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Futures Surge, Dollar Crumbles Ahead Of Pivotal CPI Print

Futures Surge, Dollar Crumbles Ahead Of Pivotal CPI Print

US futures extended their gains for fifth consecutive day – their longest winning…



Futures Surge, Dollar Crumbles Ahead Of Pivotal CPI Print

US futures extended their gains for fifth consecutive day - their longest winning streak since July - rising ahead of today's "pivotal" CPI data.

Futures on the S&P 500 and Nasdaq 100 gained 0.7% at 7:45 a.m. in New York ahead of the data that’s due at 8:30 a.m. The underlying gauges advanced Monday for a fourth straight day amid hopes that inflation will show further signs of cooling with the headline print actually declining for the first time in two years, before the Fed’s decision on interest rates next week. Treasury yields dipped while the Bloomberg dollar index extended its recent decline, sliding 0.3% to a two week low as traders bet that US inflation is near peaking, therefore challenging the dollar-dominance narrative, in the process pushing oil and bitcoin higher.

In premarket trading, tech giants including Apple and Microsoft climbed. Satellite-imaging company Planet Labs shares gained as much as 12% in US premarket session after raising full year forecasts for both revenue and adjusted gross margin. Oracle shares rose 1.9% as analysts are positive on the company’s 1Q top-line growth amid accelerating cloud revenue expansion. More bearish commentators, however, highlight a drop in operating margin as the integration of health records provider Cerner pushes up costs. Here are some other notable premarket movers:

  • Rent the Runway (RENT US) shares slump 23% in premarket trading after reporting a drop in subscribers in the second-quarter and announcing a restructuring of the company.
  • Dow (DOW US) shares declined 0.7% in premarket trading as Jefferies downgraded the stock to hold, saying that it is likely to be range-bound in the near term, with downside risk as rising interest rates further hit customer confidence.
  • Peloton (PTON US) shares may be in focus as Citi analysts say that the departure of the company’s founders, including Executive Chairman John Foley, completes the organizational changes at Peloton and should improve its free cash flow picture.
  • Keep an eye on Innovid (CTV US) shares as Morgan Stanley initiates coverage with an underweight rating, saying that the company has good positioning in connected TV, but the stock appears to be “more than fully valued”.

Previewing the CPI (our full preview here), UBS chief economist Paul Donovan writes that while US August consumer price inflation is due "Consumer prices do not measure the cost of living. Fantasy numbers in US CPI calculation further divorce this price measure from the cost of living. However, the Fed’s June policy error elevated the importance of consumer price inflation. Disinflation and deflation in durable goods, the longest period of gasoline price deflation for years, and some evidence of squeezing profit margins all suggest a lower reading."

“It’s way to early to expect the Fed to react to the fact that we’re past peak inflation,” Nannette Hechler-Fayd’Herbe, chief investment officer at Credit Suisse International Wealth Management, told Bloomberg TV. “When you look at S&P 500 we have seen very big support levels from a technical point of view, so I can very well envisage that volatility takes us down to these levels once the market finally realizes the Fed will not cut rates as early as 2023.”

The government’s report is expected to show that consumer inflation increased 8.1% in August from the same month last year, down from 8.5% in July yet still historically elevated. The figures aren’t likely to sway the Fed’s September decision, with traders almost fully expecting another 75-basis-point increase next week, taking their cue from officials supporting that view. Still, solid signs of peaking inflation can affect the US central bank’s policy in later meetings.

“With a lot of US policymakers calling for a front-loading approach, the odds appear to favor a 75 basis-point move if markets are to be convinced the US central bank is serious about driving inflation lower on a ‘sustainable basis'," said Michael Hewson, chief market analyst at CMC Markets UK. That “means today’s inflation numbers may not be terribly instructive.”

Meanwhile, JPMorgan permabullish strategists Marko Kolanovic and Nikolaos Panigirtzoglou said a soft landing is becoming the more likely scenario for the global economy, which will continue to provide tailwinds for risky assets. As a reminder, Marko has said to buy the dip pretty much every single week in 2022. Recent data pointing to moderating inflation and wage pressures, rebounding growth and stabilizing consumer confidence suggest the world will avoid a recession, they said. Not confirming their optimism,  a Bank of America survey showed investors are fleeing equities en masse amid the specter of a recession, with allocations to stocks at record lows and cash exposure at all-time highs.

“The fact is that two consecutive reports showing a sharp deceleration combined with last month’s goldilocks jobs report will be a really encouraging sign and could trigger a broader risk rebound in the markets,” said Craig Erlam, a senior market analyst at Oanda Europe Ltd. “It may not be enough to tip the Fed balance in favor of a more modest 50 basis point rate hike next week but it may slow the pace of tightening thereafter.”

In Europe, corporate news helped buoy the Stoxx Europe 600 index, with UBS Group AG rising after raising its dividend and share-buyback target, and Bayer AG jumping more than 2% after starting the search for a new chief executive. Retailers and grocers pared some of their recent rally after Ocado Group Plc said inflation and energy costs will weigh on profit. The FTSE MIB outperformed peers, adding 0.3%. Utilities, consumer products and miners are the strongest performing sectors. 

Earlier in the session, Asian stocks extended their recent rally as several markets returned from holidays, and as traders awaited a key US inflation data release due later Tuesday. The MSCI Asia Pacific Index rose as much as 0.7%, poised for a fourth-straight day of gains, driven by technology shares. South Korean stocks led advances among regional benchmarks in a catch-up rally following a four-day weekend. The US CPI report is expected to show a mixed picture, hinting that inflation may have peaked but remained elevated. This could provide more clues to the Federal Reserve’s rate decision next week, with traders currently expecting another 75-basis-point increase.

“Further pushback from the Fed could be likely but for now, with the Fed blackout period in place, market bulls may be hoping to see underperformance in the upcoming inflation data,” Jun Rong Yeap, a market strategist at IG Asia Pte, wrote in a note. How to trade dollar, bonds or equities ahead of the Fed decision? This week’s MLIV Pulse survey asks about the best trades going into the FOMC meeting. Please click here to share your views anonymously. Chinese equities edged higher as traders returned from a holiday. President Xi Jinping plans to travel to Central Asia this week in what would be his first trip abroad since the Covid pandemic began. Shares in Hong Kong fell.

Japanese equities rose for a fourth day, driven by optimism that inflation is close to the peak as investors await US CPI data to be announced late Tuesday.  The Topix Index rose 0.3% to 1,986.57 as of market close Tokyo time, while the Nikkei advanced 0.3% to 28,614.63. Nintendo Co. contributed the most to the Topix Index gain, increasing 5.5%. Out of 2,169 stocks in the index, 1,126 rose and 903 fell, while 140 were unchanged. “Consumer surveys released by the New York Fed show that inflation expectations have receded, supporting stock prices to some extent,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

In Australia, the S&P/ASX 200 index rose 0.7% to close at 7,009.70, boosted by gains in banks and mining shares. The benchmark reached the highest level since Aug. 26.  Ramsay Health Care tumbled more than 10% after a consortium led by KKR & Co. indicated it won’t improve the terms of a takeover proposal, indicating the end of a A$20.1 billion ($14 billion) pursuit. In New Zealand, the S&P/NZX 50 index fell 0.4% to 11,762.15

Key equity gauges in India advanced for fourth consecutive session to edge closer to peaks seen in October as shares in the heavily weighted finance sector rebound following the resumption of inflows from foreigners. The S&P BSE Sensex gained 0.8% to 60,571.08 in Mumbai, while the NSE Nifty 50 Index rose by a similar measure. Both gauges are less than 3% short of their record highs after climbing more than 14% since the end of June. The rally in stocks comes despite surging consumer prices in the country. Retail inflation accelerated to 7% in August, slightly above the consensus estimate, data released Monday evening showed. Foreign investors have net bought more than $8 billion of local equities since end of June, with a large proportion going into shares of financial firms.  “The current market buoyancy globally, including in India, is based on the expectation that inflation has peaked along with softening crude prices,” said Naveen Kulkarni, chief investment officer of Axis Securities’ PMS business. With the onset of winter, investors should watch energy prices in Europe and the US, which can re-ignite inflation, he added.  HDFC Bank Ltd contributed the most to the Sensex’s gain, increasing 1.3%. Out of 30 shares in the benchmark index, 24 rose and 6 fell.

In FX, the Bloomberg Dollar Spot Index extended its recent losses, and after hitting an all time high at the start of the month, fell to a two-week low as the greenback weakened against all of its Group-of-10 peers apart from the Norwegian krone. CAD and NZD were the weakest performers in G-10 FX, SEK and JPY outperform.

  • The euro rose a third day, to touch a day high of 1.0155 versus the greenback. European bonds traded mostly lower. German yields rose up to 4bps as they underperformed Italian bonds and with both countries tapping the market today
  • The Norwegian krone posted a small drop versus the euro after a key survey of business sentiment by Norges Bank showed that the economy faces worsening prospects amid a “sharp” rise in prices.
  • The yen reversed an Asia-session loss while the Australian and New Zealand dollars swung between modest gains and losses

In fixed income, Treasuries held gains into early US session, having pared most of Monday afternoon’s slide that followed weak 10-year note auction. US yields are richer by 4bp-5bp across the curve; the long-end lags, steepening 5s30s by about 1bp. The 10-year yield eased 4bps to near 3.31%. Bunds 10-year yield is up 1bp to around 1.66% and gilts 10-year yield is little changed. Treasuries outperform bunds and gilts as stock futures reach highest levels this month. The US auction cycle concludes with $18b 30-year bond reopening at 1pm. WI 30-year yield around 3.475% is above auction stops since 2014 and ~37bp cheaper than August’s, which tailed by 1.1bp. IG dollar issuance slate empty so far; Monday saw eight borrowers price $11.7b; activity expected to be lighter Tuesday with focus on August inflation data. Focal points of US session include CPI inflation and 30-year bond auction; Monday’s 3-year sale also tailed.  

In commodities, WTI and Brent are firmer intraday as a function of the receding Dollar, but traders are wary of short-term upward moves as China continues with strings of lockdowns. WTI trades within Monday’s range, adding 1.1% to near $88.71. Spot gold trades on either side of the flat mark in the run-up to US CPI, under its 50 and 21 DMAs at 1,740.82/oz and USD 1,731.05/oz respectively. Base metals are mostly firmer amid the weaker Buck and upside across stocks.

Bitcoin trades on either side of USD 22,500, whilst Ethereum pulled back after reaching levels close to 1,800.

Looking to the day ahead, along with August CPI in the US, American data will include NFIB Small Business optimism (came in at 91.8, higher than the 90.8 expeected) and average hourly earnings, German and Eurozone ZEW survey results, UK August jobless claims, July average weekly earnings, and unemployment rate, Japanese August PPI, and Italian 2Q unemployment rate.

Market Snapshot

  • S&P 500 futures up 0.5% to 4,129.25
  • STOXX Europe 600 up 0.3% to 429.10
  • MXAP up 0.5% to 156.38
  • MXAPJ up 0.6% to 513.28
  • Nikkei up 0.3% to 28,614.63
  • Topix up 0.3% to 1,986.57
  • Hang Seng Index down 0.2% to 19,326.86
  • Shanghai Composite little changed at 3,263.80
  • Sensex up 0.8% to 60,577.61
  • Australia S&P/ASX 200 up 0.6% to 7,009.69
  • Kospi up 2.7% to 2,449.54
  • Gold spot down 0.1% to $1,723.41
  • U.S. Dollar Index down 0.22% to 108.09
  • German 10Y yield little changed at 1.67%
  • Euro up 0.2% to $1.0140

Top Overnight News from Bloomberg

  • Pacific Investment Management Co. is advocating a radical solution to fix the liquidity woes plaguing the world of bonds: The entire $23.7 trillion Treasury market should move to a model where investors can transact directly with each other -- reducing their unhealthy dependence on balance-sheet-constrained banks
  • The euro is up by almost 3% from two-decade lows hit a week ago against the dollar, and option markets suggest the rally has more room to run. The bet is that US consumer price data due later Tuesday will show inflation is near peaking, therefore challenging the dollar-dominance narrative. That view is behind the greenback’s recent retreat versus its major peers
  • Germany is set to use a fund created to help companies cope with the economic hit from the pandemic to provide loan guarantees for struggling energy firms, according to a person familiar with the plan. The volume of loan guarantees available would be around 67 billion euros ($68 billion)
  • China’s Premier Li Keqiang called for more policies to drive up consumption in the economy as latest figures show a further plunge in travel and spending over a three-day public holiday amid tight Covid controls
  • For the better part of a decade, a US hedge-fund manager who has never even set foot in China has been patiently betting that the yuan will stage a massive collapse, one so deep that its value could be cut in half
  • It’s not a common sight for euro overnight volatility to trade above 20% on non-central bank decision days. Yet this is what investors face this morning as everyone is on the lookout for the release of the US inflation report
  • Britain’s unemployment rate fell to the lowest since 1974 as more people dropped out of the workforce, fanning upward pressure on wages. The government said 3.6% of adults were out of work and looking for jobs in the three months through July, lower than the 3.8% pace in the previous months. Economists had expected no change
  • Secretary of State Antony Blinken said it was ‘unlikely’ the US and Iran would reach a new nuclear deal anytime soon, adding to Western officials’ downbeat assessment over the prospects for reviving an accord that President Donald Trump abandoned in 2018
  • Japan has more firepower in its foreign exchange reserves than it did the last time it intervened in markets to support its currency, though a unilateral move is seen as unlikely to succeed without US support

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks traded positive after the advances in global peers including on Wall St. where sentiment was helped by slowing inflation expectations, although gains were capped ahead of US CPI data and amid further China COVID woes. ASX 200 reclaimed the 7,000 level with advances led by the commodity-related sectors and with the risk tone also helped by an improvement in business and consumer sentiment data. Nikkei 225 marginally gained amid hopes of further supportive measures with Japan to potentially implement a nationwide travel incentive this month. Hang Seng and Shanghai Comp were slightly firmer but with upside contained after fresh COVID restrictions including in Sanhe near Beijing and with Shijiazhuang city in Hebei also locking down a district due to coronavirus.

Top Asian News

  • Emmys for Netflix’s Squid Game Boost ‘K-Drama’ Stocks in Seoul
  • Fosun Chief Says Many Overseas Units Resilient Amid Pandemic
  • Holders of Fosun’s 2b Yuan Bond Request Early Repayment in Full
  • Netflix’s Megahit ‘Squid Game’ Wins Top Emmy Awards
  • Woodford Administrator Faces Possible £306 Million Hit, UK Says

European bourses tread water with modest gains following a relatively mixed APAC lead. European sectors are mostly higher with no overarching theme or bias. Stateside, futures are edging higher in early European trade with a broad-based performance seen across the ES, NQ, YM, and RTY.

Top European News

  • UK Chancellor Kwarteng told Treasury officials to adapt to a new approach focused on boosting GDP to 2.5%, the long-term average pre-GFC, ahead of the mini-Budget announcement next week which includes tax cuts and increased borrowing, according to FT.
  • UK and EU are reportedly seeking to avoid a September 15th legal deadline over ‘grace periods’ becoming a flashpoint in talks, according to officials from both sides cited by the FT.
  • The EU is delaying plans to cut the use of pesticides amid food production fears and subsequent price increases as a result, according to the FT.
  • UK's Felixstowe port has received notice from union of further strike action from 27th Sept to 5th Oct; collective bargaining process has been exhausted - no prospect of an agreement being reached with union.
  • EU Commission President is to call another energy meeting by end-September, according to the Spanish Energy Minister, according Reuters.
  • German Economy Ministry report says early indicators and polls point to a rising number of insolvencies in H2, but there is no 'insolvency wave' in sight, via Reuters.
  • EU is reportedly mulling a EUR 180-200 price cap from lower-cost sources (vs guided EUR 200); eyes taking 33% of extra profits from fossil fuel companies, according to Bloomberg sources.
  • Ocado Plummets as Shoppers Cut Back and Energy Costs Bite
  • Mercedes-Benz Wins Dismissal of German Climate Lawsuit
  • Some 17 Million in Europe Got Long Covid in First Pandemic Years


  • DXY is softer and trades on either side of 108.00, ahead of yesterday's 107.80 low and the 50 DMA at 107.52.
  • EUR/USD faded at 1.0160 with decent option expiry interest between 1.0170-80 (1.21bn).
  • The JPY continued its correction to almost 142.00 against the Greenback, irrespective of mixed Japanese PPI prints.

Fixed Income

  • Choppy and divergent price action in debt futures as EZ bonds digest decent auction results from Germany and Italy.
  • Gilts regroup after underperformance on the back of better than expected UK data.
  • Bunds are holding above 144.00 having fallen to a marginal new Eurex low at 143.86
  • US Treasuries are firmer across the board pre-US CPI, irrespective of Monday’s poorly received 3 and 10 year offerings.


  • WTI and Brent are firmer intraday as a function of the receding Dollar, but traders are wary of short-term upward moves as China continues with strings of lockdowns.
  • Spot gold trades on either side of the flat mark in the run-up to US CPI, under its 50 and 21 DMAs at 1,740.82/oz and USD 1,731.05/oz respectively
  • Base metals are mostly firmer amid the weaker Buck and upside across stocks.


  • Bitcoin trades on either side of USD 22,500, whilst Ethereum pulled back after reaching levels close to 1,800.

US Event Calendar

  • 06:00: Aug. SMALL BUSINESS OPTIMISM, 91.8, est. 90.8, prior 89.9
  • 08:30: Aug. Real Avg Hourly Earning YoY, prior -3.0%
  • 08:30: Aug. CPI Ex Food and Energy MoM, est. 0.3%, prior 0.3%
  • 08:30: Aug. CPI Core Index SA, est. 296.250, prior 295.275
  • 08:30: Aug. CPI Index NSA, est. 295.588, prior 296.276
  • 08:30: Aug. CPI Ex Food and Energy YoY, est. 6.1%, prior 5.9%
  • 08:30: Aug. CPI YoY, est. 8.1%, prior 8.5%
  • 08:30: Aug. Real Avg Weekly Earnings YoY, prior -3.6%
  • 08:30: Aug. CPI MoM, est. -0.1%, prior 0%
  • 14:00: Aug. Monthly Budget Statement, est. -$217b, prior -$170.6b

DB's Jim Reid concludes the overnight wrap

It’s that time again. US CPI will clearly be the major focus today and could shape next week’s FOMC and the rest of the month’s trading. Or, of course, it could be a damp squib but I’m sure they’ll be something in it to move markets.

Our economists are expecting a slight decline in the headline number, (-0.09% MoM) but for core to pick up (+0.30%). On a YoY basis, headline CPI should fall five-tenths to 8.0% while core should increase a tenth to 6.0%. With the market pricing a near certainty of a 75bp move next week (now at 73.4bps), that profile above won’t be enough to meaningfully reduce chances of a 75bp hike, and markets will turn to this Friday’s inflation expectations data as the last hurdle to clear before the Fed delivers (barring any late breaking news stories to the contrary). On that front, the New York Fed’s 3-year inflation expectations measure fell to its lowest level in 2 years yesterday, clocking in at 2.8% in August from 3.2% in July. For context, it’s retreated from a high of 4.2% in October of last year. Uncertainty remains near record highs, though, which will continue to give policymakers pause even as the 75th and 25th percentile of survey responses have also fallen.

Ahead of CPI, the S&P 500 rallied (+1.06% and a 5-day rally for the first time since late-January/early-February) alongside the global risk complex, led by energy and big tech stocks, with the NASDAQ outperforming, up +1.27%. Apple (+3.85%) led the way in the first full trading day since their new iPhone went on sale on Friday. Orders have been strong so far. I upgrade every year but this time I decided not to.... until one minute before the virtual shop opened for the new products. As with every year I got seduced.

While European sovereign curves rallied and flattened, the Treasury curve steepened, and yields climbed ahead of today’s inflation data. 2yr yields climbed +1.5bps while 10yr yields were +4.8bps higher, but some +9.8bps higher than their lunchtime lows. Much of that was after the Europe close as 10yr Bunds and BTP rallied -4.4bps and -5.7bps, respectively. One theory for the US yield sell-off was the fact that yesterday brought the first batch of US Treasury coupon auctions since the Fed doubled the size of their monthly QT runoff, with yields marching higher after both the 3yr and 10yr auction, as the market has to absorb additional collateral. There’s been a partial pullback in Asia this morning with yields on 10yr USTs down -2.12bps to 3.34%.

The initial risk appetite yesterday was led by Europe, as most of the early focus was on the news we discussed 24 hours ago, namely Ukraine’s successful counter-offensive operation over the weekend. Risk sentiment enjoyed a boost, with the Euro also having its best day against the US dollar in a month, appreciating +0.80%. The wider implications of this success are still up for debate though. In particular, it seems like this pushes out the timeline on any potential peace talks, as Ukraine will be emboldened to double down on their red lines. In that vein, the Kremlin said yesterday there were no prospects for talks at the moment. On the downside, this potentially raises the spectre of escalation as well, whether it’s on the battlefield via unconventional weapons or a mass mobilisation from Russia, or on the economic front with Russia applying more pressure through natural gas markets through the remaining pipeline to Europe. European natural gas futures were trading in line with the broader risk sentiment yesterday though, rather than on potential tail risk scenarios, falling another -8.0%, closing below EUR 200 for the first time in a month. We peaked at EUR 342 eleven days ago, so down -44.23% since then. As hinted, European equities rallied strongly, with the STOXX 600 climbing +1.76%, the DAX +2.40% higher, and the CAC increasing +1.95%.

Sticking with the theme of the war and energy, a draft EU proposal, to be officially unveiled this week, included mandatory power cut targets, bringing the bloc closer to rationing. The draft also includes a levy on extra profits at energy producers used to fund relief to consumers. These are still merely draft proposals, which would ultimately need member state buy-in to be implemented, so the negotiation process may wind up watering down the proposal. Nevertheless, as mentioned, natural gas futures fell on the news, with German and French power prices also falling -8.10% and -3.60%, respectively.

The UK’s own energy support plan that we’ve recently covered is due to take effect come October. Whilst US CPI out later today will gain the lion’s share of attention over the near term, the UK has its own CPI print out tomorrow, as well. Our economists are expecting headline inflation to stay put at 10.1% yoy and core to increase to 6.4% yoy. With the new Energy Price Guarantee program in place, they’re lowering their peak forecast for CPI from 14% to 10.5%.

Asian equity markets are firmly in the green while extending a global rally this morning on optimism that inflation is peaking. Across the region, the Kospi (+2.56%) is leading gains with the CSI (+0.70%), the Shanghai Composite (+0.33%) and the Hang Seng (+0.44%) catching up after reopening following a public holiday. Elsewhere, the Nikkei (+0.16%) is trading in positive territory in early trade.

In overnight trading, US stock futures are pointing to slightly higher with the S&P 500 (+0.11%) and NASDAQ 100 (+0.10%).

Early morning data indicated that pipeline prices in Japan appear to have stabilised as factory gate inflation (+9.0% y/y) in August remained unchanged (vs +9.4% in June), albeit a tenth above expectations. Looking at the data, the decline in global oil prices seems to have led the way despite the weakening in the Japanese yen.

Oil prices are slightly lower in early Asian trade with Brent crude futures -0.18% at $93.83/bbl as China’s harsh zero-Covid policy continues to negatively impact the demand from the world’s top oil importer.

To the day ahead, along with August CPI in the US, American data will include NFIB Small Business optimism and average hourly earnings, German and Eurozone ZEW survey results, UK August jobless claims, July average weekly earnings, and unemployment rate, Japanese August PPI, and Italian 2Q unemployment rate.

Tyler Durden Tue, 09/13/2022 - 07:58

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What Is the New York Stock Exchange and What Does It Do?

What Is the New York Stock Exchange in Simple Terms?With more than 2 billion shares trading hands each day, the New York Stock Exchange (NYSE) is the world’s…



The New York Stock Exchange is located on Wall Street in New York City.

wdstock from Getty Images Signature; Canva

What Is the New York Stock Exchange in Simple Terms?

With more than 2 billion shares trading hands each day, the New York Stock Exchange (NYSE) is the world’s largest exchange for securities trading, which is the buying and selling of debt or equity, such as stocks and bonds. The NYSE is located in a historic building in the heart of New York City’s financial district at 11 Wall Street.

The NYSE was known for centuries as the "Big Board" because brokers would use an auction-based system to buy or sell shares of stock from its trading floor, and share prices were updated throughout the day on a large board that traders could see from the trading pit. 

A ringing bell signaled the beginning and the end of the trading day. The opening bell signaled the start of the trading day at 9:30 AM, and the closing bell happened at 4:00 PM, marking the end of the trading day. Trades at the NYSE took place on an actual trading floor up until the onset of the COVID-19 pandemic, when everything moved online; floor trading resumed for vaccinated brokers in May 2021.

Is the NYSE a Stock Exchange or a Stock Index?

The NYSE was a privately-owned exchange, or a place for trading, from its inception in the late 1700s until 2006, when it was bought by Intercontinental Exchange, which took shares public. Its ticker symbol is ICE.

However, since the New York Stock Exchange is the world’s largest trading exchange, with over 80% of the S&P 500 companies trading on it, the NYSE Composite, made up of 2,000 stocks listed on the NYSE, has come to be known as a benchmark stock market index. Glancing at how it’s doing gives investors a sense of the overall health of the financial markets. An exchange-traded fund (ETF) based on the NYSE Composite was introduced in 2004; its ticker symbol is NYA.

In addition, the New York Stock Exchange owns a smaller stock exchange, the American Stock Exchange, which it acquired in 2008. Now known as the NYSE American, it is where small-cap companies trade on lower volumes.

What Does the New York Stock Exchange Do? Who Works There? How Does It Make Money?

The NYSE has two purposes:

1. It facilitates buy-and-sell trades of securities.

2. It enables companies to raise capital by selling stock.

The NYSE was originally founded as a space exclusively for securities trading under the Buttonwood agreement in 1792. Prior to that, traders had to sell securities alongside commodities like coffee and tobacco and often had to do so outside, in rain and snow, which is how they got the nickname curbstone brokers.

The Buttonwood Agreement also established regulations and set standard commission fees that brokers could charge clients. Now, with a roof above their heads, traders could call out buy and sell orders from the trading floor; those transactions would be recorded, which provided a level of transparency as well as liquidity that before had not been possible. It was the beginning of efficient market operations as we know them.

Today, computers do most of the buying and selling at the NYSE, although there are still several hundred brokers and traders who shout their orders from the trading pit each day. The scene plays host to dozens of media outlets as well as executives and celebrities who ring the opening bell.

The NYSE makes money through revenues from transaction fees it charges to brokerages, asset-management companies, and market makers. In addition, all members of the NYSE are required to pay yearly membership fees as well as an additional fee to apply.

What Are the New York Stock Exchange’s Hours? Can I visit the NYSE?

The NYSE operates Monday–Friday from 9:30 AM–4:00 PM eastern time. It is closed in observance of the following holidays; when the holiday falls on a Saturday, it closes the Friday before.

  • New Year’s Day
  • Martin Luther King, Jr. Day
  • Washington’s Birthday
  • Good Friday
  • Memorial Day
  • Juneteenth
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas Day

The NYSE was open for tours up until the September 11, 2001 attacks; it is no longer accessible to the public.

Which Companies Are Listed in the New York Stock Exchange? How Does a Company Get Listed?

The NYSE lists over 2,000 U.S. and international stocks—for the current lineup, check the directory on its website.

What Is the Difference Between the NYSE and the Nasdaq?

The NYSE and the Nasdaq are both stock exchanges, but the NYSE is much larger. It has a market capitalization of $26 trillion as of 2021, compared with the Nasdaq, which has a market cap of $19 trillion.

In addition, there are several other key differences:

Differences between NYSE and Nasdaq Exchanges

The NYSE sets prices through an auction market, which means that shares are bought directly by buyers from sellers, and share prices are set based on the highest price a bidder is willing to pay and the lowest price a seller will accept.

The Nasdaq uses a dealer market, which means that buyers and sellers do not interact directly; rather, the trades are handled by a dealer, often a larger brokerage known as a market maker, which maintains inventories of stocks and facilitates trades from its own accounts.

Where Is the New York Stock Exchange at Right Now?

For a live feed of NYSE prices, check out its website.

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Volatility Snaps Near-Term Conviction

Overview:  The markets seem to lack conviction today. Stocks in the Asian Pacific region advanced. Europe’s Stoxx 600 is giving up its earlier advance,…



Overview:  The markets seem to lack conviction today. Stocks in the Asian Pacific region advanced. Europe’s Stoxx 600 is giving up its earlier advance, and US futures are heavier. Australian and New Zealand bonds played catch-up after the rise in the US and Europe yesterday. Their benchmark yield rose 14 bp and 10 bp, respectively. The US 10-year Treasury yield is firm near 3.77%, while European bonds are narrowly mixed, though Gilts are under pressure. The 10-year yield is up 10 bp to 4.12%. The dollar is mixed with the dollar-bloc currencies, sterling and the Norwegian krone on the weaker side. Those G10 currencies like the euro, Swedish krona, and Swiss franc are barely holding on to gains. Gold snapped a six-day rally yesterday and is a little lower today. It still looks poised to retest $1700. December WTI is little changed against rallying more than 10% in the first three sessions this week. It is near $86.70 after settling last week slightly below $78.75. US natgas is rising for the third consecutive session. Its 1.4% gain follows a 7% increase in the past two sessions. Europe’s natgas benchmark is off 3.1% to offset a good part of yesterday’s 3.5% gain. Iron ore rose for the third consecutive session, but it is flat on the week. December copper is also rising for a third session, but it is up about 3.5% this week. December wheat is extending its slide into a fourth session. It is off about 3% this week after rising 7% over the past two weeks.  

Asia Pacific

Australia reported a smaller than expected trade surplus for August. Exports rose 3% after a 10% fall in July, while imports rose 4% after a 0.5% increase previously. Economists in Blomberg's survey had expected a small decline in imports. The surplus of A$8.3 bln missed the median forecast for a $10 bln surplus and was smaller than July’s nearly A$9 bln surplus. Still, in the first eight months of the year, the average monthly surplus was A$11.1 bln compared with A$10.2 bln in the same period last year. In Jan-Aug period in 2019, the average monthly trade surplus was A$5.7 bln.

Japan weekly portfolio flow data showed that into the end of the fiscal half year, Japanese investors continued to divest foreign bonds. Japanese investors some JPY886 bln of foreign bonds. This bring brings the four-week total JPY3.3 trillion (~$23 bln). Japanese investors bought foreign equities for the third consecutive week for a cumulative total of JPY876 bln (~$6.1 bln). Meanwhile, foreign investors continued to be significant sellers of Japanese bonds. They sold JPY1.56 trillion in the last week of September to bring the four-week total to a whopping JPY6.4 trillion (~$45 bln). This appears to be a record outflow. Foreign investors were net sellers of Japanese stocks for the sixth consecutive week. Over the past four-weeks, they sold JPY2.6 trillion ($1.8 bln), the most in six months.

The US dollar recovered from yesterday's seven-day low against the yen (~JPY143.55) to JPY144.70. It remains firm, though in a narrow range and has not traded much below JPY144.40. Market participants continue to seem uncomfortable buying dollars above JPY145.00. The Australian dollar tried to extended yesterday's recovery off the $0.6415 area and made it $0.6540 before being turned lower. It traded to around $0.6480 in the European morning and could slip a little more. There are options for almost A$600 mln at $0.6475 that expire today. We assume they have been neutralized. The intraday momentum is oversold, suggesting a better tone is possible in North America. The base around $0.6400 looks firm. China's mainland markets remain closed for the Golden Week holiday. The US dollar fell to almost CNH7.0125 yesterday and has steadied today, remaining within in yesterday's range. Recall that it settled September (the last day mainland markets were open) near CNH7.1420. 


German factory goods fell 2.4% in August, more than three-times more than expected. On the other hand, the July series was revised sharply higher (+1.9% from -1.1%) on the back of large aerospace orders, according to the government, which looked like foreign orders. Domestic orders fell 3.4% in August after dropping 3.7% in July. Foreign orders fell 1.7% in August but rose 6.0% in July. Orders from the eurozone rose 4.5% in July and fell 3.8% in August. Separately, the construction PMI fell to 41.8 from 42.6. It has not been above the 50 boom/bust level since March. Tomorrow, Germany reports August retail sales (median in the Bloomberg survey calls for a 1.2% decline) and industrial output (expected to fall by 0.5% after a 0.3% drop in July. Note that the eurozone's aggregate retail sales were reported today. While the 0.3% decline was expected July's 0.3% gain was revised to a 0.4% decline.

A week ago, S&P lowered the outlook of its AA UK rating. However, this seemed to be catch-up as both Fitch and Moody's had the credit as the equivalent of AA-. Today, Fitch puts cut its outlook to negative, reflected the unfunded tax cuts. We await today's report, but on Tuesday and Wednesday the. BOE did not buy any bonds. This emergency program to address what had appeared as a threat to financial stability is to conclude at the end of next week. The concern is what is going to happen afterwards. The BOE's program aimed at the long-end of the curve. The UK's 30-year bond yield was around 3.5% in the middle of September. The yield jumped to almost 5.0% on September 27 as the market reeled from the mini-budget and the forced liquidation. The BOE stepped in and at the end of last week, the 30-year Gilt yield was about 3.82%. However, it has risen each session this week and now stands a little above 4.25%. Many expect the BOE to address this may either a new permanent facility and/or some other measures, including, perhaps, delaying further when it intends to sell bonds that it bought during the pandemic.

Parity capped the euro over the past two sessions. The euro was sold to $0.9835 yesterday and has recovered to trade in about a quarter-cent range on both sides of $0.9900. While the range can extend in North America, we suspect that the proximity of tomorrow's US jobs data is conducive to a consolidative tone. The $0.9950 area may offer a nearby cap. Similarly, sterling encountered strong resistance near $1.15 and was sold to almost $1.1225 yesterday. It recovered to a bit more than $1.1350 yesterday in North America and extended it a bit further today (~$1.1385). It retreated a cent by early European trading and found support near $1.1280. The intrasession momentum indicator is turning ahead of the North American open.


Yesterday's data prompted the Atlanta Fed's GDPNow to lift its Q3 estimate to 2.7%, the highest so far in the quarterly cycle. The strong dollar is expected to hurt US exports, but real (adjusted for inflation) have been strong. In August, real exports rose by about $2.8 bln while real imports fell by $1.4 bln. Net exports could contribute 2-3 percentage points to Q3 GDP. A combination of factors drove this, and it probably will not be repeated in Q4.

It seems rich for many observers to say that OPEC+ decision to cut output is a snub against the US. The Federal Reserve's monetary policy is making it more difficult for many countries but few of the OPEC+ critics want the Federal Reserve to sacrifice its domestic mandate,  The OPEC+ decision may be short-sighted, as the White House claims,  these countries pursuing what they think is their national interest. A few years ago, many of these critics thought OPEC was dead. Moreover, actions by the US and Europe, such as the embargo on Russian oil and cap on prices, impacts the oil market. The US official comment that the yesterday's decision shows OPEC is aligning with Russia shows a masterful grasp of the obvious. OPEC+ is set to continue through 2024. OPEC was struggling to be the swing producer, partly because of the rise of US production. The answer for the cartel to the competitive challenge was to increase its market share by forming the alliance. Some pundits suggest the US should stop selling weapons to Saudi Arabia and others in OPEC. Yet, what is missing is the understanding that the US does not assist in the defense of the Saudi Arabia or oil pipelines out of a sense of altruism, but because it is understood to be in the US national interest. Should the US really take on the position of Gandhi's mother who would fast (punish herself) when her prodigious son disappointed?  Implicit in Biden's threat yesterday will be to reanimate the NOPEC bill that has been in Congress for some time that would allow lawsuits against OPEC members for manipulated the energy market.

The US reports weekly jobless claims and the Challenger jobs cuts. In the last week in September, weekly jobless claims fell to five-month lows. The JOLTS data, earlier this week (August) disappointed, and tomorrow the national September figures will be reported. The median forecast in Bloomberg's survey calls for an increase of 260k after a 315k increase in August. Today, five Fed officials speak (Kashkari and Mester twice). These Fed officials' views are well known, and indeed, everyone seems to be singing from the same hymn sheet. The market recognizes this, and the implied yield of the December Fed funds futures contract is rising today for the sixth consecutive session.

The US dollar found a bottom against the Canadian dollar in the past two sessions near CAD1.3500. It recovered yesterday and closed above CAD1.3600. It initially pulled back in Asia, as US stocks were bid. It found support near CAD1.3565. The greenback has recovered in the European morning to reach the session high around CAD1.3665. Yesterday's high was just shy of CAD1.37. While taking cues from US equities, note that intraday momentum for the greenback overextended against the Canadian dollar. After a push to almost MXN20.60 in late September, the US dollar has returned to the MXN19.80-MXN20.20 range that has dominated since mid-August. It is in a narrow range (~MXN20.0175-MXN20.1050) today. It appears to have scope to test yesterday's high near MXN20.15. 


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Futures Slide As OPEC+ Cut Sparks Gas Inflation Fears And “Tighter For Longer” Fed

Futures Slide As OPEC+ Cut Sparks Gas Inflation Fears And "Tighter For Longer" Fed

Two days ago, when stocks were melting up even as oil was…



Futures Slide As OPEC+ Cut Sparks Gas Inflation Fears And "Tighter For Longer" Fed

Two days ago, when stocks were melting up even as oil was storming higher and threatened to rerate inflation expectations sharply higher, we mused that algos were clearly ignoring this potentially ominously convergence.

And while yesterday we saw the first cracks developing in the meltup narrative as oil extended gains following OPEC's stark slap on the face of the dementia patient in the White House, it was only today that the "oil is about to push inflation sharply higher" discussion entered the broader financial sphere, with JPM writing this morning that "OPEC+ presents inflation risk", Bloomberg echoing JPM that "OPEC+ alliance’s plan to cut oil supply stoked inflation fears and as traders awaited labor-market data to gauge the risk of recession" and Saxo Bank also jumping on the bandwagon, warning that OPEC+ supply cut will worsen global inflation which "raises the risk of inflation staying higher for longer” and “sends the wrong signal to the US Federal Reserve... It could send a signal that they have to keep on their foot on the brake for longer.”

And sure enough, with oil rising above its 50DMA for the first time since Aug 30, futures have slumped overnight as oil kept its gains, with S&P and Nasdaq 100 futures both sliding 0.5% as of 730am, while Europe’s Stoxx 600 erased an advance and traded near session lows. US crude futures held on to weekly gains of about 11% after the oil cartel said it would cut daily output by 2 million barrels. Treasuries were steady, the 10Y trading around 3.77%, with the 2Y rate hovering about the 4.15% level.

In pre-market trading, Credit Suisse jumped as much as 5.2% after JPMorgan upgraded to neutral from underweight, saying it sees $15bn as a minimum value for the lender, in-line with the estimated value of the Swiss legal entity. Shares were 2% higher by 13:20pm CET in Zurich, after Bloomberg News reported that the lender is trying to bring in an outside investor to inject money into a spinoff of its advisory and investment banking businesses, citing people with knowledge of the deliberations. Other banks did not do as well, and slumped in premarket trading Thursday, putting them on track to fall for a second straight day. Twitter shares fell as much as 1.1% to $50.75, trading nearly 7% below Elon Musk’s offer price of $54.20 as investors await progress in the revived deal. Here are the other notable premarket movers:

  • Pinterest (PINS US) shares jump as much as 5.8% in US premarket trading after Goldman Sachs upgraded the social networking site to buy from neutral on improving user growth and better engagement trends, even as the backdrop for digital advertising remains uncertain.
  • Biohaven Ltd. (BHVN US) shares rise 9.7% in US premarket trading, set to extend a 75% gain over the past two days as regular trading in the newly constituted drug developer began following an unusual deal with Pfizer Inc.
  • SurgePays (SURG US) shares soar as much as 11% in premarket trading after the company gave an update on subscriber numbers for its subsidiary SurgePhone Wireless.
  • Flutter (FLTR LN) gained 3.3% in premarket trading as it was initiated at outperform at Exane as the best-placed online gambling name, while Entain also at outperform and DraftKings started at underperform.
  • Richardson Electronics (RELL US) rose 8.2% in extended trading after reporting year-over-year growth in net sales and earnings per share for the fiscal first quarter.

While higher energy prices could stoke inflation, some have speculated that this will also divert discretionary income from core items thus pushing core inflation lower and hit company earnings -- potentially encouraging the Federal Reserve to slow monetary tightening.

While such expectations fueled equity gains this week, several money managers are cautioning that the economic path to a less aggressive Fed could be painful: “If you want to preempt the Fed, you are playing a very high-stakes game,” said Kenneth Broux, a strategist at Societe Generale SA. “The Fed do not want financial conditions to loosen; they don’t want equity markets to take off and get too comfortable.”

That said, investors are wary of placing large-scale equity bets as they await a report on US initial jobless claims later Thursday and the official nonfarm payrolls data Friday. A Bloomberg survey shows the US economy will have added 260,000 jobs last month; a higher-than-anticipated number may spook markets.

In Europe, the Stoxx 50 dropped -0.3% to session lows. Stoxx 600 outperforms peers, adding 0.2%, FTSE MIB lags, dropping 0.5%. Energy and insurance underperform while real estate and travel lead gains. Here are all the notable European movers:

  • Imperial Brands shares rise as much as 4.7% after the tobacco company said it will buy back up to £1b worth of stock. The move was welcomed by analysts, with RBC calling it a “big deal” and Citigroup saying the announcement was earlier than expected.
  • Home24 SE gains as much as 126% to EU7.53 after XXXLutz offered to buy all outstanding shares in the German online furniture retailer for EU7.50 apiece. The bid is generous and the deal is straightforward from a regulatory perspective, according to Tradition.
  • Credit Suisse jumps as much as 5.2% after JPMorgan upgraded to neutral from underweight, saying it sees $15b as a minimum value for the lender, in-line with the estimated value of the Swiss legal entity.
  • CMC Markets climbs as much as 6.5% after the online trading firm said it sees first- half net operating income up 21% y/y, with market volatility in August and September boosting the results. Numis upgraded the stock to add from hold following the report.
  • Shell drops as much as 5% as analysts say the oil and gas major’s trading update looks “weak” and may mean that FY consensus proves too ambitious.
  • Kloeckner falls as much as 12% as the company faces a “high likelihood” of an imminent profit warning, Bankhaus Metzler says, double-downgrading the stock to sell from buy.
  • Swiss Re is among the weakest members of the Stoxx 600 insurance index on Thursday, declining as much as 4.0%, as Morgan Stanley lowers its price target ahead of third-quarter earnings.
  • Accor drops as much as 2.5% after the hotel chain owner was downgraded to underweight from equal-weight at Barclays, which sees short-term risks as bigger for the company compared with peers and feels investors are looking more at potential negative factors heading into FY23 than 2022 upgrades.

Earlier in the session, Asian stocks rose for a third day as hardware technology stocks in South Korea and Japan advanced on views they may have reached a bottom. The MSCI Asia Pacific Index climbed as much as 0.9%, lifted by TSMC, SoftBank and Sony. The benchmark trimmed gains later in the day, but remains on track to advance for the week, following a seven-week losing streak that was the longest since 2015.Korea’s Kospi Index was the region’s best-performing major benchmark, jumping about 1%. The advance was helped by chipmakers extending their gains amid Morgan Stanley’s bullish view on the sector. Hong Kong stocks retreated after Wednesday’s catch-up rally.

Trading volume in the region was light as mainland China remains closed for the Golden Week holiday. The MSCI’s Asian benchmark has rebounded this week from its lowest in more than two years. The move tracked a nascent revival in global equities on bets that the Federal Reserve may turn less aggressive in its tightening. In a potential harbinger of shifting market views, Morgan Stanley strategists upgraded emerging-market and Asia ex-Japan stocks to overweight from equal-weight.   Investors are also optimistic that monetary policies in China and Japan, which have bucked the global wave of tightening to remain loose, could provide further support to the nations’ equities.  “While the rest of the world is tightening, Japan and China are still easing, especially China where we are going to see more easing policies going forward,” Chi Lo, senior investment strategist for Asia Pacific at BNP Paribas Asset Management, said in an interview with Bloomberg TV. “That makes us more positive on EM Asia.”

Japanese equities gained for a fourth day as investors awaited domestic corporate earnings coming out later this month.  The Topix rose 0.5% to 1,922.47 as of the market close in Tokyo, while the Nikkei 225 advanced 0.7% to 27,311.30. Sony Group contributed the most to the Topix’s gain, increasing 1.7%. Out of 2,168 stocks in the index, 1,564 rose and 490 fell, while 114 were unchanged. “There is relatively little concern about corporate earnings for Japanese stocks with the economy restarting and the yen weakening,” said Shogo Maekawa, a strategist at JPMorgan Asset Management.

In FX, the Bloomberg Dollar Spot Index consolidated within the recent day’s ranges, while Britain’s pound slipped 0.4% and gilt yields rose after Fitch Ratings lowered its outlook on the nation to negative. The greenback advanced against most of its G-10 peers. The euro steadied just below $0.99. Euro hedging costs are on the rise again as traders position ahead of Friday’s payrolls print and next week’s US inflation report. Commodity currencies were the worst performers along with the pound. Australian and New Zealand dollars gave up an Asia-session advance. The yen traded in a narrow range.

In rates, Treasuries were slightly cheaper across the curve after paring declines led by gilts in London trading after a Bank of England survey found expectations for higher prices. Focal points of US session include several Fed speakers and potential for risk-reduction ahead of Friday’s September jobs report Friday. US yields cheaper by less than 2bp across the curve in bear- flattening move, 10-year by 2bp vs 17bp for UK 10-year, the downside leader in developed market sovereign bonds.  German and Italian bond curves flattened modestly as yields on shorter-dated notes rose, while those further out fell.

In commodities, West Texas Intermediate futures traded near $88 a barrel, while Brent crude held near $93.30. The output-cut plan drew a warning from the White House about negative effects on the global economy. Goldman Sachs Group Inc. increased its fourth-quarter price target for Brent to $110 a barrel.

To the day ahead now, and data releases include German factory orders for August, the German and UK construction PMIs for September, Euro Area retail sales for August, and the weekly initial jobless claims from the US. Meanwhile from central banks, we’ll get the ECB’s account of their September meeting, as well as remarks from the Fed’s Evans, Cook, Kashkari, Waller and Mester, and the BoE’s Haskel.

Market Snapshot

  • S&P 500 futures down 0.3% to 3,783.50
  • STOXX Europe 600 up 0.3% to 400.25
  • MXAP up 0.4% to 145.05
  • MXAPJ up 0.3% to 471.37
  • Nikkei up 0.7% to 27,311.30
  • Topix up 0.5% to 1,922.47
  • Hang Seng Index down 0.4% to 18,012.15
  • Shanghai Composite down 0.6% to 3,024.39
  • Sensex up 0.6% to 58,403.02
  • Australia S&P/ASX 200 little changed at 6,817.52
  • Kospi up 1.0% to 2,237.86
  • German 10Y yield little changed at 2.05%
  • Euro little changed at $0.9886
  • Brent Futures up 0.3% to $93.62/bbl
  • Gold spot up 0.0% to $1,716.69
  • U.S. Dollar Index little changed at 111.24

Top Overnight News from Bloomberg

  • UK bond markets face a potential “cliff edge” when the Bank of England exits the market at the end of next week, leaving traders to navigate a turbulent backdrop without the support of a buyer of last resort
  • Millions more Britons will be dragged into higher rates of income tax over the next three years, costing twice as much as Prime Minister Liz Truss’s personal tax cuts, according to calculations by the Institute for Fiscal Studies
  • Britain’s construction industry turned more pessimistic in September after rising interest rates and the risk of recession held back new orders
  • The European Union plans to examine whether Germany’s massive plan to shelter companies and households from surging energy costs respects the bloc’s rules on public subsidies, EU Commissioner Thierry Breton said
  • German factory orders dropped in August after the previous month was revised to show an increase, hinting at a lack of momentum as the economy stands on the brink of a recession
  • Societe Generale SA cut its exposure to counterparties on trades in China by about $80 million in the past few weeks as global banks seek to guard against any potential fallout from rising geopolitical risks in the world’s second-largest economy

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks traded mixed as the region partially shrugged off the lacklustre lead from the US where the major indices snapped a firm two-day rally and finished the somewhat choppy session with mild losses amid higher yields and as Fed rhetoric essentially pushed back against a policy pivot. ASX 200 lacked direction amid underperformance in the Real Estate and the Consumer sectors, although the downside was also limited by strength in energy after oil prices were lifted by the OPEC+ output cut. Nikkei 225 was positive with notable gains in exporter names and with Rakuten leading the advances as Mizuho looks to acquire a 20% stake in Rakuten Securities for USD 555mln. Hang Seng was lacklustre and took a breather after the prior day’s more than 5% jump with the mood also not helped after Hong Kong PMI slipped into contraction territory for the first time in 6 months.

Top Asian News

  • Haikou city in China's Hainan imposed a COVID lockdown for Thursday, according to Bloomberg.
  • Malaysia PM May Propose Parliament Dissolution, Bernama Reports
  • Why Polio, Once Nearly Eradicated, Is Rebounding: QuickTake
  • Legoland Korea’s Default Flags Risks for Nation’s Developers
  • Paris Club Seeks China Collaboration in Sri Lanka Debt Talks
  • Yen Rout Is Over on Peak US Rate Hike Bets, Says Top Forecaster

European bourses are under modest pressure as sentiment broadly takes a slight turn for the worst amid limited newsflow as participants look to Friday's NFP. Currently, European benchmarks are lower by 0.1-0.3% while US futures are posting slightly larger losses of circa 0.7 ahead of Fed speak.

Top European News

  • Fitch affirmed the UK at AA-; Outlook revised to Negative from Stable, while it stated that the fiscal package announced as part of the new UK government's growth plan could lead to a significant increase in deficits over the medium-term, according to Reuters.
  • The UK Treasury is set to impose GBP 21bln of additional income taxes despite the "tax-cutting mini-budget", according to a study by the Institute for Fiscal Studies. (Times)
  • BoE Monthly Decision Maker Panel data - September 2022; looking ahead, DMP members expected CPI inflation to be 9.5% one-year ahead, up from 8.4% in the August survey, and 4.8% in three years’ time.
  • BoE's Cunliffe says the FPC will publish its next financial policy statement and record on October 12th, liquidity conditions in the run up to the BoE gilt intervention were "very poor", MPC will make a full assessment of recent developments at its November 3rd meeting.
  • UK government has proposed easing the fee cap for illiquid assets in pensions, according to a rule consultation publication by the government.
  • Swedish Economy Shrinks More Than Estimated on Weak Industry
  • UK Tech M&A Spree Pauses as Buyers Pull Out Amid Chaotic Markets


  • USD benefits from the mentioned risk tone, with the DXY extending to a 111.35 peak to the modest detriment of peers.
  • However, EUR is relatively resilient and holding around 0.99 vs the USD as we await the ECB Minutes account for near-term guidance.
  • Cable faded sub-1.1400 and reversed through 1.1300 again amid the USD's move and prior to a letter exchange from the BoE to Treasury re. the Gilt Intervention.
  • Antipodeans under pressure given the USD move and associated action in metals, while the Yuan initially lent a helping hand but this has since dissipated.
  • Given the broader tone, the traditional havens are holding near unchanged levels though yield dynamics are a hinderance.

Fixed Income

  • Gilts are once again the standout laggard following rating agency action and the BoE DMP showing inflation pressures were already elevated MM before the fiscal update.
  • As such, the UK yield has extended back above 4.10%; in the US, yields are also bid though to a much lesser extent before Fed speak and Friday's jobs.
  • Back to Europe, Bunds are pressured though only modestly so vs UK counterparts awaiting the ECB's September account


  • Crude benchmarks are modestly firmer at present, extending marginally above yesterday’s best levels with fresh newsflow limited as participants digest yesterday’s OPEC+ action.
  • WTI and Brent are towards the mid-point of circa. USD 1/bbl ranges, though Brent Dec’22 briefly surpassed the 200-DMA at USD 94.11/bbl before moving back below the figure.
  • Acting Kuwaiti Oil Minister said the OPEC+ decision to cut output will have positive ramifications for oil markets, while they understand consumers' concerns about prices increasing but added that the main motive in OPEC+ is balancing supply and demand, according to Reuters.
  • US National Security official stated the US sanctions policy on Venezuela remains unchanged and there are no plans to change the sanctions policy without constructive steps from Maduro, according to Reuters.
  • Norway's Budget proposes changing the temporary tax rules for the petroleum sector, entails that the uplift is reduced to 12.40% (prev. 17.69%), via Reuters.
  • Saudi sets the November Arab Light OSP to N.W Europe at Ice Brent +USD 0.90/bbl; to the US at ASCI +USD 6.35/bbl, via Reuters citing a document; to Asia at Oman/Dubai +USD 5.85 (Unch.), via Reuters sources.


  • North Korea launched two short-range ballistic missiles which were fired from Pyongyang and landed outside of Japan's exclusive economic zone, according to the South Korean military cited by Yonhap. Furthermore, North Korea said that its missile launches are counteraction measures against the US and South Korean military drills.
  • North Korean jets and bombers have been seen flying in an exercise, according to Yonhap; South Korean jets take off in response, via Reuters.
  • US State Department condemned North Korea's ballistic missile launch and said North Korea's missile launches pose a threat to regional neighbours and the international community, while it added that the US remains committed to a diplomatic approach to North Korea and called on North Korea to engage in dialogue, according to Reuters.
  • The EU has approved the 8th round of Russian sanctions; as expected.

US Event Calendar

  • 08:30: Sept. Continuing Claims, est. 1.35m, prior 1.35m
  • 08:30: Oct. Initial Jobless Claims, est. 204,000, prior 193,000

Central bank Speakers

  • 08:50: Fed’s Mester Makes Opening Remarks
  • 09:15: Fed’s Kashkari Takes Part in Moderated Q&A
  • 13:00: Fed’s Evans Takes Part in Moderated Q&A
  • 13:00: Fed’s Cook Speaks on the Economic Outlook
  • 13:00: Fed’s Kashkari Discusses Cyber Risk and Financial Stability
  • 17:00: Fed’s Waller Discusses the Economic Outlook
  • 18:30: Fed’s Mester Discusses the Economic Outlook

DB's Henry Allen concludes the overnight wrap

After an astonishing rally at the beginning of Q4, markets reversed course yesterday as investors became much more sceptical that we’ll actually get a dovish pivot from central banks after all. The idea of a pivot has been a prominent theme over recent days, particularly after the financial turmoil during the last couple of weeks, thus sparking the biggest 2-day rally in the S&P 500 since April 2020 as the week began. But over the last 24 hours, solid US data releases have created a pushback against that narrative, since they were seen as giving the Fed more space to keep hiking rates over the coming months. And if markets had any further doubt about the Fed’s intentions, San Francisco Fed President Daly explicitly said yesterday that she didn’t expect there to be rate cuts next year, in direct contrast to futures that are still pricing in rate cuts from Q2. Indeed for a sense of just how volatile the reaction has been, 10yr bund yields were up by +16.3bps yesterday, which is their largest daily rise since March 2020 during the initial wave of the pandemic.

Looking at the details of those releases, it was evident that markets are still treating good news as bad news at the minute, since they sold off even as data pointed to a more resilient performance from the US economy than had been thought. For example, the ISM services index came in above expectations at 56.7 (vs. 56.0 expected), and the employment component moved up to a 6-month high of 53.0. So that’s a noticeably different picture to the manufacturing print on Monday, when there was a surprise contraction in the employment component. Furthermore, there was another sign of labour market strength from the ADP’s report of private payrolls, which came in at +208k in September (vs. +200k expected), and the previous month’s reading was also revised upwards. We’ll see if that picture is echoed in the US jobs report tomorrow, but there was a clear reaction to the ISM print in markets, as investors moved to upgrade the amount of Fed hikes they were expecting whilst the equity selloff accelerated.

Those expectations of a more hawkish Fed were given significant support by comments from Fed officials themselves. The most obvious came from San Francisco Fed President Daly, who was asked about the fact that futures were pricing in rate cuts, and said “I don’t see that happening at all”. In fact when it came to rates, she not only said that they were raising them into restrictive territory, but that they would be “holding it there” until inflation fell. Atlanta Fed President Bostic struck a similar tone, emphasising rate cuts in 2023 were not likely and that “I am not advocating a quick turn toward accommodation. On the contrary.” He said he wanted fed funds rates between 4% and 4.5% by the end of this year, “and then hold at that level and see how the economy and prices react.”

That backdrop led to a sizeable cross-asset selloff yesterday on both sides of the Atlantic. The effects on the rates side were particularly prominent, with 10yr US Treasury yields bouncing back +12.0bps to 3.75%. And that move was entirely driven by real yields, which rose +15.1bps as investors moved to price in a more hawkish Fed over the months ahead. You could see that taking place in Fed funds futures too, with the rate priced in for December 2023 up by +8.9bps to 4.19%, thus partially reversing the -22.2bps move lower over the previous two sessions. This morning, 10yr yields are only down -1.0 bps, so far from unwinding those moves.

The hawkish tones also proved bad news for equities, with the S&P 500 taking a breather following its blistering start to the week, retreating -0.20% after being as low as -1.80% in the New York morning. European equities did not enjoy the benefits of a New York afternoon rally, leading to a transatlantic divergence, and the STOXX 600 was down -1.02% on a broad-based decline. The energy sector outperformed in both the S&P 500 and STOXX 600 following a rally in crude oil which saw both Brent crude (+2.81%) and WTI (+2.53%) oil prices hit a 3-week high. That followed a decision from the OPEC+ group, who cut output by 2 million barrels per day. Those gains have continued in overnight trading as well, with Brent Crude now at $93.48/bbl.

In Europe, the performance of sovereign bonds echoed that for US Treasuries, as yields on 10yr bunds (+16.3bps), OATs (+17.6bps) and BTPs (+29.0bps) all saw their largest daily increases since March 2020. As in the US, that reflected growing scepticism about a dovish pivot from the ECB, but another factor not helping matters was the rebound in energy prices, with natural gas futures up +7.25% on the day to close at €174 per megawatt-hour, alongside the oil rebound mentioned above. That’s been reflected in inflation expectations too, with the 10yr German breakeven up another +8.0bps yesterday to 2.15%, after having closed beneath 2% on Monday for the first time since Russia’s invasion of Ukraine began.

Here in the UK, we also saw several key assets lose ground once again following their rally over the last week. For instance, sterling ended a run of 6 consecutive daily gains against the US Dollar to close -1.31% lower, closing back at $1.13. And that wasn’t simply a story of dollar strength, as the pound weakened against every other G10 currency as well. Gilts were another asset to struggle, with real yields in particular seeing significant daily rises of at least +30bps across most of the yield curve, including a +33.0bps rise for the 10yr real yield, and a +36.7bps rise for the 30yr real yield. That came as the Bank of England said they didn’t buy any gilts under their emergency operation for a second day running. In the meantime, there were fresh signs that the turmoil after the fiscal announcement was impacting the mortgage market, with Moneyfacts saying that the average 2yr fixed-rate mortgage had risen to 6.07%, which is the highest since November 2008. Last night that was then followed up by the news that Fitch had downgraded the UK’s outlook from stable to negative.

Overnight in Asia there’s been a mixed performance from the major equity indices. Both the Nikkei (+0.94%) and the Kospi (+1.25%) have recorded solid advances, which continues their run of having risen every day this week. In addition, futures in the US and Europe are both pointing higher, with those on the S&P 500 up +0.49%. However, the Hang Seng is down -0.43% and Australia’s S&P/ASX 200 is down -0.05%, whilst markets in mainland China remain closed for a holiday. The dollar index has also lost ground overnight, falling -0.25%, which comes in spite of those hawkish comments from Fed officials pushing back against rate cuts next year.

Looking at yesterday’s other data, the final services and composite PMIs mostly echoed the data from the flash readings. The composite PMI for the Euro Area was revised down a tenth to 48.1, and the US composite PMI was revised up two-tenths to 49.5. There was a bigger rise in the UK however, where the composite PMI was revised up seven-tenths to 49.1.

To the day ahead now, and data releases include German factory orders for August, the German and UK construction PMIs for September, Euro Area retail sales for August, and the weekly initial jobless claims from the US. Meanwhile from central banks, we’ll get the ECB’s account of their September meeting, as well as remarks from the Fed’s Evans, Cook, Kashkari, Waller and Mester, and the BoE’s Haskel.

Tyler Durden Thu, 10/06/2022 - 08:02

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