NEWS:
US (BBG): Liz Cheney to Campaign With Harris in Swing-State Wisconsin
Vice President Kamala Harris will be joined by former Representative Liz Cheney at a campaign stop in swing-state Wisconsin on Thursday as the Democratic nominee looks to tout the support of a longtime Republican critic of Donald Trump to expand her electoral coalition.
MNI US Payrolls Preview: Risks Of Upside Unemployment Surprise
Nonfarm payrolls growth is expected to have firmed marginally to 150k in September although some
analysts also look for upward revisions to August. A scenario with the u/e rate firmly rounding to 4.3% and payrolls growth of circa 100k could be sufficient for a material step towards pricing in 50bp but the elections on Nov 5 remain a key unknown.
BoE (The Guardian): Bailey hints at ‘more aggressive’ path for cutting interest rates if inflation news stays positive
Bailey said he was encouraged by the fact that cost of living pressures had not been as persistent as the Bank thought they might be. He said if the news on inflation continued to be good there was a chance of the Bank becoming more “a bit more activist” in its approach to cutting interest rates, now at 5%.
MIDDLE-EAST (MNI): MIDEAST: Direct Confrontation Escalates As IDF Incursion Into Lebanon Grows
In a statement, Hezbollah has claimed that its fighters have 'confronted an attempt' by Israeli forces to advance into Lebanon at the Fatima Gate, a border crossing point at the northern tip of Israel. The land on the Israeli side of the border has been closed off by the military in preparation for a ground incursion.
The Reserve Bank of New Zealand will strongly consider a 50-basis-point cut to the 5.25% official cash rate when it meets next week and look to solidify a faster easing tempo when it updates its forecasts following December's decision, former RBNZ staffers told MNI.
JAPAN (MNI): BOJ's Noguchi Sees "Not Too Distant" Rate Hike
Bank of Japan board member Asahi Noguchi said on Thursday the BOJ could raise the policy interest rate again in the "not too distant future," depending on economic data, without further elaboration.
JAPAN (MNI): BOJ Dec Rate Hike Hinges On US Outlook - Kameda
The Bank of Japan is likely to raise its policy interest rate further in December if financial markets and the Federal Reserve both foresee a soft landing for the U.S., former BOJ Chief Economist Seisaku Kameda told MNI.
The Bank of Japan has estimated the economy's output gap at -0.55% in Q2, its 17th straight quarter in negative territory following Q1's -0.72%, indicating upward pressure on prices continues with a time lag, data released by the BOJ showed on Thursday.
MNI: FRANCE SEP SERVICES PMI 49.6 (FLASH 48.3, AUG 55.0)
MNI: GERMANY SEP SERVICES PMI 50.6 (FLASH 50.6, AUG 51.2)
MNI: ITALY SEP SERVICES PMI 50.5 (FCAST 51.1, AUG 51.4)
- The DMP data shows that labour market is softening in quantity terms, wage growth has stabilised but expectations are still for slow positive employment growth ahead and wage growth that is above that consistent with a 2% inflation target. Things are more mixed when looking at price growth, a little bit of a blip this month on realised prices, but the trends still point lower.
EUROPEAN INFLATION: Sep SZ Details Show Services Contribution Declined vs Aug
Looking at the individual subcategories and their respective contributions to Swiss August headline CPI shows that while the main downside contribution indeed comes from the energy and fuels category (-0.18pp contr vs Aug), services inflation declined more than it appeared from the initial, rounded figures - its contribution to headline declined by almost 0.11pp since last month.
- Regardless of that, we think the print does not warrant a material reassessment of short-term SNB rate expectations - further easing has been the base case before, and an outsized cut appears unlikely given the policy rate already only stands at 1.0%. However, if inflation continues to print softer, that might push terminal rate expectations to the downside over time. In that context, though, note that energy, which was the main downside contributor here vs August, can be a low-persistence inflation category.
- The print did push CHF lower, with EURCHF standing at levels around 0.9417 at the time of writing - around 40 pips higher than pre-release.
- For details see table:
EGBS: Underperform Gilts Following Bailey Comments, Heavy Supply
Bund futures are -34 ticks today at 134.80, underperforming Gilts after dovish commentary from BoE Governor Bailey. Regional headline flow has been light, with heavy French and Spanish supply weighing on EGBs this morning.
- Although today is a German public holiday, major futures volumes have been in line/slightly above average. Cross-market trading with UK instruments has likely factored in there, given Bailey’s comments.
- Initial firm support in Bunds lies at 134.59, the 20-day EMA.
- Today’s LT OAT auction was successful, with the top of the target range sold (E12.0bln) and all four LT OATs seeing a stop price exceed the pre-auction mid-price. Spanish supply was also digested smoothly.
- An upward revision to the Eurozone September services PMI and slightly higher-than-expected monthly PPI inflation were not major market movers.
- The German cash curve has bear steepened, with 2s10s now at 7bps.
- 10-year peripheral spreads to Bunds are biased wider, with Estoxx 50 futures 0.5% lower today.
- Broader macro focus turns to US jobless claims and ISM services data.
GILTS: Outperformance Holds Post-Bailey, Off Session Highs
Gilt outperformance remains evident after BoE Governor Bailey opened the door to more activist rate cuts, if the inflation data allows.
- Gilt futures trade as high 98.53 before fading back to 98.30 with wider core global FI markets under pressure and some questioning the degree of commitment to swifter cuts in Bailey’s comments.
- The bearish technical threat remains.
- Yesterday’s low (97.97) provides initial support, while bulls really need to overcome the Oct 1 high (99.47) to start turning the technical tide more in their favour.
- Yields 5bp lower to 1bp higher, curve twist steepening
- 10-Year gilt/Bunds back below 190bp, narrowing by 5bp from cycle wides registered on Wednesday.
- We still don’t think that the idea of 50bp BoE cuts is warranted at this stage.
- The market agrees with our view, with odds of sequential, as opposed to upsized, cuts rising this morning.
- BoE-dated OIS prices 25bp of easing for November, 42bp of cuts through December and 122.5bp of cuts through June ’25.
- SONIA futures are 1.0-8.5 firmer on the day, back from early session highs.
- U.S. data and Fedspeak headlines the macro calendar today, while the next UK risk event of note comes in the form of tomorrow’s appearance from BoE chief economist Pill.
- A dovish appearance from BoE's Bailey in this morning Guardian newspaper helped trigger a phase of dovish Bank of England re-pricing. OIS markets now price close to 45bps of easing for the rest of 2024, up from 37bps as of yesterday's close after Bailey stated that rates could be cut more aggressively if inflation stayed subdued. As a result, GBP/USD corrected lower to take out recent lows of 1.3237, taking out support to touch new pullback lows of 1.3106. This puts the pair on course for a test of the 50-dma at 1.3070 in the near-term, with a 300 pip gap now opened with the September high.
- The comment raise the focus on the September CPI print due on Oct 16th - a soft read should prompt markets to more aggressively price back-to-back 25bps rate cuts for the remainder of this year - keeping the BOE on course with the Fed and ECB, and leaving less risk of yawning rate differentials.
- While GBP is the weakest currency in G10, the greenback is the firmest, as this week's weakness in the EUR boosts the USD Index back toward the 102.00 handle - and through the 101.859 50-dma. This puts the currency at the highest level since early September. Strong jobs data today and tomorrow would extend the short-term streak of higher highs and higher lows.
- Weekly jobless claims data crosses today, alongside the ISM services index for September - both of which provide the last look at inflation ahead of Friday's payrolls print. Fed's Kashkari, Bostic and Schmid are also set to make appearances.
COMMODITIES: WTI Futures Falter at Test on 50-dma
Gold is unchanged and bulls remain in the driver’s seat. Recent gains confirm a resumption of the primary uptrend and maintain the bullish price sequence of higher highs and higher lows. WTI futures traded in a volatile manner Tuesday and the contract has recovered from its recent lows. Resistance at the 50-day EMA, at $71.63, has been pierced. A clear breach of this EMA is required to highlight a stronger reversal that would open $76.40, the Aug 26 high.
- WTI Crude up $1.02 or +1.46% at $71.31
- Natural Gas up $0.03 or +1.11% at $2.92
- Gold spot down $13.89 or -0.52% at $2645.57
- Copper down $3.2 or -0.69% at $461.7
- Silver down $0.34 or -1.05% at $31.534
- Platinum down $18.47 or -1.83% at $992.64
EQUITIES: Stocks Remain Within Range of Recent Highs
A bull cycle in S&P E-Minis remains intact and the latest shallow pullback is considered corrective. Recent gains reinforce a bullish theme and note that moving average studies are in a bull-mode setup, highlighting a dominant uptrend. Eurostoxx 50 futures traded sharply higher last week resulting in a clear break of 5024.00, the Sep 3 high. This confirms a resumption of the bull leg that started Aug 5 and cancels a recent bearish theme.
- Japan's NIKKEI closed higher by 743.3 pts or +1.97% at 38552.06 and the TOPIX ended 31.75 pts higher or +1.2% at 2683.71.
- Across Europe, Germany's DAX trades lower by 174.83 pts or -0.91% at 18990.93, FTSE 100 lower by 1.21 pts or -0.01% at 8290.73, CAC 40 down 81.79 pts or -1.08% at 7496.82 and Euro Stoxx 50 down 48.31 pts or -0.97% at 4915.78.
- Dow Jones mini down 177 pts or -0.42% at 42333, S&P 500 mini down 22 pts or -0.38% at 5738, NASDAQ mini down 99.75 pts or -0.5% at 19909.75.
| Date | GMT/Local | Impact | Country | Event |
| 03/10/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 03/10/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 03/10/2024 | 1400/1000 | *** | US | ISM Non-Manufacturing Index |
| 03/10/2024 | 1400/1000 | ** | US | Factory New Orders |
| 03/10/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 03/10/2024 | 1440/1040 | US | Fed's Raphael Bostic, Neel Kashkari | |
| 03/10/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 03/10/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 04/10/2024 | 0130/1130 | ** |  AU | Lending Finance Details |
| 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 |