EXECUTIVE SUMMARY
- HARRIS BACKS $15 MINIMUM WAGE IN FIGHT WITH TRUMP OVER PAY
- ECB STARTING TO DEBATE IF RATES HAVE TO GO BELOW NEUTRAL, RTRS SOURCES SAY
- STARMER SAYS TRUMP ELECTION INTERFERENCE CLAIM WON’T DAMAGE TIES
- XI, MODI TO HOLD FIRST TALKS IN TWO YEARS AFTER BORDER DEAL
Figure 1: Rise in short-end US yields working in favour of USD/JPY
Source: MNI/Bloomberg
NEWS
US (BBG): Harris Backs $15 Minimum Wage in Fight With Trump Over Pay
Vice President Kamala Harris backed raising the federal minimum wage to at least $15 an hour, saying she would push lawmakers to follow through as she sought to bolster her standing on the economy with working-class voters. “At least $15 an hour, but we’ll work with Congress, right? It’s something that is going through Congress,” Harris said in an interview with NBC News that aired Tuesday night.
US (WaPo): Biden Spurs Controversy By Saying ‘We’ve Got to Lock Him Up’ About Trump
President Joe Biden sparked controversy Tuesday with a new attack line against former president Donald Trump, telling Democrats, "We've got to lock him up," before moderating to suggest he meant figurative rather than literal incarceration. After listing several dangers posed by a potential second Trump presidency at a Democratic Party campaign office here, Biden said: "I know this sounds bizarre. It sounds like, if I said this five years ago, you'd lock me up. We've got to lock him up."
US (BBG): Trump Excludes Asian, European Cars From Vehicle Tax-Break Plan
Donald Trump touted his pledge to provide tax breaks for purchasing cars, highlighting that the benefit would only apply to vehicles made in the US as he rallied voters in a crucial swing state with just two weeks until Election Day. “I don’t want it to benefit other countries. I want it to benefit us,” Trump said Tuesday at a rally in Greensboro, North Carolina. “Deductibility of interest is great, but only if the car is manufactured in the United States.”
US (BBG): Blinken Heads to Riyadh After Urging Israel to Ease Conflicts
US President Joe Biden’s top diplomat headed to Saudi Arabia on Wednesday, continuing his push for a broad truce in the various conflicts between Israel and Iranian-backed militants. Antony Blinken reiterated the White House’s warning to Israel that it shouldn’t retaliate against an Iranian missile attack this month in a way that worsens hostilities in the region. “We’ll always stand with Israel in its defense,” he said to reporters in Tel Aviv as he prepared to board a plane to Riyadh. “It’s also very important that Israel responds in ways that do not create greater escalation.”
US (WaPo): U.S. Officials Say Russia Smeared Tim Walz, Might Stoke Post-vote Violence
U.S. intelligence officials on Tuesday said Russians seeking to disrupt the U.S. elections created a faked video and other material smearing Democratic vice-presidential nominee Tim Walz with abuse allegations and are considering fomenting violence during and after the vote. The faked content accused Walz of inappropriate interactions with students while a teacher and coach. The posts drew millions of views on social media, falsely tarring the Minnesota governor ahead of Nov. 5.
US/UK (BBG): Starmer Says Trump Election Interference Claim Won’t Damage Ties
UK Prime Minister Keir Starmer said Donald Trump’s legal complaint against his Labour Party over alleged election interference won’t jeopardize their relationship if the former president wins the US election next month. Trump accused the UK’s ruling Labour Party of “blatant foreign interference” and illegal foreign campaign contributions to Democratic presidential candidate Kamala Harris’ campaign, in a filing with the Federal Election Commission earlier this week.
ECB (RTRS): ECB Starting to Debate if Rates Have to Go Below Neutral, Sources Say
European Central Bank policymakers have begun to debate whether interest rates need to be lowered enough to start stimulating the economy, ending years of economic restriction, conversations this week with half a dozen sources indicate. The ECB has been cutting rates quickly this year but policymakers have so far said the goal is a neutral setting, where the central bank is neither slowing nor stimulating growth in the hopes this will keep inflation stable. While the sources, who spoke on condition of anonymity, stressed that any consensus was still long off, it marks a significant shift in the policy-making debate which could ultimately lead to the bank cutting rates sooner and by more than currently expected.
ECB (BBG): ECB’s Lingering Inflation Risks Warrant Caution, Patsalides Says
The European Central Bank has room to lower borrowing costs further as inflation approaches its target but must pay close attention to upside risks, according to Governing Council member Christodoulos Patsalides. While the 20-nation euro economy is undoubtedly slowing and may prove weaker than the most recent forecasts indicate, the same can’t be said about price pressures, said Patsalides, who also heads the Cypriot central bank. Policymakers should therefore tread carefully and avoid removing restriction too soon.
FRANCE (MNI): French Cabinet to Discuss Art 49.3 for Budget
French gov't spox Maud Bregeon confirmed in an interview on France 2 that the Council of Ministers is set to meet today with the potential use of Art. 49.3 of the French constitution to push the budget through parliament without a vote on the agenda. Bregeon sought to emphasise that at this stage the discussions were a formality. Legally, before Art. 49.3 can be used, the Council of Ministers has to discuss and approve its implementation. The spox said that gaining ministerial approval would avoid the situation of a hastily convened meeting should the budget appear on course for defeat further down the line.
GERMANY (MNI): Outgoing FDI Shifts From China to the US; Incoming FDI Lagging - Bundesbank
The Bundesbank reports some shifting trends in outgoing and incoming German direct investment in their September monthly report. Specifically, they note higher direct investment into the US, slower new direct investment into China (some capital has even been withdrawn form the country), and limited recent success of Germany attracting foreign investment itself. Subdued incoming foreign direct investment into Germany i.e. lower fixed capital formation in the country would contribute to the ongoing unfavourable labour productivity developments in the country.
CHINA/INDIA (BBG): Xi, Modi to Hold First Talks in Two Years After Border Deal
Chinese President Xi Jinping and Indian Prime Minister Narendra Modi will hold their first bilateral meeting since 2022 on Wednesday, after the two countries eased a four-year border stalemate earlier this week. The two leaders will meet on the sidelines of the BRICS summit in the Russian city of Kazan, India’s foreign secretary Vikram Misri said Tuesday. Modi and Xi had a brief conversation when they attended the bloc’s meeting in Johannesburg in 2023 and last had a formal sitdown during the Group of 20 leaders’ summit in Bali a year earlier.
CORPORATE (BBG): Tesla Earnings to Show EV Maker Falling Further Behind Big Tech
With shares falling and profits shrinking, Tesla Inc. is increasingly looking like the odd one out among its mega-cap technology peers. Investors worry that quarterly results will make the electric-vehicle maker even more of an outlier. The Elon Musk-led company is the only member of the so-called Magnificent Seven which is expected to see profits decline in its latest quarterly results - and the only one that has seen Wall Street estimates come down from a year ago.
FOREX: USD Gains Further as Markets Narrow in on Election
- Markets continue to narrow in on the still too-close-to-call US election, with the near-term upside in the dollar showing little signs of abating. Greenback strength and the yawning US-JN 2yr yield spread are working further in favour of USD/JPY, which touched a new recovery high at 152.56 in European hours, extending the clearance of the 50% retracement of the downleg off the July high. 153.40 marks the next notable level.
- Pervasive USD strength extends across G10 this morning, with the USD Index touching 104.353 today for the highest print since early August. A close at current or higher levels for the USD Index confirms a clean break of 104.087 (61.8% retracement for the downleg off the April high) and provides another strong signal of near-term momentum in the greenback.
- GBP trades well, prompting a second consecutive session of losses for EUR/GBP, which remains tilted toward recent lows and the bear trigger at 0.8295. Moves come alongside the continued pricing and speculation that the ECB could up the pace of their rate cutting cycle as soon as the December meeting, with markets still pricing a ~50% chance of a 50bps step before year-end.
- The Bank of Canada today are expected to increase the pace of rate cuts with a 50bps move, more aggressively shifting Canadian monetary policy out of restrictive territory and closer toward neutral. A not insignificant minority, however, look for a smaller move of 25bps. The decision and statement are set for release at 1445BST/0945ET. US existing home sales and speeches from ECB's Lagarde, Lane, Cipollone, Escriva, Knot & Centeno, BoE's Bailey and Fed's Barkin make up the rest of the schedule.
EGBS: Curves Bull Steepen on More Aggressive ECB Rate Cut Expectations
EGB curves have steepened on the back of more aggressive ECB rate cut expectations, with the implied probability of a 50bp cut in December now at 40% (from 20% yesterday morning).
- Reuters sources suggested policymakers have begun to debate if rates need to be cut below neutral to stimulate the economy.
- The German curve has twist steepened, with 2-year yields almost 6bps lower and 30-year yields 1.5bps higher.
- Increased odds of a Trump election victory continues to underpin long-end yields across core FI.
- Germany will sell E4bln of the 2.60% Aug-34 Bund at 1030BST/1130CET.
- Bund futures are -7 ticks at 132.76.
- 10-year peripheral spreads to Bunds are tighter on the back of the increased rate cut expectations, with BTPs and GGBs outperforming.
- ECB-speak headlines today’s regional calendar, with only October flash consumer confidence data due at 1500BST/1600CET.
GILTS: Bear Steepening, Yesterday's Low Breached in Futures, Wider to Bunds
Spill over from Tsy trade weighed on gilts at the open.
- Several factors then added further pressure:
- A break of initial technical support at yesterday’s low in futures.
- Cross-market selling interest vs. Bunds in light of the dovish ECB repricing covered elsewhere.
- Speculation surrounding increased UK government spending on public sector pensions.
- Futures trade as low as 96.38, next meaningful support at the Oct 10 low/bear trigger (95.83).
- Yields 2.0-3.5bp higher, curve steeper. Yesterday’s highs in 2s10s and 5s30s untouched.
- Gilt/Bund Spread above 188bp (over 3.5bp wider) after the first close below 185bp since September on Tuesday.
- Mar-27 supply was digested smoothly.
- Early dovish repricing on BoE OIS strip more than reversed, contracts little changed to 3bp more hawkish on the day. ~24bp of cuts priced for November, 41bp showing through year-end and 111bp of cuts priced through June.
- SONIA futures flat to -5.0.
- BoE’s Breeden will speak on “Global priorities in financial sector regulation” (14:00 London), with the subject of the address seemingly set to limit the scope for meaningful monetary policy comments. BoE Governor Bailey will then speak via a fireside chat at the IIF after the close (19:45).
EQUITIES: E-Mini S&P Trend Conditions Unchanged, Signals Remain Bullish
Eurostoxx 50 futures are unchanged. For now, a bear threat remains present. The contract traded sharply lower on Oct 15 and has recently pierced the 50-day EMA, at 4947.94. A clear break of this average would undermine a recent bullish theme and highlight a stronger reversal. This would open 4884.06, a Fibonacci retracement. Key resistance and the bull trigger is 5106.00, the Sep 30 high. Clearance of this level resumes the uptrend. S&P E-Minis trend conditions are unchanged and signals remain bullish. The latest move lower is considered corrective. Recent fresh cycle highs confirm a resumption of the primary uptrend and maintain the bullish price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode setup, highlighting a dominant uptrend. Sights are on 5961.00, a Fibonacci projection. Initial support to watch is 5830.91, the 20-day EMA.
- Japan's NIKKEI closed lower by 307.1 pts or -0.8% at 38104.86 and the TOPIX ended 14.51 pts lower or -0.55% at 2636.96.
- Elsewhere, in China the SHANGHAI closed higher by 16.936 pts or +0.52% at 3302.803 and the HANG SENG ended 261.2 pts higher or +1.27% at 20760.15.
- Across Europe, Germany's DAX trades lower by 14.16 pts or -0.07% at 19409.24, FTSE 100 lower by 11 pts or -0.13% at 8295.59, CAC 40 down 31.66 pts or -0.42% at 7503.44 and Euro Stoxx 50 down 12.18 pts or -0.25% at 4927.13.
- Dow Jones mini down 150 pts or -0.35% at 43021, S&P 500 mini down 6.75 pts or -0.11% at 5885.75, NASDAQ mini down 45.75 pts or -0.22% at 20498.75.
Time: 09:55 BST
COMMODITIES: WTI Futures Holding Onto Bulk of This Week's Gains
WTI futures have recovered from their recent lows. However, a bearish theme remains intact following last week’s sell-off. A resumption of weakness would threaten the recent bullish theme and expose $65.99, the Oct 1 low, and $64.16, the Sep 10 low and a key support. For bulls, a stronger reversal would instead refocus attention on the key short-term resistance at $77.70, the Oct 8 high. Clearance of this level would resume to the recent uptrend. Gold bulls remain in the driver’s seat. Last week’s climb resulted in a break of $2685.6, the Sep 26 high, confirming a resumption of the primary uptrend. This week’s extension reinforces the bullish theme. Sights are on $2767.1 next, a Fibonacci projection point, ahead of the $2800.0 handle. Firm support is $2661.4, the 20-day EMA. A clear break of this EMA would signal scope for a deeper retracement.
- WTI Crude down $0.66 or -0.92% at $71.08
- Natural Gas down $0.02 or -0.69% at $2.293
- Gold spot up $7.42 or +0.27% at $2756.64
- Copper down $3.15 or -0.72% at $434.8
- Silver down $0.2 or -0.57% at $34.669
- Platinum up $3.83 or +0.37% at $1035.65
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 23/10/2024 | 1100/0700 | ** |  US | MBA Weekly Applications Index |
| 23/10/2024 | - |  EU | ECB's Lagarde and Cipollone in G20 FMs and CB Governors meeting | |
| 23/10/2024 | 1300/1400 |  GB | BOE's Breeden panellist at IIF meeting | |
| 23/10/2024 | 1300/0900 | US | Fed Governor Michelle Bowman | |
| 23/10/2024 | 1345/0945 |  CA | BOC Monetary Policy Report | |
| 23/10/2024 | 1345/0945 | *** | CA | Bank of Canada Policy Decision |
| 23/10/2024 | 1400/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 23/10/2024 | 1400/1000 | *** | US | NAR existing home sales |
| 23/10/2024 | 1400/1600 | EU | ECB's Lane participates in growth talk at IIF Meeting | |
| 23/10/2024 | 1400/1600 | EU | ECB's Lagarde Speech at Atlantic Council event | |
| 23/10/2024 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 23/10/2024 | 1430/1030 | CA | BOC Governor Press Conference | |
| 23/10/2024 | 1430/1630 | EU | ECB's Cipollone in panel by Bretton Woods Committee | |
| 23/10/2024 | 1600/1200 | US | Richmond Fed's Tom Barkin | |
| 23/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 23/10/2024 | 2030/2130 | GB | ECB's Bailey at IIF meeting | |
| 24/10/2024 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 24/10/2024 | 0030/0930 | ** |  JP | Jibun Bank Flash Japan PMI |
| 24/10/2024 | 0645/0845 | ** |  FR | Manufacturing Sentiment |
| 24/10/2024 | 0715/0915 | ** | FR | S&P Global Services PMI (p) |
| 24/10/2024 | 0715/0915 | ** | FR | S&P Global Manufacturing PMI (p) |
| 24/10/2024 | 0730/0930 | ** |  DE | S&P Global Services PMI (p) |
| 24/10/2024 | 0730/0930 | ** | DE | S&P Global Manufacturing PMI (p) |
| 24/10/2024 | 0800/1000 | ** | EU | S&P Global Services PMI (p) |
| 24/10/2024 | 0800/1000 | ** | EU | S&P Global Manufacturing PMI (p) |
| 24/10/2024 | 0800/1000 | ** | EU | S&P Global Composite PMI (p) |
| 24/10/2024 | 0830/0930 | *** | GB | S&P Global Manufacturing PMI flash |
| 24/10/2024 | 0830/0930 | *** | GB | S&P Global Services PMI flash |
| 24/10/2024 | 0830/0930 | *** | GB | S&P Global Composite PMI flash |
| 24/10/2024 | 1000/1100 | ** | GB | CBI Industrial Trends |
| 24/10/2024 | - | EU | ECB's Lagarde and Cipollone in G20 FMs and CB governors meeting | |
| 24/10/2024 | 1230/0830 | *** | US | Jobless Claims |
| 24/10/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 24/10/2024 | 1245/0845 | US | Cleveland Fed's Beth Hammack | |
| 24/10/2024 | 1300/1400 | GB | BOE's Mann panellist at Reinventing Bretton Woods session | |
| 24/10/2024 | 1345/0945 | *** | US | S&P Global Manufacturing Index (Flash) |
| 24/10/2024 | 1345/0945 | *** | US | S&P Global Services Index (flash) |
| 24/10/2024 | 1400/1000 | *** | US | New Home Sales |
| 24/10/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 24/10/2024 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 24/10/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 24/10/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 24/10/2024 | 1700/1900 | EU | ECB's Lane remarks at 'Inflation: Drivers and Dynamics' event | |
| 24/10/2024 | 1700/1300 | ** | US | US Treasury Auction Result for TIPS 5 Year Note |