Source: Citi/MNI - Market News/Bloomberg
UK
INVESTMENT (BBG): “The UK recommitted to a major investment in carbon-saving technology even as rising costs mean it will only be possible to capture a fraction of the emissions released from industrial sites compared to previous estimates.”
EU
EU/CHINA (MNI BRIEF): European Union states look set to back the Commission's proposal to impose tariffs of between 8% and 35% on China-made electric vehicle imports in a vote on Friday morning, officials in Brussels told MNI.
GERMANY (RTRS): "Germany on Friday will vote against the introduction of European Union tariffs on Chinese electric vehicles, people with knowledge of the matter told Reuters on Thursday."
FRANCE (BBG): “Planned tax increases to get France’s budget deficit under control will hit about 300 of the country’s biggest companies, Prime Minister Michel Barnier said.”
US
ECONOMY (MNI INTERVIEW): U.S. services growth broadened in September to a 17-month high and looks likely to strengthen further in 2025 as investment increases, Institute for Supply Management chair Steve Miller told MNI Thursday.
ECONOMY (RTRS): U.S. dock workers and port operators reached a tentative deal that will immediately end a crippling three-day strike that has shut down shipping on the U.S. East Coast and Gulf Coast, the two sides said Thursday.
OTHER
MIDEAST (RTRS): The U.S. is discussing strikes on Iran's oil facilities as retaliation for Tehran's missile attack on Israel, President Joe Biden said on Thursday, while Israel's military hit Beirut with new air strikes in its battle against Lebanese armed group Hezbollah.
JAPAN (BBG): “The Bank of Japan will keep seeking the best timing to raise interest rates again as economic conditions continue to improve, according to former BOJ board member Takako Masai.”
JAPAN (RTRS): “Japanese Prime Minister Shigeru Ishiba formally instructed his cabinet on Friday to compile a fresh economic package to cushion the blow to households from rising living costs, Chief Cabinet Secretary Yoshimasa Hayashi said.”
CANADA (MNI BRIEF): The Bank of Canada is hiring a second external deputy governor and extended the term of the current outside member, saying getting wider perspectives has helped improve monetary policy.
AUSTRALIA (MNI Interview): Global Easing To Drive RBA Cuts To 3.5% In 2025
PHILIPPINES (BBG): “The Philippines will likely use quarter-point moves to slash its benchmark interest rate by around 175 basis points through 2025, according to Governor Eli Remolona, as a shock slowing of inflation backed his case for further easing.”
CHINA
MARKETS (BBG): “Billions of dollars have exited China’s largest money market exchange-traded funds just as billions more flowed into ETFs tracking equities, signaling that Beijing has finally drawn skeptical investors back to the country’s struggling stock market.”
MARKET DATA
NEW ZEALAND AUG FILLED JOBS M/M 0.2%; PRIOR -0.2%
AUSTRALIA AUG HOUSEHOLD SPENDING M/M 0.0%; MEDIAN 0.5%; PRIOR -0.5%
AUSTRALIA AUG HOUSEHOLD SPENDING Y/Y 1.7%; MEDIAN 2.9%; PRIOR 2.4%
AUSTRALIA AUG HOME LOANS M/M 1.0%; MEDIAN 1.0%; PRIOR 3.5%
MARKETS
US TSYS: Tsys Futures Trade In Narrow Ranges Ahead Of NFP
- Tsys futures have traded in narrow ranges throughout the session TY remains trading just above the 50-day EMA (113-29+) at 113-30+ a break below there would be the first time the contract trades below the 50-day EMA since July.
- Yield curves are slightly steeper with the 2s10s +0.427 at 14.263 vs recent highs of 23.585. Yields have given back majority of the sessions gains and are now trading flat to 0.6bps lower, with the 2yr -0.6bps at 3.700% and the 10yr is -0.2bps at 3.844%
- Oil rally looks to have taken a break and trades little changed today, while Gold has moved a touch higher over the past 30 mins following some reports that there has been more missiles fired at Israel.
- Fed funds futures are trading steady with little change over the past few sessions, Nov dated futures are pricing in 33.8bps of cuts, or roughly 35% chance of another 50bps cut.
- Focus is all on tonight's NFP where they expected to have firmed marginally to 150k in September although some analysts also look for upward revisions to August. The employment rate is expected to come in at 4.2% for a second month.
JGBS: Cash Bonds Little Changed Ahead Of US NFP
JGB futures are weaker and sit near session lows, -20 compared to settlement levels.
- Japan's new economy minister, Ryosei Akazawa, said on Friday that the timing of changes in the Bank of Japan's monetary policy should be aligned with the government's broader goal of exiting deflation. (per Reuters)
- "The timing of various monetary policy changes is very important," Akazawa said in a press conference. "It's important that they are aligned with our policy priorities such as exiting from deflation and growth in wages and investments."
- Cash US tsys are flat to 1bps richer in today’s Asia-Pac session after yesterday’s heavy session. All eyes have turned to nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker-than-expected 142k in August. That said, everyone remains on Middle East headlines watch.
- Cash JGBs are little changed across benchmarks beyond the 1-year (+2.8bps). The benchmark 10-year yield is 0.5bp higher at 0.838%.
- Swap rates are little changed out to the 10-year but 3-4bps higher beyond. Swap spreads are mixed.
- On Monday, the local calendar will see Coincident & leading Indices alongside BoJ Rinban Operations covering 1-25-year JGBs.
AUSSIE BONDS: Cheaper Ahead Of US Non-Farm Payrolls
ACGBs (YM -6.0 & XM -6.0) are weaker and near Sydney session cheaps. With the domestic data calendar relatively light, local participants have been largely content to sit on the sidelines ahead of tonight’s release of US payroll data.
- Cash US tsys are flat to 1bps richer in today’s Asia-Pac session. All eyes have turned to nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker-than-expected 142k in August. That said, everyone remains on Middle East headlines watch.
- Cash ACGBs are 6bps cheaper with the AU-US 10-year yield differential at +23bps.
- Swap rates are 6bps higher.
- The bills strip has bear-steepened, with pricing -1 to -7.
- RBA-dated OIS pricing is flat to 7bps firmer for 2025 meetings. A cumulative 12bps of easing is priced by year-end.
- Next week, the local calendar will see the Melbourne Institute Inflation Gauge on Monday, ahead of September’s RBA Minutes, and Consumer and Business Confidence on Tuesday. A reminder that NSW, QLD and SA have a Labor Day holiday on Monday.
- The AOFM plans to sell A$500mn of the 3.25% 21 June 2039 bond on Wednesday and A$1.0bn of the 2.75% 21 November 2028 bond on Friday.
NZGBS: Outperforms $-Bloc, RBNZ Policy Decision Next Wednesday
NZGBs closed unchanged but at session bests ahead of the release of US Non-Farm Payrolls data later today.
- Outside of the previously outlined filled jobs data, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are flat to 1bps richer in today’s Asia-Pac session after yesterday’s heavy session. All eyes will now turn to headline nonfarm payrolls where growth is seen accelerating marginally to 150k in September after the weaker-than-expected 142k in August.
- On a relative basis, the NZGB 10-year has strongly outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials 4bps and 5bps tighter respectively.
- Growing expectations that the RBNZ will cut the OCR by 50bps at each of its two remaining policy meetings this year have assisted this outperformance. Economists point to the risk that inflation could undershoot the RBNZ’s 2% target.
- For next Wednesday's RBNZ Policy Decision, the market is pricing in a 74% chance (44bps) of a 50bp cut, with 92bps of easing by year-end.
- Swap rates closed flat to 2bps higher, with the 2s10s curve steeper.
- The local calendar is empty ahead of next week’s RBNZ meeting.
FOREX: Yen Trims Weekly Losses Ahead Of US NFP
USD/JPY gains for the week have been pared as the first part of Friday's session unfolds. Otherwise G10 FX moves have been quite muted, as we await the US payrolls print later. The USD BBDXY index sits down a touch, last near 1232.2.
- The BBDXY index is still close to recent highs and up over 1% for the week, which at this stage is the best weekly gain since April. A host of factors have aided the USD - better data outcomes, more hawkish Powell rhetoric and flight to safety amid Mid-east tensions. The next litmus test will be the NFP print later.
- For USD/JPY we are off 0.50%, last near 146.20. Yen is still down around 2.75% for the past week. Japanese government efforts to show the new PM and BOJ are aligned (after yen slumped earlier in the week on dovish comments from new PM Ishiba) has likely helped JPY at the margins. We have also had an ex BoJ board member note the central bank will continue to seek timing around raising rates. the new government also plans further support for households under cost of living pressures.
- CHF is also firmer, up 0.20%, but cross asset signals in the equity space have mostly been against safe havens, with firmer gains in the region and US futures a touch higher. US yields are down a touch.
- AUD/USD is a touch higher, but still under 0.6850 at this stage. NZD/USD is steady near 0.6210. The market bias appears to be play AUD/NZD from the long side as we approach next week's RBNZ meeting. The cross sits at 1.1020/25, highs back to mid August.
- Looking ahead, the US NFP will be the main focus.
EQUITIES: Asian Equities Edge Higher With Tech Outperforming
- Asian stocks are mostly higher today led by gains in Hong Kong shares, as traders assessed the ongoing impact of Middle East tensions. The MSCI Asia Pacific Index rose 0.6%, boosted by major Chinese tech names like Tencent and Alibaba. Investors are optimistic about holiday spending data from the Golden Week in China, though mainland markets remain closed until Monday. Japan's stocks rose amid a weaker yen, and South Korea's market saw gains, though Taiwan edged lower after reopening post-typhoon. Despite today’s uptick, the regional benchmark is set for a 0.7% weekly decline, its first in four weeks.
- Shipping stocks fell across Asia as US dockworkers suspended their strike, while Asian energy producers like Woodside and S-Oil saw gains due to rising oil prices on fears of further Middle East conflict.
- China property stocks have been rather volatile today with the Mainland Property Index +1.35%, the BBG China Property gauge trades +0.50% although well off earlier highs of +6%.
- Nasdaq 100 Futures have broken back above 20,000 although levels we have been unable to hold above for any longer than an hour or so since breaking below on Tuesday. The HSTech index is trading up 3.50% which looks to be supporting the move with other large-cap Asian tech stocks also trade higher, Sk Hynix +3.10%, Hon Hai +3.50%, TSMC +0.75% although Japan's Tokyo Electron trades 1.65% lower.
- Elsewhere, Taiwan returns from serve weather with the Taiex -0.30%, gains in semiconductor names have been offset by losses in most other sectors and South Korean equities are seeing slightly better buying from foreign investors today which has contributed to the KOSPI trading 0.40% higher. Australia's ASX200 -0.80% has been weighed down by Miners.
Oil Steadies Following Yesterday’s Surge, Holding Strongly Weekly Gain
- As world leaders warn against an uncontrolled escalation in the Middle East, news emerged of significant bombing of Hezbollah targets in Beirut on Thursday.
- Joe Biden admitted on Thursday when asked if airstrikes would target Iranian oil facilities that ‘we are discussing that.’
- Crude oil’s price rise had stagnated yesterday following data out showing that inventory levels in the US were rising.
- However, on news of the airstrikes, prices surge with crude trading up towards US$74/bbl, settling in Asia’s morning at US$73.61/bbl.
- WTI also surged towards US$78/bbl, settling at US$77.50.
- For the week crude was up almost 8% with WTI up 7.70%.
- Iran pumps approximately 3 million barrels of oil per day and any impact on that supply would put upward pressure on prices.
- For WTI, having pierced resistance at the 50-day EMA, at $71.69, focus turns to $76.40 next, the Aug 26 high. (for the Nov 2024 contract).
GOLD: Steady Ahead Of US Payrolls Data
Gold is 0.3% higher in today’s Asia-Pac session, after closing little changed at $2655.89 on Thursday.
- Bullion has been steady over the past 24 hours ahead of the release of US Non-Farm Payrolls data later today.
- The market hopes the jobs print will shed light on the health of the US economy, as it weighs the potential for further monetary easing by the Federal Reserve.
- Lower rates are typically positive for gold, which doesn’t pay interest.
- Yesterday, ISM Services printed stronger than expected with some genuinely strong readings for both prices paid and new orders. However, the employment index fell back into contractionary territory, which took some of the gloss off an otherwise strong report.
- According to MNI’s technicals team, gold bulls remain in the driver’s seat and moving average studies are in a bull-mode set-up, highlighting a clear uptrend and positive market sentiment. The focus remains on $2,690.2 next, a Fibonacci projection, while firm support lies at $2,602.0, the 20-day EMA.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 04/10/2024 | 0545/0745 | ** |  CH | Unemployment |
| 04/10/2024 | 0645/0845 | * |  FR | Industrial Production |
| 04/10/2024 | 0700/0900 | ** |  ES | Industrial Production |
| 04/10/2024 | 0730/0930 | ** |  EU | S&P Global Final Eurozone Construction PMI |
| 04/10/2024 | 0755/0855 |  GB | BOE's Pill Speech at Chartered Accounts conference | |
| 04/10/2024 | 0830/0930 | ** | GB | S&P Global/CIPS Construction PMI |
| 04/10/2024 | 0900/1100 | * |  IT | Retail Sales |
| 04/10/2024 | 1000/1200 | EU | ECB's De Guindos remarks at Radio Intereconomia anniversary | |
| 04/10/2024 | 1230/0830 | *** |  US | Employment Report |
| 04/10/2024 | 1300/0900 | US | New York Fed's John Williams | |
| 04/10/2024 | 1310/1510 | EU | ECB's Elderson Speech at Change in Leadership event | |
| 04/10/2024 | 1400/1000 | * |  CA | Ivey PMI |