NEWS
US (MNI): Unexpected End To Port Strikes As Dockworkers Accept 62% Pay Increase
In a somewhat unexpected development overnight, the International Longshoremen’s Association representing dockworkers along the eastern seaboard reached an agreement with port operators to end a three-day strike that, if extended, would risk a notable hit to the US economy. WSJ reports that according to people familiar with the matter the offer of a 62% increase in wages over six years was enough to clinch a deal. A previous offer of 50% was rejected. President Joe Biden offered his support for the deal, saying “Collective bargaining works, and it is critical to building a stronger economy from the middle out and the bottom up.”
US (BBG): Obama Launching Four-Week Campaign Blitz for Harris
Barack Obama will spend the final four weeks before Election Day stumping for Kamala Harris and other Democrats in a bid to protect his legacy from Republican Donald Trump. The former president plans to begin his election blitz with an event for the Democratic presidential nominee in Pittsburgh on Oct. 10, a Harris campaign official said, and continue campaigning across battleground states as voters prepare to submit mail-in ballots and early voting begins.
MNI US PayrollsPreview: Risks Of Upside Unemployment Surprise: https://media.marketnews.com/USNFP_Oct2024_Preview1_bb6bbc0e4e.pdf
Nonfarm payrolls growth is expected to have firmed marginally to 150k in September although some analysts also look for upward revisions to August.
- There is a strong cluster of estimates around 150k but with a wider than recent range of views beyond that.
- The unemployment rate can again have a major role in the market reaction. Consensus sees 4.2% for a second month and whilst claims have proved resilient, we see a real risk that it tilts the other side of 4.25%.
- 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 (MNI): BOE Pill Warns Against Cutting Too Far, Too Fast
Bank of England Chief Economist Huw Pill said Friday that there were plenty of reasons to be cautious in assuming that elevated inflation will not persist and he again made the case for gradual rate cuts, warning of the danger of moving too far or fast.
UK (MNI): Sky-Chancellor To Deliver Mansion House Speech 14 Nov
Sky News reporting that Chancellor of the Exchequer Rachel Reeves will deliver her first Mansion House speech on 14 November. The annual address to financiers and business leaders is jointly organised by the Treasury, BoE and City of London Corporation, and is seen as a chance for the chancellor to set out their economic vision for the year ahead.
ISRAEL (BBG): Israel Stages Massive Beirut Strikes Targeting Hezbollah Leaders
Israel carried out huge bombing raids overnight near Beirut airport aimed at Hezbollah commanders and facilities, as the US and its allies warned of “uncontrollable escalation” in the Middle East. The air strikes in the southern outskirts of the Lebanese capital targeted the potential successor of the militant group’s assassinated leader Hassan Nasrallah and other figures, the New York Times reported, citing Israeli officials. It was not known if Hashem Safieddine died in the bombardment, which shook buildings in the city, the newspaper said.
EU/CHINA (BBG): EU Votes to Impose Tariffs of Up to 45% on China-Made EVs
The European Union voted on Friday to impose tariffs as high as 45% on electric vehicles from China in a move set to increase trade tensions with Beijing, according to people familiar with the process. The European Commission, the bloc’s executive arm, can now proceed with implementing the duties, which would last for five years, said the people, who spoke on the condition of anonymity. A number of countries abstained in the ballot.
ECB (MNI): ECB Rate Path Should Be "Pre-Visible" - Centeno
The European Central Bank's hoped for interest rate path should be "pre-visible" while still keeping to a meeting by meeting and data dependent approach, Bank of Portugal Governor Mario Centeno said Friday. Sharing a panel with Bank of Spain Governor Jose Manuel Escriva at an event in Spain, Centeno said that euro area inflation is finally under control and that it's understandable a certain degree of wage catch-up should be expected bloc, as households saw a significant drop in disposable real income.
The Reserve Bank of New Zealand is expected to lower the official cash rate by 50 basis points when it meets on Oct 9, but there is a chance it could stick to a 25bp move as it awaits quarterly CPI and labour metrics before making a bigger cut at the November meeting.
JAPAN (MNI): Japan's PM To Compile Stimulus Measures Swiftly
Japanese Prime Minister Shigeru Ishiba said on Friday that the government will swiftly compile economic stimulus measures, not only to help defeat deflation, but also to realise wage hikes above price rises. The government will provide support to low-income households suffering from high prices, Ishiba said at an extraordinary Diet session.
Recent dovish remarks made by the Japanese Prime Minister will not impact the Bank of Japan’s policy-rate strategy, with officials not ruling out a December hike should fundamental conditions hold, MNI understands. Prime Minister Shigeru Ishiba said recently he doubted whether conditions warranted further interest-rate hikes, which saw the yen weaken to a one month low of JPY147 and pushed up the Nikkei 225, an about-face from comments made in August that supported policy normalisation.
AUSTRALIA (MNI): Global Easing To Drive RBA Cuts To 3.5% In 2025
The Reserve Bank of Australia will likely look to cut the cash rate by 25 basis points in Q1 due in part to the changed international situation and easing measures by peer central banks, with the terminal rate to reach about 3.5% sometime in 2025 driven strongly by the Federal Reserve’s reductions, a former board member told MNI.
DATA
MNI: UK SEP CONSTRUCTION PMI 57.2 (FCST 53.1); AUG 53.6
MNI: EUROZONE SEP CONSTRUCTION PMI 42.1; AUG 41.4
FRANCE AUG MANUFACTURING OUTPUT +1.6% M/M, +0.3% Y/Y
MNI: FRANCE AUG INDUSTRIAL PRODUCTION +1.4% M/M, +0.5% Y/Y
SWISS SA UNEMPLOYMENT RATE 2.6 (AUG 2.5, FCAST 2.6)
EGBS: Weaker As Markets Await US NFP Report
Major EGB futures have weakened through this morning, with markets awaiting today’s US labour market report (1330BST/1430CET).
- Bund futures lightly outperform Gilts after comments from BoE Chief Economist Pill (see our UK-centric posts for more there), but remain -54 ticks today at 134.26, piercing the Sep 27 low.
- A fresh uptick in crude oil futures will have kept pressure on core FI, while today's industrial production data from France and Spain were not market movers.
- The EU will able to impose sizeable tariffs on Chinese-made electric vehicles for a period of five years after member states approved the measures.
- Selling interest has been prevalent in Schatz and Bobl futures, helping the German cash curve bear flatten. 2-year yields are 5bps higher, with 30-year yields up 3bps.
- 10-year peripheral spreads to Bunds remain tighter today, with little obvious catalyst to note. The 130bp handles provides a key level in the BTP/Bund spread.
GILTS: Lower Following Pill, 41bp Of BoE Cuts Priced Through Dec
Gilts are lower, with a bid in crude oil and comments from BoE chief economist Pill weighing.
- Governor Bailey's comments yesterday sounded much more dovish than Pill did today, although we remind that Pill did dissent against the August rate cut, so the divergence in tone isn’t a huge surprise and was something we flagged the potential for ahead of today’s comments.
- Zooming out, Pill sounded a little less hawkish when compared to some of his recent comments, but we aren’t sure he will support the idea of a cut in November, let alone sequential moves through year-end.
- Gilt futures 97.82 last, after trading to fresh session lows of 97.80 post-Pill.
- Next support comes in at 97.47, the 0.618 projection of the Sep 17-30-Oct 1 price swing, with the bearish move strengthening after the break of some key support levels.
- Yields 2.5-5.5bp higher, bear flattening.
- 10s through their early September high.
- Widening in the UK/German 2-Year yield spread (+1bp) only reverses some of yesterday’s Bailey-driven 9bp narrowing, spread below 190bp, just.
- BoE-dated OIS 1-4bp less dovish since Pill. 24bp of cuts priced for November, 41bp of cuts priced through December and 114bp of cuts showing through June.
- Spill over from U.S. NFP data is set to dominate this afternoon.
FOREX: GBP Recovers as Pill Retains Cautious Approach to BoE Rate Cuts
- JPY is the strongest performing currency in G10, pressuring AUD/JPY back toward Y100.00 to fade the Ishiba-triggered move mid-week. As a result, yesterday's USD/JPY high at 147.24 remains intact, allowing the USD/JPY strength to press pause.
- GBP trades well, partially reversing the Bailey-inspired sell-off on Thursday. BoE's Pill added to the recent BoE policy mix, tilting hawkish in his view that the Bank should be cautious and avoid cutting rates "too far or too fast". As a result, GBP/USD is back above 1.3150, facing next intraday resistance at 1.3174, the 38.2% retracement for the downleg posted off the midweek high.
- NZD is at the bottom of the G10 pile, just underperforming against the EUR.
- Focus for the duration of Friday trade turns to the US jobs report, at which markets expect the US to have added 150k jobs over the month, keeping the unemployment unchanged at 4.2%. Nonetheless, there remain upside risks to unemployment - which could further trigger a dovish response via pricing for a 50bps November Fed rate cut.
EQUITIES: Stock Pullback Shallow
A bull cycle in S&P E-Minis remains intact and the latest shallow pullback appears to be a correction. 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 recently breached resistance at 5024.00, the Sep 3 high. This confirms a resumption of the bull leg that started Aug 5 and cancels a recent bearish theme. It also suggests that the pullback this week is likely a correction.
- Japan's NIKKEI closed higher by 83.56 pts or +0.22% at 38635.62 and the TOPIX ended 10.36 pts higher or +0.39% at 2694.07.
- Across Europe, Germany's DAX trades higher by 6.89 pts or +0.04% at 19022.86, FTSE 100 lower by 6.58 pts or -0.08% at 8275.76, CAC 40 up 41.5 pts or +0.56% at 7519.28 and Euro Stoxx 50 up 9.21 pts or +0.19% at 4930.54.
- Dow Jones mini down 6 pts or -0.01% at 42313, S&P 500 mini up 2.75 pts or +0.05% at 5752.25, NASDAQ mini up 24 pts or +0.12% at 20013.5.
COMMODITIES: Brent, WTI Building on Recent Gains
Gold is in consolidation mode. The trend condition 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 higher Thursday, extending the rally that started on Oct 1. Short-term gains appear to be corrective, however, the break of the 50-day EMA suggests potential for an extension near-term.
- WTI Crude up $0.74 or +1% at $74.37
- Natural Gas up $0.01 or +0.27% at $2.977
- Gold spot up $4.09 or +0.15% at $2659.6
- Copper down $0.05 or -0.01% at $455.45
- Silver up $0.01 or +0.03% at $32.0068
- Platinum up $10.2 or +1.02% at $1004.69
| Date | GMT/Local | Impact | Country | Event |
| 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 |