EXECUTIVE SUMMARY
- JAPAN’S KATO DISCUSSES FX WITH YELLEN AFTER RAMPING UP WARNINGS
- ECB’S SIMKUS WANTS RATE CUTS BUT CAN’T JUSTIFY HALF-POINT MOVE
- JUST 1% OF POLYMARKET BETTORS ARE BOOSTING TRUMP’S ODDS
- GERMAN IFO UPTICK BROAD-BASED BUT PROPER REBOUND APPEARS NOT IMMINENT
Figure 1: One-Year Inflation Expectations at 3-Yr Low
NEWS
US/JAPAN (BBG): Japan’s Kato Discusses FX With Yellen After Ramping Up Warnings
Japan’s Finance Minister Katsunobu Kato discussed developments in the foreign exchange market with US counterpart Janet Yellen, a day after he intensified warnings over a rapid slide in the yen. “Recent moves in foreign exchange rates were discussed at a bilateral meeting today between Finance Minister Kato and Treasury Secretary Yellen,” Atsushi Mimura, Japan’s top currency official, told reporters in Washington on Thursday. “The two confirmed they would continue to closely communicate to exchange views.”
US (BBG): Just 1% of Polymarket Bettors Are Boosting Trump’s Odds
Since Sept. 1, more than 102,000 Polymarket users have bet on whether Donald Trump or Kamala Harris will be the next president of the United States, propelling Trump’s likelihood of victory to a high of 66.4% on Tuesday despite polls remaining close. According to trading activity, a small number of users are having an outsized impact on the odds. Nearly half of all purchase volume comes from 670 power traders representing 0.7% of all accounts, according to blockchain data from Dune.com. Many of these users are acting as market makers, buying and selling constantly to earn the small rewards Polymarket pays to accounts that provide liquidity. These users typically play both sides of the market and have limited exposure.
US (BBG): Musk Gives at Least $132 Million to Elect Trump, GOP Allies
Elon Musk gave another $56 million to elect Donald Trump and other Republicans in the final weeks of the 2024 election, bringing to at least $132 million the amount spent by the world’s richest person to elevate his allies to the White House and Congress, federal filings show. The donations - revealed in disclosures with the Federal Election Commission Thursday - show that the Tesla Inc. and SpaceX chief executive officer has poured money into the Washington trifecta: funding Trump’s White House bid, along with supporting House and Senate Republicans.
ECB (BBG): ECB’s Simkus Wants Rate Cuts But Can’t Justify Half-Point Move
European Central Bank Governing Council member Gediminas Simkus said people shouldn’t obsess over the size of a probable interest-rate cut in December, since the question of where borrowing costs will end up is more important. With money-market bets fluctuating on a possible half-point reduction at the final decision of the year, the Lithuanian central-bank chief said he couldn’t justify such a big move at present, but it’s the direction of travel that is key anyway.
ECB (BBG): ECB’s Vujcic Says He’s Open on December Rate Decision
European Central Bank Governing Council member Boris Vujcic said he hasn’t decided what outcome should be reached at the final interest-rate meeting of the year. “I’m completely open to any discussion in December,” he told CNBC. “Personally, I don’t know what the decision will be, nor I think we should know at the moment, because we should wait if we are data dependent, we should not now talk about 25 basis points versus 50, or maybe a pause in December. Anything can happen depending on the incoming data.”
FRANCE (MNI): Budget Debate Extended to Saturday Amid Mountain of Amendments
On 24 Oct it was confirmed that deputies in the National Assembly will continue debate on the revenue side of the draft finance bill (PLF) into Saturday 26 Oct amid a mountain of amendments that need to be decided on. The debate had been due to close at midnight on 25 Oct, with a vote on 29 Oct. However, as of the evening of 24 Oct there were still ~2,500 of the ~3,500 amendments to be decided upon. The leftist New Popular Front has said that it will pull a quarter of its ~1,200 amendments to try to get a vote as soon as possible. The centrist Ensemble pour la Republique (EPR) of President Emmanuel Macron will withdraw 100 of its ~900 amendments in a similar effort according to party chair Gabriel Attal.
UK (BBG): UK Critical Mineral Importers to Get Financial Support in Budget
UK companies which import critical minerals will be given greater financial support in Chancellor of the Exchequer Rachel Reeves budget next week, in an effort to bolster British industries and reduce their reliance on China. Importers of lithium, graphite and cobalt for use in manufacturing in the UK will be granted access to UK Export Finance, a state body that usually helps British exporters and their buyers with financing and insurance, people familiar with the matter said.
CHINA (BBG): PBOC-Backed Group Surveys Chinese Banks on Interbank Deposits
China’s interest rate self-disciplinary mechanism, a supervisory body overseen by the PBOC, is conducting a survey on some lenders’ interbank deposits to look into the size of the funds deposited and the rates offered, according to people familiar with the matter. The survey mainly focuses on interbank deposits placed by non-financial institutions, with questions including the spread between the deposits and other investment options, and year-to-date changes in the deposit amount, the people said
CHINA (BBG): Xi’s Stimulus Package Met With Wall of Skepticism in Washington
President Xi Jinping’s boldest economic stimulus since the pandemic failed to impress global luminaries gathered in Washington this week, who called for more measures to rebalance China’s growth and greater clarity over Beijing’s policy plans. Central bank governors and finance ministers threw cold water on China’s recent roll-out of rate cuts, more cash for banks and housing sector support on the sidelines of the annual meeting of the International Monetary Fund and World Bank.
CHINA (BBG): China Steel Group Calls for Supply Restraint After Price Rally
China’s major steel industry group is calling for mills to be disciplined in restraining production after government stimulus efforts stoked a rebound in prices of the alloy. There haven’t been any notable changes in orders for steel products, the China Iron & Steel Association said in a statement late Thursday following a meeting of 18 producers. Any rebound in prices doesn’t reflect a reversal of the longer-term dynamic of oversupply, it said.
RUSSIA/UKRAINE (MNI): Military Aid' From North Korea 'Would Be Our Sovereign Decision' - Putin
Speaking to state-run Rossiya 1 TV, Russian President Vladimir Putin said "Russia and North Korea are to make a decision on military aid contained in the bilateral agreement when the time comes". Says "It would be our sovereign decision whether we need to implement this article of the agreement". The Treaty on Comprehensive Strategic Partnership agreed in June states "that if one of the parties is subjected to an armed attack by any state or several states and finds itself in a state of war, the other party will immediately provide military and other assistance with all available means".
DATA
EUROZONE DATA (MNI): One-Year Inflation Expectations at 3-Yr Low - ECB
- ECB 1-YEAR CONSUMER INFLATION EXPECTATIONS 2.4%
- ECB 3-YEAR CONSUMER INFLATION EXPECTATIONS 2.1%
Consumers expect eurozone inflation to decline to 2.4% over the next 12 months, the lowest level since September 2021, the European Central Bank's September Consumer Expectations Survey showed on Friday. Expectations for inflation three years ahead also declined, falling 0.2 percentage points to 2.1% - the lowest since February 2022. Consumers across the bloc perceive the current inflation rate to be 3.4%, down from 3.9% in August but double the level of the 1.7% reported by Eurostat for September. Uncertainty about inflation expectations over the next 12 months remained unchanged, also at its lowest level since February 2022, the survey showed.
GERMAN DATA (MNI): IFO Uptick Broad-Based But Proper Rebound Appears Not Imminent
- GERMANY OCT IFO BUSINESS CLIMATE INDEX 86.5
Germany's IFO Business Climate Index rebounded slightly in October after four consecutive falls, to 86.5 (September 85.4), also outperforming expectations of 85.6. The print broadly mirrors yesterday's flash PMI release, with both services and manufacturing up. However, the relative uptick in services was more pronounced in the IFO, contrary to the PMI. Overall, the print suggests that the prior downward momentum is not set to further intensify - but a proper rebound appears quite far away at this stage. Current assessment at 85.7 (vs 84.4 cons and prior) and expectations at 87.3 (vs 86.9 cons; prior upwardly revised 0.1 to 86.4) broadly saw similar improvements.
UK DATA (MNI): GfK Consumer Confidence Weakest Since March 2024
- UK OCT GFK CONSUMER CONFIDENCE INDEX -21
UK GfK Consumer Confidence fell for the second consecutive month to -21 (vs -20 prior), making it the lowest since March 2024. 3 of 5 subcomponents fell. The key future indicators were broadly unchanged, with the major purchase index up by 2 points, whilst personal financial situation over the next year is up 1 point and general economic situation is down one point relative to September. It looks as though the trend in consumer confidence and CPI is breaking down as CPI returns closer to target, as it did between 2020 and 2021.
FRANCE OCT CONSUMER SENTIMENT 94 (MNI)
JAPAN DATA (MNI): Japan Oct Tokyo Core CPI Rises 1.8% vs. Sept 2.0%
- JAPAN OCT TOKYO CORE CPI +1.8% Y/Y; SEPT +2.0%
- JAPAN OCT TOKYO CORE-CORE CPI +1.8% Y/Y; SEPT +1.6%
The Tokyo core inflation rate slowed to 1.8% y/y in October from September’s 2.0% for the second straight deceleration and fell below the bank’s 2% target for the first time in five months, data from the Ministry of Internal Affairs and Communications showed on Friday. The result was in line with market expectations. Lower energy prices (+2.5% vs. +9.5%) drove the result, although prices for food excluding perishables rose 3.8% vs. +2.8%.
JAPAN DATA (MNI): Japan Sept Services PPI Rises 2.6% vs. Aug 2.8%
- JAPAN SEPT SERVICES PPI +2.6% Y/Y; AUG REV +2.8%
- JAPAN SEPT SERVICES PPI -0.1% M/M: AUG REV +0.0%
Japan’s services producer price index rose 2.6% y/y in September, slowing from August’s revised 2.8%, showing that corporate pass-through of cost increases remained solid despite the pace slowing due to the strengthening yen, preliminary data released by the Bank of Japan on Friday showed. Weaker transportation and postal activities (+1.7% vs. +2.2%) and advertising services (+4.4% vs. +5.4%) drove the result. The SPPI fell 0.1% m/m in September after August's flat result.
RATINGS: Moody's on France, S&P on Belgium Headline after Hours
Rating reviews of note scheduled for after hours on Friday include:
- Moody’s on France (current rating: Aa2; Outlook Stable).
- S&P on Belgium (current rating: AA; Outlook Stable), Finland (current rating: AA+; Outlook Stable), Hungary (current rating: BBB-; Outlook Stable), Slovakia (current rating: A+; Outlook Stable) & Sweden (current rating: AAA; Outlook Stable)
- DBRS Morningstar on European Union (current rating: AAA; Stable Trend) & Italy (current rating: BBB (high); Stable Trend)
- Scope on Cyprus (current rating: BBB+; Outlook Stable)
FOREX: EUR Fails to Break Out, NZD Eyes First Close Below $0.60 in Two Months
- EUR/USD creeping to new daily highs of 1.0837 fails to stick, but has helped the pair break out of the very tight early Friday range. Concurrently, EUR/AUD has failed to show above the overnight highs - keeping the cross below 1.6354 resistance, as lower-than-expected Eurozone CPI expectations counter any hawkish read-through from Simkus comments - who repeated that he doesn't see the need for rate cuts of larger than 25bps.
- Nonetheless, antipodean currencies are underperforming despite the more rangebound equity market. NZD/USD has traded to a new pullback low of 0.5987, showing through the Wednesday low in the process. A close below $0.6000 would be the first since August, exposing 0.5975 support in the process.
- The greenback is somewhat firmer, but generally contained in early Friday trade. The USD Index is either side of the 104.00 handle, holding between the technical parameters of the 104.570 cycle high and the 200-dma support of 103.818.
- Canadian retail sales data is set to cross later today, alongside prelim durable goods numbers for September. Final University of Michigan stats for Octover also cross, but are unlikely to trigger any outsized market moves. Fed's Collins appears in a fireside chat, but the lack of a text release could contain any major policy messages.
BONDS: Bunds Underperform Gilts Amid Cautious ECB Speak
Bund futures underperform Gilts, with this morning’s more cautious ECB-speak seemingly outweighing lower-than-expected consumer inflation expectations and stronger-than-expected money supply growth.
- ECB’s Wunsch and Vujcic both consider the discussion of a 50bp cut in December to be premature, while Simkus provided more forceful pushback.
- ECB-dated OIS continue to assign a ~40% implied probability of a 50bp cut next meeting,
- The German IFO survey was stronger-than-expected, broadly mirroring yesterday’s flash PMI release.
- UK headline flow has been limited, with focus still on speculation ahead of next week’s budget, which has been an important driver of the near-10bp widening of the Gilt/Bund spread since Wednesday.
- Bund futures are -41 ticks at 133.10, with Gilt futures -11 ticks at 96.17.
- The 10-year Gilt/Bund spread has tightened almost 3bps to 194bps.
- 10-year peripheral spreads to Bunds are little changed. BTP Short Term and BTPei supply was digested smoothly.
- Moody’s review France’s sovereign credit rating after hours (current rating: Aa2; Outlook Stable). At least an outlook downgrade seems likely.
EQUITIES: Eurostoxx 50 Futures Continue to Trade Close to Recent Lows
Eurostoxx 50 futures continue to trade closer to their recent lows. For now, a bear threat remains present. The contract traded sharply lower on Oct 15 and has pierced the 50-day EMA, at 4947.73. 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. A breach of it would resume the uptrend. S&P E-Minis traded lower Wednesday and the contract remains below its recent highs. Short-term weakness is considered corrective and the uptrend remains intact. Price has traded through the 20-day EMA, at 5833.22, but is - for now - trading above this EMA. A clear break of this average would open 5749.80, the 50-day EMA. A stronger resumption of gains would refocus attention on 5961.00, a Fibonacci projection.
- Japan's NIKKEI closed lower by 229.37 pts or -0.6% at 37913.92 and the TOPIX ended 17.25 pts lower or -0.65% at 2618.32.
- Elsewhere, in China the SHANGHAI closed higher by 19.438 pts or +0.59% at 3299.7 and the HANG SENG ended 100.53 pts higher or +0.49% at 20590.15.
- Across Europe, Germany's DAX trades lower by 14.42 pts or -0.07% at 19428.18, FTSE 100 lower by 6.37 pts or -0.08% at 8262.98, CAC 40 down 20.56 pts or -0.27% at 7482.72 and Euro Stoxx 50 down 7.51 pts or -0.15% at 4927.94.
- Dow Jones mini up 46 pts or +0.11% at 42651, S&P 500 mini up 9.25 pts or +0.16% at 5858.25, NASDAQ mini up 42.25 pts or +0.21% at 20422.5.
Time: 10:00 BST
COMMODITIES: WTI Futures Above Weekly Low But Bearish Threat Present
WTI futures are trading above their recent lows. However, a bearish theme remains intact following the Oct 8 - 18 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 and price is trading closer to its recent highs. Recent gains resulted in a break of $2685.6, the Sep 26 high, confirming a resumption of the primary uptrend. This week’s extension reinforces the bull theme. Sights are on $2767.1 next, a Fibonacci projection point, ahead of the $2800.0 handle. Firm support is $2673.2, the 20-day EMA. A clear break of this EMA would signal scope for a deeper retracement.
- WTI Crude down $0.05 or -0.07% at $70.13
- Natural Gas up $0 or +0.08% at $2.524
- Gold spot down $16.88 or -0.62% at $2719.85
- Copper down $1.95 or -0.45% at $433.2
- Silver down $0.47 or -1.39% at $33.2236
- Platinum down $24.2 or -2.35% at $1004.86
Time: 10:00 BST
| Date | GMT/Local | Impact | Country | Event |
| 25/10/2024 | 1230/0830 | ** |  CA | Retail Trade |
| 25/10/2024 | 1230/0830 | ** |  US | Durable Goods New Orders |
| 25/10/2024 | 1230/0830 | ** | CA | Retail Trade |
| 25/10/2024 | 1300/1500 | ** |  BE | BNB Business Sentiment |
| 25/10/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 25/10/2024 | 1500/1100 | US | Boston Fed's Susan Collins | |
| 25/10/2024 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 26/10/2024 | 1520/1620 |  GB | BOE's Bailey panellist at G30 Banking Seminar |