EXECUTIVE SUMMARY
- ISRAELI GOVT SOURCE SAYS GREEN LIGHT FOR LEBANON CEASE-FIRE
- SNB CUTS RATES 25BPS, WILL USE FX INTERVENTION IF NEEDED
- HARRIS SAYS KEEPING US STEEL DOMESTIC ‘MOST IMPORTANT’ OVER JOBS
- OIL EXTENDS SHARP DROP OVER PROSPECTS OF MORE LIBYAN SUPPLY
Figure 1: Saudi, Libya supply and cease-fire headlines prompt solid dip in WTI futures
Source: MNI/Bloomberg
NEWS
ISRAEL/MIDEAST (BBG): Israeli Govt Source Says Green Light for Lebanon Cease-fire: N12
There is a green light from Israel for a cease-fire for the purpose of conducting talks, Channel 12 news reports, citing an unnamed person in the Prime Minister’s office.
ISRAEL/MIDEAST (BBG): Lebanon Says Hezbollah Shows Flexibility With Israel Truce
Hezbollah has shown flexibility with regards to a proposal for a cease-fire with Israel, according to Lebanon’s economy minister, as world powers rush to prevent a full-blown war between the two. “We feel there is a lot of flexibility in the past 24 hours from Hezbollah’s side,” Economy and Trade Minister Amin Salam told Bloomberg TV on Thursday. The US, European and Arab countries are calling for a three-week truce between Israel and Iran-backed Hezbollah in a deal that could prevent an Israeli ground offensive of southern Lebanon and potentially help end the Israel-Hamas war in Gaza.
ISRAEL (BBG): Israel Prime Minister Says Has Not Responded to Truce Proposal
Israel Prime Minister Benjamin Netanyahu’s office says “the news about a ceasefire is incorrect. This is an American-French proposal, to which the prime minister did not even respond.” Says report that the prime minister asked the army to moderate the fight in Lebanon is not true. “The Prime Minister instructed the IDF to continue the fighting with full force, and according to the plans presented to him.”
US (BBG): Harris Says Keeping US Steel Domestic ‘Most Important’ Over Jobs
Democratic presidential candidate Kamala Harris said keeping domestic control of steel production was more important than possible job losses if a proposed deal for Nippon Steel Corp., a Japanese company, to purchase United States Steel Corp. fell through. “It’s most important that we maintain America’s ability to have American manufacturing of steel by American workers,” Harris said Wednesday in an interview with MSNBC, when asked which concern weighed more heavily in her consideration of the deal.
US (BBG): NYC Mayor Eric Adams Indicted After Federal Corruption Probe
New York City Mayor Eric Adams has been indicted following a federal corruption investigation, according to people familiar with the matter, calling into question the political future of the man in charge of running the biggest US city. The indictment of Adams, just the second Black mayor in the city’s more than 400-year history, is a remarkable turn for a former police captain who beat a crowded field to win the New York City mayor’s race in 2021 — running on a law and order platform that pledged to make city government work better.
FED (MNI): Fed’s Kugler Strongly Backed 50bp Cut, More Cuts Ahead
Federal Reserve Governor Adriana Kugler said Wednesday she strongly backed the FOMC’s half point interest rate cut last week, adding she expects additional reductions in borrowing costs if the economic outlook develops as she foresees. “The combination of significant ongoing progress in reducing inflation and a cooling in the labor market means that the time has come to begin easing monetary policy, and I strongly supported the decision last week by the Federal Open Market Committee to cut the federal funds rate by 50 basis points,” Kugler said in prepared remarks.
SNB (MNI): SNB Cuts Rates, Will Use FX Intervention if Needed
The Swiss National Bank cut its policy rate by 0.25 percentage points to 1.0% on Thursday, as anticipated, with the threshold-adjusted sight deposit rate cut to 0.5%. SNB policymakers also stressed their willingness to be active in the foreign exchange market as necessary. According to the policy statement, the rate cut reflected both the strength of the Swiss franc and the continued decline of inflationary pressures throughout the domestic economy. The inflation outlook has been lowered across the board, with the SNB's new forecast showing price growth within the range of price stability over the whole forecast horizon. It puts average annual inflation at 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026.
ECB (RTRS): ECB Doves to Push for Rate Cut in Oct, Hawks to Dig In - Sources
Policy doves at the European Central Bank are preparing to fight for an interest rate cut next month after a string of weaker-than-expected economic data, a move likely to meet resistance from their more conservative peers, seven sources told Reuters. ECB policymakers had seen an Oct. 17 rate cut as rather unlikely after lowering borrowing costs this month on the back of weaker growth forecasts and expectations for a continued, albeit bumpy, fall in inflation over the next year. However, disappointing euro zone business surveys and German sentiment data, as well as a bigger-than-envisaged slowdown in wages, have emboldened policymakers who favour lower rates - or doves in market parlance - to push for a cut, the sources said.
CHINA (MNI): China GDP Growth Likely 4.8% in Q3 - BOC
MNI (Beijing) China is likely to see a 4.8% GDP expansion in Q3, and a possible 5.1% in Q4 should supportive measures strengthen domestic demand, Bank of China said in its quarterly report on the economic and financial outlook on Thursday. BOC suggested fiscal authorities must intensify and accelerate efforts,increasing the budget deficit and issuing more government bonds, following the People's Bank of China's monetary policy easing measures this week. China should also push for the full removal of all types of house buying rules, such as encouraging first-tier cities to lift restrictions on purchases and cancelling or reducing property-related transaction taxes and fees.
CHINA (BBG): China Weighs $142 Billion Capital Injection Into Top Banks
China is considering injecting up to 1 trillion yuan ($142 billion) of capital into its biggest state banks to increase their capacity to support the struggling economy, according to people familiar with the matter. The funding will mainly come from the issuance of new special sovereign bonds, said the people, asking not to be identified discussing a private matter. The details have yet to be finalized and are subject to change, the people added. Such a move would be the first time since the global financial crisis in 2008 that Beijing has injected capital into its big banks.
CHINA (MNI): China's Politburo Eyes Additional Pro-Growth Policy
MNI (Beijing) Beijing will step up efforts to meet its 5% annual growth target by launching additional measures and improving policy effectiveness, according to the details of Thursday's Politburo meeting reported by the People’s Daily. China must increase countercyclical adjustments, ensure fiscal spending and use government bonds to drive investment, while lowering the reserve requirement ratio and implementing strong interest-rate cuts, the Politburo stated.
BOJ (MNI): Board Notes Potential for Rate Hikes - BOJ Minutes
A Bank of Japan board member emphasised the need to adjust the degree of easy policy further following the BOJ Board's call to raise the policy interest rate to 0.25% at the July meeting, the minutes of the meeting showed on Thursday. The BOJ should raise the policy rate to neutral, estimated to be at least 1%, toward the second half of the projection period, said another member. “Many members shared the recognition that real interest rates were expected to remain significantly negative even if the Bank raised the policy interest rate slightly, and accommodative financial conditions would continue to support economic activity,” the minutes showed.
BOK (BBG): BOK Member Flags Optimism Policies to Curb Home Prices Will Work
A Bank of Korea member flagged expectations that government measures aimed at reining in housing prices will gradually take effect, underscoring hopes that a cooling property market may allow the central bank to begin a policy pivot as early as next month. Until now a hotter-than-expected recovery in Seoul’s home prices has kept the BOK from pivoting to an easing cycle as authorities feared easier policy settings might raise the risk of financial imbalances. South Korea has one of the highest levels of household debt in the developed world.
RBA (MNI): RBA Says Financial System Robust
Australia’s financial system remains robust despite indicators of household financial stress increasing, the Reserve Bank of Australia's Financial Stability Report revealed Thursday. “Overall, households have remained resilient to the effects of high interest rates and inflation. However, pockets of stress remain, and debt-servicing and cost-of-living pressures continue to disproportionately affect lower income households,” the reported noted.
LIBYA/OIL (MNI): Libyan Rivals Reach Compromise on Appointing Central Bank Leader
Libya’s factions reached a “compromise” on appointing new leadership for the OPEC member’s central bank, the United Nations said, an initial step toward eventually resolving a crisis that’s slashed oil output. Representatives from Libya’s rival eastern and western administrations “initialed an agreement on the procedures, criteria, and timelines for appointing a governor, deputy governor and board of directors,” the UN mission to the country said Wednesday in a statement.
SAUDI ARABIA/OIL (FT): Saudi Arabia Ready to Abandon $100 Crude Target to Take Back Market Share
Saudi Arabia is ready to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output, in a sign that the kingdom is resigned to a period of lower oil prices, according to people familiar with the country’s thinking. The world’s largest oil exporter and seven other members of the Opec+ producer group had been due to unwind long-standing production cuts from the start of October.
FOREX: Dollar Bounce Falters, AUD Underpinned by China Rally
- The large part of yesterday's late USD rally is holding into the NY crossover, with EUR/USD failing to make material headway above 1.1150 and GBP/USD posting only a modest bounce off the pullback low of 1.3313. That said, the USD is softer against most others in G10 on an intraday basis, with AUD and NZD performing most solidly.
- Market moves follow a further commitment on stimulus from the Chinese authorities overnight, who made a rare commitment to growth by pledging to ramp up policities targeting both the housing market and interest rates. The headlines clearly carried weight as the Politburo intervened - helping a strong positive close for Asia-Pac equities and a +4% rally in the CSI-300 just ahead of next week's Golden Week market holidays.
- The firm risk sentiment has underpinned AUD and NZD, keeping AUD/USD within range of yesterday's highs of 0.6908 - clearance here would resume the primary uptrend to target the best levels since March of last year.
- Meanwhile, JPY trades softer, helping USD/JPY build on yesterday's rally and target a concrete close above 145.00 today. The level has been pierced, but bulls will be eyeing a close above here to test the 50-dma of 146.49. Today's global equity rally will be helping thew theme.
- Slippage in oil prices on the back of positive supply stories from Libya and Saudi Arabia have somewhat dented progress in CAD and NOK, which sit alongside USD at the bottom of the G10 pile. CHF outperforming JPY as the SNB declined a super-sized 50bps cut and opted for 25bps at this morning's decision.
- Fed speak ahead is busy - with weekly jobless claims stats and the prelim August durable good orders the data highlights.
EGBS: Supported by October ECB Cut Speculation and Crude Pullback
The pullback in crude prices and heightened speculation of an October ECB rate cut have supported EGBs this morning. Bunds are +37 at 134.81 but remain short of yesterday’s 134.98 high.
- Reuters reported that policy doves are pushing for a rate cut in October, helping the OIS implied probability of a cut at that meeting extend to ~70% (vs 20% at the start of this week).
- The German cash curve has bull steepened as a result, with 2s10s now at 6bps.
- OAT futures underperform, currently +29 at 126.63, amid rumours that France has asked the EC for a 2-year delay in reaching its 3% deficit target (i.e. in 2029 instead of 2027). The 10-year OAT/Bund spread is 1bp wider at 80bps, while the Spain/France spread has turned negative.
- 10-year peripheral spreads to Bunds have tightened owing to this morning’s strong equity market rally, with BTPs outperforming.
- Eurozone August money supply growth was 2.9% Y/Y (vs 2.5% cons).
- Focus turns to potential remarks from Lagarde, de Guindos and Schnabel, alongside this afternoon’s suite of US data.
GILTS: Wider vs. Bunds
Gilts continue to widen vs. Bunds.
- Readthrough into fiscal policy from PM Starmer suggesting that he wants government spending to catalyse private investment, while noting that he has “always thought that we should borrow to invest”, was likely behind the early widening.
- German paper then benefitted from a dovish RTRS sources piece, pushing the move further.
- Futures last 98.56, in the middle of a 32-tick range.
- The corrective technical cycle in the contract has extended in recent days.
- Today’s low protects key support at the Sep 2 low (98.11).
- Bulls need to retake resistance seen at the 20-day EMA (99.82).
- Yields 1bp lower to 1bp higher, curve twist steepens.
- BoE-dated OIS still shows ~40bp of cuts through year-end and just under 125bp of cuts through June ’25.
- SONIA futures -0.5 to +1.5, sticking to narrow ranges on the day.
- Nothing of note on the UK calendar today, which will leave focus on central bank comments from the ECB & Fed, as well as the U.S. data.
EQUITIES: E-Mini S&P Breaks Above $5800 Handle, Strengthening Bullish Conditions
Eurostoxx 50 futures have started the session strongly, reorienting focus on the September highs and bull trigger at 5024.00. It is still possible that recent gains are corrective. MA studies are in a bear-mode position and this highlights a downtrend. A reversal lower would refocus attention on key support at 4757.00, the Sep 6 / 10 lows. Key resistance is 5024.00, the Sep 3 high. A break would cancel a bearish theme and strengthen bullish conditions. A bull cycle in S&P E-Minis firmed this morning with the break above both round number resistance at 5800 and the 0.50 projection for the Sep 6 - 17 - 8 minor price swing at 5818.12. This confirms a resumption of the long-term uptrend. First key support is 5628.50, the 50-day EMA. Initial support lies at 5689.85, the 20-day EMA.
- Japan's NIKKEI closed higher by 1055.37 pts or +2.79% at 38925.63 and the TOPIX ended 70.62 pts higher or +2.66% at 2721.12.
- Elsewhere, in China the SHANGHAI closed higher by 104.647 pts or +3.61% at 3000.953 and the HANG SENG ended 795.48 pts higher or +4.16% at 19924.58.
- Across Europe, Germany's DAX trades higher by 235.3 pts or +1.24% at 19153.69, FTSE 100 higher by 39.2 pts or +0.47% at 8307.9, CAC 40 up 128.56 pts or +1.7% at 7694.18 and Euro Stoxx 50 up 88.9 pts or +1.81% at 5005.79.
- Dow Jones mini up 206 pts or +0.49% at 42482, S&P 500 mini up 45.25 pts or +0.78% at 5824.25, NASDAQ mini up 271.75 pts or +1.35% at 20463.75.
Time: 09:55 BST
COMMODITIES: WTI Futures Sharply Reverse Bulk of Recent Gains
WTI futures are softer for a second session, reversing a large part of recent gains. This affirms the strength of resistance at the 50-day EMA of 72.25, which remains the key upside level. This price action confirms the recovery since Sep 9 as a correction. Note that MA studies are in a bear-mode set-up, highlighting a dominant downtrend. A reversal lower would refocus attention on $64.61, the Sep 10 low and bear trigger. Gold bulls remain in the driver’s seat and the yellow metal has again traded to a fresh all-time high. The move higher confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull-mode set-up, highlighting a clear uptrend and positive market sentiment. The focus is on $2675.5 next, a Fibonacci projection. Firm support lies at $2567.4, the 20-day EMA.
- WTI Crude down $1.68 or -2.41% at $67.99
- Natural Gas up $0.02 or +0.91% at $2.661
- Gold spot up $10.75 or +0.4% at $2667.52
- Copper up $4.55 or +1.01% at $453.55
- Silver up $0.34 or +1.07% at $32.1585
- Platinum up $16.74 or +1.69% at $1007.95
Time: 09:55 BST
| Date | GMT/Local | Impact | Country | Event |
| 26/09/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 26/09/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 26/09/2024 | 1230/0830 | *** | US | GDP |
| 26/09/2024 | 1230/0830 | * |  CA | Payroll employment |
| 26/09/2024 | 1230/0830 | ** | US | Durable Goods New Orders |
| 26/09/2024 | 1310/0910 | US | Fed's Susan Collins, Adriana Kugler | |
| 26/09/2024 | 1315/0915 | US | Fed Governor Michelle Bowman | |
| 26/09/2024 | 1320/0920 | US | Fed Chair Jerome Powell | |
| 26/09/2024 | 1325/0925 | US | New York Fed's John Williams | |
| 26/09/2024 | 1330/1530 |  EU | ECB Lagarde address at ESRB Conference | |
| 26/09/2024 | 1400/1000 | ** | US | NAR Pending Home Sales |
| 26/09/2024 | 1415/1615 | EU | ECB's De Guindos in macroprudential policy panel | |
| 26/09/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 26/09/2024 | 1430/1030 | US | Fed Vice Chair Michael Barr | |
| 26/09/2024 | 1430/1030 | US | Fed Governor Lisa Cook | |
| 26/09/2024 | 1500/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 26/09/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 26/09/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 26/09/2024 | 1600/1800 | EU | ECB's Schnabel at Wirtschaftsrat der CDU e.V | |
| 26/09/2024 | 1700/1300 | US | Fed's Neel Kashkari, Michael Barr | |
| 26/09/2024 | 1700/1300 | ** | US | US Treasury Auction Result for 7 Year Note |
| 26/09/2024 | 1900/1500 | *** |  MX | Mexico Interest Rate |
| 26/09/2024 | 2010/1610 | US | New York Fed's Roberto Perli | |
| 26/09/2024 | 2200/1800 | US | Fed Governor Lisa Cook | |
| 27/09/2024 | 2330/0830 | ** |  JP | Tokyo CPI |
| 27/09/2024 | 0645/0845 | *** |  FR | HICP (p) |
| 27/09/2024 | 0645/0845 | ** | FR | PPI |
| 27/09/2024 | 0645/0845 | ** | FR | Consumer Spending |
| 27/09/2024 | 0700/0900 | *** |  ES | HICP (p) |
| 27/09/2024 | 0700/0900 | *** | ES | GDP (f) |
| 27/09/2024 | 0755/0955 | ** |  DE | Unemployment |
| 27/09/2024 | 0800/1000 | ** |  IT | PPI |
| 27/09/2024 | 0800/1000 | ** | EU | ECB Consumer Expectations Survey |
| 27/09/2024 | 0815/1015 | EU | ECB's Lane remarks at Fiscal Policy conference | |
| 27/09/2024 | 0900/1100 | ** | EU | EZ Economic Sentiment Indicator |
| 27/09/2024 | 0900/1100 | * | EU | Consumer Confidence, Industrial Sentiment |
| 27/09/2024 | 0940/1140 | EU | ECB's Cipollone speech at Economics of Payments XIII conference | |
| 27/09/2024 | 1000/1100 | ** |  GB | CBI Distributive Trades |
| 27/09/2024 | 1230/0830 | *** | US | Personal Income and Consumption |
| 27/09/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 27/09/2024 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/09/2024 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 27/09/2024 | 1330/0930 | US | Fed's Susan Collins, Adriana Kugler | |
| 27/09/2024 | 1400/1000 | ** | US | U. Mich. Survey of Consumers |
| 27/09/2024 | 1500/1100 | CA | Finance Dept monthly Fiscal Monitor (expected) | |
| 27/09/2024 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 27/09/2024 | 1715/1315 | US | Fed Governor Michelle Bowman |