Elections
Asian equities traded in a narrow range as investors focused on the upcoming US election, economic data, and Fed decision. While stocks rose in Tokyo and Australia, equities in China, Hong Kong, Taiwa and South Korea fell. US futures dipped, yield are steady as the market prepared for corporate earnings from major companies like Apple and Microsoft. Meanwhile, the Biden administration finalized restrictions on US investments in advanced technology in China, and Chinese ETFs saw outflows as recent stimulus measures underwhelmed.
- Japanese equities are the top performing in the region today, following on from Monday's bounce. The yen has recovered somewhat today, however still trades 0.60% off recent lows. The TOPIX is up 0.85%, with banking stocks outperforming (TOPIX Banks Index +2.63%), while the Nikkei is 0.55% higher, with Softbank 2.50% higher. Earlier, the Jobless rate missed estimates coming in a 2.4% vs 2.5% expected, and down from 2.5% in August.
- Hong Kong equities have erased earlier gains with the HSI now down 0.15%. Property is the worst performing with the Mainland Property Index falling 1.85%, the HSTech Index was up over 2% earlier, before paring some gains to now trade 1% higher for the session. China mainland equities are performing slightly worse today, with the CSI 300 down 0.60%.
- Large-cap Asian tech stocks are mostly lower today, which have dragged on both Taiwan & South Korean equities. South Korea's KOSPI is 0.30% lower after SK Hynix dropped 3.30%, while Taiwan's Taiex is 1.86% lower after TSMC dropped 2.40% & Hon Hai fell 2.80%.
- Foreign investors have been selling South Korean equities today, with a net outflow of $200m, with tech and chemicals seeing the majority of those outflows.
- Australia equities are 0.40% higher, with Financials contributing the most to index gains. Premium Investments have surged followed reports it has signed signed a binding share sale and implementation agreement with Myer. New Zealand equities have returned from a long weekend to closed 00.10% higher.
- US equities futures are slightly lower today, traders are positioning for a downside move heading into the US Election in the SPX. SPX Index which is currently trading at $5,823 shows the $4,700 strike puts have the most open interest for the Nov 8th maturity followed by the $5,000 puts while there is a 1.10 put/call ratio for the maturity.
OIL: Crude Holds Onto Monday’s Losses, Supply/Demand Trends In Focus
After falling over 5% on Monday in response to less inflammatory comments from Israel and Iran following Israel’s strikes on military targets, oil prices are moderately higher in APAC trading thus holding onto most of yesterday’s losses. WTI is off its intraday high of $68.08/bbl though to be up 0.3% to $67.56, close to the intraday low. Brent is 0.2% higher at $71.56/bbl, also near today’s trough. The USD index is little changed.
- Not only have the risks associated with the Iran/Israel conflict dissipated, but a Gaza ceasefire may be closer too, even if only a temporary one, with Israel voicing its willingness.
- With geopolitical risks in the background for now, the focus has returned to supply/demand fundamentals, especially as OPEC is planning to increase production from December. This puts renewed focus on US and China demand. Today industry-based US crude/product inventory data is released and oil markets will be watching Friday’s US payroll and ISM data closely too.
- Later US September trade, inventories, JOLT job openings, October consumer & Dallas Fed services confidence and August house prices print, as well as November German consumer confidence and UK September credit data. BoC’s Macklem and Rogers speak.
GOLD: Hovering Below All-Time High Ahead Of Key US Data
Gold is 0.5% higher and just shy of its all-time high of $2758.49 in today’s Asia-Pac session, after closing 0.2% lower at $2742.46 on Monday.
- After a slow start to the week's US data and newsflow, things are set to heat up with ADP Jobs and PCE Deflator data on Wednesday and Non-Farm Payrolls for October on Friday. There is also a heavy corporate earnings docket. Next Tuesday's presidential election will also likely keep some trading accounts on the sidelines.
- Market participants will be looking for US inflation and payroll data this week to guide on the pace of interest rate cuts by the Federal Reserve this year. Lower rates are typically positive for gold, which doesn’t pay interest.
- According to MNI’s technicals team, gold bulls remain in the driver’s seat, with sights on $2,767.1 next, a Fibonacci projection point, ahead of the $2,800.0 handle.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 29/10/2024 | 0700/0800 | * |  DE | GFK Consumer Climate |
| 29/10/2024 | 0700/0800 | ** |  SE | Retail Sales |
| 29/10/2024 | 0700/0800 | SE | Flash GDP | |
| 29/10/2024 | 0930/0930 | ** |  GB | BOE M4 |
| 29/10/2024 | 0930/0930 | ** | GB | BOE Lending to Individuals |
| 29/10/2024 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 29/10/2024 | 1255/0855 | ** |  US | Redbook Retail Sales Index |
| 29/10/2024 | 1300/0900 | ** | US | S&P Case-Shiller Home Price Index |
| 29/10/2024 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/10/2024 | 1300/0900 | ** | US | FHFA Home Price Index |
| 29/10/2024 | 1400/1000 | *** | US | Conference Board Consumer Confidence |
| 29/10/2024 | 1400/1000 | ** | US | housing vacancies |
| 29/10/2024 | 1400/1000 | *** | US | JOLTS jobs opening level |
| 29/10/2024 | 1400/1000 | *** | US | JOLTS quits Rate |
| 29/10/2024 | 1430/1030 | ** | US | Dallas Fed Services Survey |
| 29/10/2024 | 1530/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 29/10/2024 | 1530/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 29/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 29/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 29/10/2024 | 1930/1530 |  CA | BOC Governor Macklem at House finance committee | |
| 30/10/2024 | - |  JP | Bank of Japan Meeting | |
| 30/10/2024 | 0030/1130 | *** |  AU | CPI inflation |
| 30/10/2024 | 0030/1130 | *** | AU | CPI Inflation Monthly |
| 30/10/2024 | 0600/1400 | ** |  CN | MNI China Money Market Index (MMI) |
| 30/10/2024 | 0630/0730 | ** |  FR | Consumer Spending |
| 30/10/2024 | 0630/0730 | *** | FR | GDP (p) |
| 30/10/2024 | 0700/0800 | *** | DE | GDP (p) |
| 30/10/2024 | 0800/0900 | *** |  ES | HICP (p) |
| 30/10/2024 | 0800/0900 | *** | ES | GDP (p) |
| 30/10/2024 | 0800/0900 | ** |  CH | KOF Economic Barometer |
| 30/10/2024 | 0800/0900 | ** | SE | Economic Tendency Indicator |
| 30/10/2024 | 0855/0955 | ** | DE | Unemployment |
| 30/10/2024 | 0900/1000 | *** |  IT | GDP (p) |
| 30/10/2024 | 0900/1000 | ** | IT | PPI |
| 30/10/2024 | 0900/1000 | *** | DE | North Rhine Westphalia CPI |
| 30/10/2024 | 0900/1000 | *** | DE | Bavaria CPI |
| 30/10/2024 | 1000/1100 | *** |  EU | EMU Preliminary Flash GDP Q/Q |
| 30/10/2024 | 1000/1100 | *** | EU | EMU Preliminary Flash GDP Y/Y |
| 30/10/2024 | 1000/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 30/10/2024 | 1000/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 30/10/2024 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 30/10/2024 | - | GB | UK Budget | |
| 30/10/2024 | 1215/0815 | *** | US | ADP Employment Report |
| 30/10/2024 | 1230/0830 | *** | US | GDP |
| 30/10/2024 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 30/10/2024 | 1230/0830 | *** | US | Treasury Quarterly Refunding |
| 30/10/2024 | 1300/1400 | *** | DE | HICP (p) |