- Yesterday’s session on Wall Street was dictated by the bulls; the DJIA and Russell 2000 gained nearly 1% and 1.5%, respectively, although the Nasdaq 100 and S&P 500 rose slightly. Today, however, Wall Street benchmark contracts are trading down slightly between -0.2-0.4%, following a rather weak session in Asia, with the Nikkei retreating nearly -1% and China’s Hang Seng rising less than 0.1%. Futures on European indices fall in the -0.3 – 0.6% range; Spanish SPA35 losing almost -0.9%
- No important macro readings (except of Japanese PPI) were released during the Asian session; markets await Consumer sentiments from US Conference Board index and home sales data scheduled at 3 PM GMT, with a very light European macro calendar today. Fed minutes from the last meeting are scheduled at 7 PM GMT
- The U.S. dollar is seeing slight appreciation, and yesterday’s drop in 10-year yields below 4.3% did not cause a ‘trend reversal’ on the Eurodollar, which is losing 0.15% again today. Donald Trump has announced that one of his first decisions will be to impose 25% tariffs on goods from Mexico and Canada. Reuters analysts agree that the tariffs will be a broader problem for the technology and automotive sectors
- Oil remains below $70 for WTI and $73 for Brent; contracts are rebounding only a trace today, following yesterday’s sell-off caused by the near peace agreement between Hezbollah and Israel, which met with Netanyahu’s approval. U.S. Representative McGawre is still in the Middle East, and peace with Lebanon is expected to be the first step toward successful negotiations with Hamas in the Gaza Strip. At the same time, Israel yesterday made a hit on an alleged weapons transport route leading from Iran to Syria. Natural gas records a slight rise
- Bitcoin momentarily tested support at $93,000, erasing the recent upward momentum, but today the price of the largest of the cryptocurrencies has already rebounded to $95,000. Smaller cryptocurrencies have not seen a major sell-off in the meantime, with some projects gaining around 5%; Ethereum is still trading around $3450. Agricultural commodities are losing, except for wheat, which is up a little today on the CBOT, up 0.5% to $5.57 per bushel
- The Fed’s Kashkari indicated that US productivity growth may have raised the neutral interest rate significantly; he sees ‘discussion’ of a 25 basis point cut in September as fully justified. He indicated that geopolitics and tariffs are currently the biggest risks to the economic outlook. Fed Goolsbee signaled that rates will be lower by the end of 2025, claimed that neutral rate is still significantly lower than current rates; citing ‘caution against focusing on inflation in any one month’
- A representative of Japan’s Democratic Party, Tamaki warned against excessive monetary tightening, which he believes could lead the country into deflation. Meanwhile, recent data from Japanese companies point to record wage negotiations. Japanese service PPI in October domestically, rose 2.9% y/y vs. 2.5% forecast and 2.6% previously
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