Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EXECUTIVE SUMMARY
- MNI ECB PREVIEW - FIRST BACK-TO-BACK CUT
- HARRIS VOWS TO BE DIFFERENT THAN BIDEN IN FIERY FOX INTERVIEW
- CHINA’S $562 BILLION LOAN PUSH FOR UNFINISHED HOMES DISAPPOINTS
- AUSSIE LABOUR MARKET STRONG, ADDS 64K JOBS
Figure 1: Trump betting market lead over Harris widens
Source: electionbettingodds.com
NEWS
MNI ECB PREVIEW - OCTOBER 2024: FirstBack-To-Back Cut
Following the weaker-than-expected PMI and inflation data, the market and many on the Governing Council have rallied behind an October cut, which appears to be the most likely outcome. However, communicating the motivation for such a move will not be straight forward. An October cut would not violate the meeting-by-meeting or data dependent approach, but is somewhat at odds with the repeated assertion that the ECB is not “data point dependent.”
US (BBG): Harris Vows to Be Different Than Biden in Fiery Fox Interview
Vice President Kamala Harris sought to deflect criticism over the administration’s handling of the border crisis, her stance on transgender rights and her ties to President Joe Biden in a combative interview Wednesday on Fox News. “Let me be very clear, my presidency will not be a continuation of Joe Biden’s presidency, and like every new president that comes in to office, I will bring my life experiences, my professional experiences and fresh and new ideas,” Harris said.
US (NYT): Yellen to Warn Sweeping Tariffs Would Ignite Inflation
Treasury Secretary Janet L. Yellen plans to warn in a speech on Thursday that the economic policies being proposed by former President Donald J. Trump would fuel inflation and harm businesses, raising alarm about the risks of blanket tariffs. The critique, which is set to be delivered in remarks to the Council on Foreign Relations, comes less than a month before the presidential election. Mr. Trump and Vice President Kamala Harris have outlined starkly different views about how they see America’s role in the global economy.
US (WSJ): A Second Trump Presidency Stands to Radically Remake World Trade
In his first term as president, Donald Trump resurrected tariffs as a tool of economic diplomacy, regularly deploying them as a lever to extract new trade deals from other countries. The result was a world trading system with a bit more friction, but it remained largely intact. If Trump carries out what he has described on the campaign trail, his potential second term would be radically different. More than just a tool for negotiation, higher tariffs would be an end unto themselves. By one estimate, tariffs could reach their highest level since the 1930s.
US (BBG): US Stealth Bombers Strike Houthi Weapons Sites in Yemen
US B-2 stealth bombers struck weapons storage sites linked to Houthi rebels in Yemen, the latest effort to blunt attacks by the Iran-backed group that have roiled commercial shipping in the Red Sea. The strikes hit what Defense Secretary Lloyd Austin said in a statement were five hardened underground facilities. He said the use of the B-2 bombers was intended to send a message.
US (BBG): Biden Cancels Student Debt for Over 1 Million Public Servants
President Joe Biden marked a new milestone in his effort to forgive student loans, as the total number of public servants who have received relief exceeded 1 million since he took office. The administration on Thursday announced that it has approved $4.5 billion in student-debt cancellation for around 60,000 of the workers.
UK (Telegraph): Rachel Reeves’s Budget to Be Biggest Tax Raiser in History
The Chancellor’s maiden Budget later this month will involve as much as £35 billion of tax rises – the most on record in cash terms – as she protects her commitment to ending “austerity” and attempts to ensure departments avoid real-terms cuts in spending. It comes amid growing speculation that proposals will include the first increase in fuel duty for 13 years, as well as a backlash from Cabinet members seeking to stave off spending reductions. Those raising concerns include Angela Rayner, the Deputy Prime Minister, it was reported on Wednesday night.
UK (MNI): Updates on Latest Budget Measures
Multiple media reports are suggesting that Chancellor Reeves is seeking to fund GBP40bln - for a combination of filling the fiscal "black hole" and also funding Labour's election spending pledges / public sector pay rises. The Times has reported that there is a "backlash" from some of the non-protected government departments about the scale of some of the cuts that they have been asked to model. The report also notes that no decisions have yet been made on the scale of these cuts but departmental spending is only expected to be settled for the 2025/26 fiscal year with the multi-year spending review likely to start early next year (we suspect this may be associated with some spending measures that more explicitly break manifesto commitments).
EUROPEAN COUNCIL (MNI): Summit Underway w/Security & Geopolitics Top of Agenda
The October European Council summit (EUCO) is underway with foreign policy and geopolitical issues top of the agenda. A lengthy list of topics for EU leaders to discuss encompasses the war in Ukraine, instability in the Middle East, migration (and the controversial topic of 'return hubs'), EU competitiveness (in relation to the Draghi report), climate change, the European Semester (coordinating EU policy for the year), and foreign policy in relation to regional and global flashpoints.
EUROPE/OIL (MNI INTERVIEW): Muted Impact On EU Inflation From MidEast Oil
A senior European Commission energy analyst addresses the impact of geopolitical tension on oil markets -- on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
CANADA/INDIA (BBG): Trudeau Describes Failed Quiet Diplomacy Efforts With Modi
Canadian Prime Minister Justin Trudeau said he only went public with a murder allegation involving India’s government after a lengthy behind-the-scenes effort to address the matter diplomatically was rejected by Indian officials. He said Canadian officials had first sought cooperation with Prime Minister Narendra Modi’s government “in a responsible way” that doesn’t “blow up the relationship between Canada and India,” especially given India was about to host a Group of 20 leaders summit at the time.
CHINA (BBG): China’s $562 Billion Loan Push for Unfinished Homes Disappoints
China’s pledge to nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion) fell short of market expectations, causing property shares to retreat as investors looked for stronger policies. The government set the new year-end target for loans to so-called “white-list” property projects after disbursing 2.23 trillion yuan as of Oct. 16. The measure, aimed at ensuring home completion, was part of a basket of initiatives announced during a Thursday briefing.
CHINA (MNI): Beijing Awaiting EU Response on Next Stage Talks
MNI (Beijing) China is awaiting a response from Brussels after inviting the EU team to China to begin the next stage of consultations regarding electric vehicle tariffs, He Yadong, a spokesperson for the Ministry of Commerce said on Thursday.
Speaking with reporters, He said China would make a cautious decision after studying potentially increasing tariffs on imported large fuel vehicles.
CHINA (MNI): PBOC Eyes Real Estate Relending Tools Enhancement
MNI (Beijing) The People's Bank of China will enhance its relending tools as incentives to support the acquisition of existing land and houses to promote the use of idle land and improve cash flow in the real-estate sector, Tao Ling, deputy-governor of the central bank, told reporters on Thursday. The Bank will allow policy and commercial banks to issue loans to qualified enterprises for the acquisition of existing land, while increasing the proportion of relending funds targeting acquisition of existing houses from the original 60% to 100% in a bid to accelerate efforts to reduce real-estate inventory, she said.
CHINA (MNI): China to Use Cash-based Housing Resettlement
MNI (Beijing) China will use a cash-based method to settle residents in urban-village renovations and double the credit scale of whitelisted housing projects to CNY4 trillion by year-end in a bid to stabilise the housing market, Housing Minister Ni Hong told reporters on Thursday. Authorities will renovate one million urban-village and dilapidated houses via “monetised resettlement,” Ni said, adding this will allow residents to choose locations themselves and move into new homes directly.
N.KOREA/S.KOREA (BBG): North Korea Defines South Korea as Hostile State in Constitution
North Korea has defined South Korea as a “hostile state” in its constitution, driving a wedge deeper between the nations after Pyongyang stoked tensions earlier this week by blowing up its sections of roads that linked it to the southern part of the peninsula. The new label was revealed by state media Thursday in a dispatch that also confirmed the nation had blasted roads and railways connecting it to the South as part of a campaign to completely separate its territory from its neighbor.
MNI CBRT PREVIEW - OCTOBER 2024: No Cuts Until Next Year
The CBRT is expected to keep the one-week repo rate unchanged at 50% and maintain a hawkish tilt to communication following the upside to surprise to inflation in September. Broad consensus over the timing of the first rate cut has shifted, with all analysts surveyed in this document now expecting the first cut to come no sooner than in Q1-2025.
COMMODITIES (BBG): Iron Ore Slumps Below $100 as Sentiment on China Demand Worsens
Iron ore tumbled to a three-week low, a sign that investors doubt whether China’s latest moves to shore up the property market will do enough to boost construction activity and steel demand. China will expand a program to support the completion of unfinished housing projects to 4 trillion yuan ($562 billion), Housing Minister Ni Hong said at a briefing on Thursday. That nearly doubles the scale of spending as Beijing bids to ease the real estate crisis.
DATA
EUROZONE DATA (MNI): EZ Final Y/Y HICP a Tenth Softer Than Flash on Rounded Basis
- EUROZONE SEP FINAL HICP -0.1% M/M, +1.7% Y/Y
- EUROZONE SEP FINAL CORE HICP +0.1% M/M, +2.7% Y/Y
Eurozone Final HICP Y/Y came a tenth (to 1dp) softer than flash in September at 1.7% Y/Y (vs 1.8% flash, 2.2% prior), whilst printing in-line with the flash sequential reading at -0.1% M/M (non-seasonally adjusted). We had flagged the risk of this downward revision following the French/Italian/Greek final data already released this week. Services and Energy inflation softened a tenth more than the flash reading. Rounding flattered the downward revision though, with headline HICP at 1.74% Y/Y on an unrounded basis (vs 1.77% flash). Core inflation (ex energy, food, alcohol, & tobacco) printed in-line with flash at 2.7% Y/Y (vs 2.8% in August) and 0.1% M/M (vs 0.3% prior).
JAPAN DATA (MNI): Japan Sept Exports Post 1st Drop In 10 Months
- JAPAN POSTS JPY294.3 BLN TRADE DEFICIT IN SEPT
- JAPAN SEPT EXPORTS -1.7% Y/Y; AUG +5.5%
Japan’s exports posted their first y/y drop in 10 months in September, down 1.7% following August's 5.5% gain, driven by the slowing global economy, data released by the Ministry of Finance showed on Thursday. The data was largely within the Bank of Japan’s latest assessment that exports have been more or less flat. Exports of automobiles fell 9.2% following August's 9.9% drop, while semiconductor manufacturing equipment shipments rose 26.3% against the prior month's 55.2% increase. Imports rose 2.1% y/y in September for the sixth straight gain following 2.3% in August.
JAPAN DATA (MNI): BOJ Real Export Index Rises 4.0% Q/Q in Q3
The Bank of Japan's real export index, calculated using Ministry of Finance trade data, rose 4.0% q/q in the July-September period for the second straight rise following a 0.5% gain in the April-June quarter, data released by the BOJ showed on Thursday. The figures were calculated by MNI based on BOJ data and confirmed by bank officials. The BOJ will release details of the index on Tuesday.
AUSTRALIA DATA (MNI): Aussie Labour Market Strong, Adds 64k Jobs
- AUSTRALIA SEP EMPLOYED PERSONS CHANGE 64.1K
- AUSTRALIA SEP F-T EMPLOYED PERSONS CHANGE 51.6K
- AUSTRALIA SEP UNEMPLOYMENT RATE +4.1%
- AUSTRALIA SEP LABOR PARTICIPATION RATE +67.2%
Australia continued to show strong jobs growth in September, adding over 64,000 positions, higher than the 25,000 market expectation, while the unemployment rate tightened 10 basis points to 4.1%, data from the Australian Bureau of Statistics showed Thursday. The Reserve Bank of Australia has forecasted unemployment to reach 4.3% by the December quarter. Monthly hours worked, a key consideration for the RBA to understand potential weakness in the labour market, increased to 1,965 million.
FOREX: USD Index Crests at New High, AUD Firms on Solid Jobs Stats
- Broad greenback strength across Asia-Pac trade and a further push higher in USD/JPY has tipped the USD Index through yesterday's highs, meaning the index has now posted higher highs in 11 of the past 15 sessions. This puts the ICE USD Index at it's strongest since early August, with strong US equity performance and the widening gap between Sep'25 Fed-ECB OIS-implied rates lending considerable support.
- AUD trades well on the back of better-than-expected jobs data overnight. Australia added 64.1k jobs over the month, well ahead of expectations, and the unemployment came in lower than forecast, with a downward revision to the August print. RBA easing expectations have been pushed back as a result, aiding AUD/USD's recovery off weekly lows today. This has kept AUD/NZD north of the $1.10 handle, but October's high of 1.1092 is out of reach for now.
- The ECB decision takes focus ahead, with markets primed for a further 25bps rate cut from the ECB. It's signalling for the December decision that could prove more price-sensitive, and a suggestion that back-to-back rate cuts are becoming the norm would prove dovish relative to consensus, and could spell further downside risk for the EUR.
- Weekly jobless claims data in the US will also be a focus, and will be eyed for any further hurricane impacts. Evidence showed Hurricane Helene took a toll on last week's numbers, and it may be the same case for Hurricane Milton in today's release.
EGBS: Pressured by Equity Rally, Spanish/French Supply
Bund futures are -38 ticks at 133.82, with today’s equity rally and Spanish/French supply weighing. Regional focus remains on the ECB decision at 1315BST/1415CET, where a 25bp cut is unanimously expected and essentially fully priced by markets.
- Initial support in Bund futures is 133.69, shielding the Oct 15 low at 133.30.
- Eurozone September final HICP was revised a tenth lower on a rounded basis to 1.7% Y/Y (unrounded 1.74%), but was not a market mover.
- Obli/MT OAT supply from Spain and France saw decent results, with a French linker auction still due this morning.
- 10-year EGB spreads to Bunds are tighter, again led by BTPs and GGBs. The BTP/Bund spread has narrowed over 25bps from the September wides, currently 1.5bps tighter today at 121bps.
- US data (retail sales and jobless claims) will also generate interest between the ECB decision and press conference.
GILTS: Off Lows, Fiscal Speculation Dominates
Gilts have moved away from lows after a bid in equities, downtick in wider core global FI markets and the latest round of UK fiscal speculation weighed at the open.
- While press reports have suggested more limited moves in CGT than many envisaged, Labour seems to be focusing on maximising the overall tax take from any fiscal measures, striking the balance between taxation rates and not dissuading taxable activity.
- The net take is ultimately what matters for public finances, and this focus will have likely factored into the stabilisation in gilts after the initial downtick.
- Futures last -27 at 97.72 vs. lows of 97.55.
- Key near-term resistance at the September 2 low (98.11) was not breached during Wednesday’s rally, bulls still need to break that level to threaten the current bearish cycle.
- Yields 1.5-3.0bp higher across the curve, bear flattening after yesterday’s bull steepening.
- 10s 1bp tighter vs. Bunds, ~187bp.
- SONIA futures 0.5-3.5 lower, off lows alongside gilts.
- Little movement in BoE-dated OIS, 24bp of cuts priced for November.
- Spill over from macro events is eyed today, with the latest ECB decision (focus on the rhetoric with a 25bp cut widely expected and almost fully priced) and U.S. weekly jobless claims data headlining.
- Further out, UK retail sales data is due Friday.
EQUITIES: E-Mini S&P Trend Condition Unchanged, Outlook Bullish
Eurostoxx 50 futures traded sharply lower Tuesday, reversing recent gains. The contract has pierced support around the 50-day EMA, at 4944.00. 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 bull trigger is unchanged at 5106.00, the Sep 30 high. A break of this level would resume the uptrend. S&P E-Minis trend conditions are unchanged and the outlook remains bullish. Recent gains 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 5789.86, the 20-day EMA.
- Japan's NIKKEI closed lower by 269.11 pts or -0.69% at 38911.19 and the TOPIX ended 2.83 pts lower or -0.11% at 2687.83.
- Elsewhere, in China the SHANGHAI closed lower by 33.564 pts or -1.05% at 3169.384 and the HANG SENG ended 207.75 pts lower or -1.02% at 20079.1.
- Across Europe, Germany's DAX trades higher by 140.89 pts or +0.73% at 19573.64, FTSE 100 higher by 7.86 pts or +0.09% at 8336.88, CAC 40 up 78.48 pts or +1.05% at 7570.48 and Euro Stoxx 50 up 35.68 pts or +0.73% at 4944.39.
- Dow Jones mini down 11 pts or -0.03% at 43330, S&P 500 mini up 18.25 pts or +0.31% at 5905.25, NASDAQ mini up 127.5 pts or +0.63% at 20477.75.
Time: 09:50 BST
COMMODITIES: Gold Continues to Hover Close to Record Highs
WTI futures gapped lower Tuesday and this resulted in a break of the Oct 9 low. A bearish extension would threaten the recent bullish theme and expose support at $66.33, the Oct 1 low, and $64.61, the Sep 10 low and a key support. For bulls, a resumption of gains would instead refocus attention on the key short-term resistance at $78.46, the Oct 8 high. Clearance of this level would resume to the recent uptrend. Gold is trading higher this week and the recent short-term retracement appears to have been a correction. The trend condition is unchanged and remains bullish. Moving average studies are in a bull-mode set-up too, highlighting a clear uptrend. Sights are on $2690.2, a Fibonacci projection. Firm support lies at $2631.1, the 20-day EMA. It has been pierced, a clear break would signal scope for a deeper retracement.
- WTI Crude up $0.19 or +0.27% at $70.55
- Natural Gas down $0.01 or -0.46% at $2.357
- Gold spot up $8.39 or +0.31% at $2681.93
- Copper down $6.65 or -1.52% at $430.05
- Silver down $0.07 or -0.22% at $31.6117
- Platinum up $1.03 or +0.1% at $999.51
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 17/10/2024 | 1100/0700 | *** |  TR | Turkey Benchmark Rate |
| 17/10/2024 | 1215/1415 | *** |  EU | ECB Deposit Rate |
| 17/10/2024 | 1215/1415 | *** | EU | ECB Main Refi Rate |
| 17/10/2024 | 1215/1415 | *** | EU | ECB Marginal Lending Rate |
| 17/10/2024 | 1230/0830 | *** |  US | Jobless Claims |
| 17/10/2024 | 1230/0830 | * |  CA | International Canadian Transaction in Securities |
| 17/10/2024 | 1230/0830 | *** | US | Retail Sales |
| 17/10/2024 | 1230/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 17/10/2024 | 1245/1445 | EU | ECB Monetary Policy Press Conference | |
| 17/10/2024 | 1315/0915 | *** | US | Industrial Production |
| 17/10/2024 | 1400/1000 | * | US | Business Inventories |
| 17/10/2024 | 1400/1000 | ** | US | NAHB Home Builder Index |
| 17/10/2024 | 1415/1615 | EU | ECB Podcast: Lagarde presents MonPol Decision | |
| 17/10/2024 | 1430/1030 | ** | US | Natural Gas Stocks |
| 17/10/2024 | 1500/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 17/10/2024 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 17/10/2024 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 17/10/2024 | 2000/1600 | ** | US | TICS |
| 17/10/2024 | 2000/2100 |  GB | BOE's Woods Speech at Mansion House | |
| 18/10/2024 | 2330/0830 | *** |  JP | CPI |
| 18/10/2024 | 0200/1000 | *** |  CN | GDP |
| 18/10/2024 | 0200/1000 | *** | CN | Fixed-Asset Investment |
| 18/10/2024 | 0200/1000 | *** | CN | Retail Sales |
| 18/10/2024 | 0200/1000 | *** | CN | Industrial Output |
| 18/10/2024 | 0200/1000 | ** | CN | Surveyed Unemployment Rate M/M |
| 18/10/2024 | 0600/0800 | ** |  SE | Unemployment |
| 18/10/2024 | 0600/0700 | *** | GB | Retail Sales |
| 18/10/2024 | 0800/1000 | ** | EU | EZ Current Account |
| 18/10/2024 | 0900/1100 | ** | EU | Construction Production |
| 18/10/2024 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 18/10/2024 | 1230/0830 | *** | US | Housing Starts |
| 18/10/2024 | 1330/0930 | US | Atlanta Fed's Raphael Bostic | |
| 18/10/2024 | 1400/1000 | US | Minneapolis Fed's Neel Kashkari | |
| 18/10/2024 | 1610/1210 | US | Fed Governor Christopher Waller | |
| 18/10/2024 | 1630/1230 | US | Atlanta Fed's Raphael Bostic | |
| 18/10/2024 | 1800/1400 | ** | US | Treasury Budget |
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.