US equity futures and global stocks rose on the last trading day of the week, month and quarter and global bonds rebounded after dovish comments from Fed officials and signs that European inflation is finally slowing when EU consumer prices rose just 4.3%, down from 5.2% in August, and the lowest since Oct 2021. Ahead of today’s closely watched “Fed’s favorite inflation gauge”, the core PCE due out at 8:30am ET, S&P and Nasdaq 100 futures were up 0.4% as longer-dated bond yields were 2-3bps lower while supportive inflation data in Europe drove European bond yields lower this morning. 30-year TSY yields are down 3bps at 4.68% but still on course for their largest quarterly gain since 2009. The US Dollar dropped and crude oil rebounded. Commodities are mostly higher led by base metals (Aluminum +1.8%; Copper +1.3%), with Brent back over $96 and approaching the 2023 high of $97. Today’s macro focus is on PCE, Personal Income/Spending, Chicago PMI, and U of Mich. survey data. For PCE, consensus sees the PCE deflator printing at 0.5% vs. 0.2% prior and Core PCE deflator rising 0.2%, unchanged from 0.2% prior.
In premarket trading, mega cap tech stocks were broadly higher; Nike rose 8% after the sportswear giant reported earnings per share for the first quarter that beat the average analyst estimate and kept its outlook unchanged for the year. The report was a positive surprise, with the outlook “better than buyside fears,” said Morgan Stanley. OPKO Health rose 8% after its ModeX Therapeutics won a contract from the US to develop antibodies to battle viral infectious disease threats.
Wall Street closed higher on Thursday after comments from Fed rate-setters including Richmond Fed chief Thomas Barkin, who said the US would likely skirt a severe downturn. Meanwhile, his Chicago Fed counterpart Austan Goolsbee said policymakers were at risk of overshooting on interest rates. Adding to positive sentiment, the WSJ reported China’s Vice Premier He Lifeng and Foreign Minister Wang Yi are discussing possible visits to the US to prepare for a potential summit between Xi Jinping and Joe Biden.
Today’s stock rebound signals relief after a quarter that’s put 30-year borrowing costs on track for their steepest increase since 2009. Here are some of the superlatives we’ve seen this quarter:
- US 2s10s inversion dropped to May’s lows
- 5y US yield highest since 2007
- 10y US yield highest since 2007
- 30y US yield highest since 2010
- 10y German yield highest since 2011
- Japan 10y highest since 2013
- Japan 20y highest since 2014
- Japan 30y highest since 2013
Not surprisingly, amid soaring rates, the July-September quarter has been the worst for MSCI’s all-country index since September 2022, as surging oil prices fanned fears over inflation and economic growth.
“We have had a lot of smallish pieces of better news all coming together at the same time,” said Stuart Cole, head macro economist at brokerage Equity Capital, forgotten to add that we have also had a lot of pieces of bad news alongside, which however markets have generally ignored. While the Fed officials’ comments soothed fears of further US rate rises, sentiment received a further boost from Friday’s softer inflation prints, he said. “Taken in conjunction with the softer German numbers yesterday, that has raised hopes that the ECB is done with tightening,” said Cole.
Investors are now awaiting the core personal consumption expenditures price index, which economists expect will have slowed in August on an annualized basis to 3.9% from 4.2%.
Europe’s Stoxx 600 equity index rose more than 1%, as data showing euro-area inflation at a two-year low boosted expectations that the ECB’s hiking cycle was over and that rates in the EU could stay on hold if not drop. Rate-sensitive sectors, such as real estate and luxury led the gains, with the latter also boosted by a bullish strategy note from Bank of America. The data “increases our conviction that the ECB hiking cycle is done,” said Samuel Zief, head of global FX strategy at JPMorgan Private Bank. Here are the top European movers:
- Luxury stocks including LVMH, Hermes and Richemont all rise at least 2.5% after Bank of America strategists raised their view on the luxury sector to overweight, saying recent underperformance now fully reflects an expected slowdown in global business activity.
- Among other luxury names, Brunello Cucinelli shares rise as much as 8.7% after Goldman double-upgrades the Italian firm to buy from sell, saying it offers underappreciated defensive qualities.
- Commerzbank shares gain as much as 12% after the German lender pre-announced planned capital returns that analysts say suggest significant upside to current consensus numbers.
- Adidas, Puma, JD Sports shares rise after Nike reported a drop in its stockpile of inventory, a sign it’s making progress in moving out older merchandise for newer, more-profitable items.
- Aston Martin shares surge as much as 13% after the carmaker said Executive Chairman Lawrence Stroll’s Yew Tree Consortium agreed to boost its stake in the firm to 26.2%.
- OCI shares rise as much as 8.6% after Jefferies says it offers a “rare corner” of positive earnings momentum within the European chemicals sector and upgrades to buy.
- Future shares rise as much as 21% after a full-year trading update that led Shore Capital to reiterate that the media company is well placed to deliver “attractive growth.” Analysts highlighted the stock’s low valuation.
- Ascential shares rise as much as 7.6% in London after Sky News reports that Apax Partners has entered advanced discussions to buy the company’s consumer trend-spotting unit, WGSN.
- Cellnex shares gain as much as 4.5% after Stonepeak buys 49% stake in Cellnex’s Swedish, Danish units for €730 million, according to a Spanish regulatory filing.
- Fevertree shares rise 4.7% after Nordflint Capital Partners disclosed a 5% stake in the maker of tonics and mixers.
- Alpha Group shares fall as much as 4.6%, to the lowest since March, after holder Morgan Tillbrook sold about 1.8% of its stake in the institutional broker at a price of £19.00 per share.
Earlier in the session, Asian equities also advanced, bolstered by a rally in Hong Kong stocks amid optimism over Golden Week holiday spending. The MSCI Asia Pacific Index climbed as much as 0.4% on Friday, helping trim losses for the quarter to less than 4%. Chinese tech stocks trading in Hong Kong including Tencent and Alibaba offered the largest support.
- Benchmarks in Hong Kong jumped more than 2%, outperforming in the region following further supportive measures by Chinese authorities, while the index was unfazed by the absence of mainland participants and Stock Connect flows due to the Mid-Autumn Festival and next week’s National Day holidays. Traders cited positive outlook for Chinese consumption during the peak travel season and dip buying as reasons for the rebound. The oil rally taking a breather also supported sentiment. “The bounce in China follows the US tech overnight and may be driven by some easing in the dollar and oil, both of which have been leaving markets anxious,” Marvin Chen, a strategist at Bloomberg Intelligence said. “It looks like a broad relief rally across the region after a week of declines,” Chen said.
- Japan’s Nikkei 225 failed to sustain early gains and pulled back from resistance around the 32,000 level despite several encouraging data releases.
- Hang Seng outperformed as property and tech surged after the recent easing of yields and
- Shares in Australia and New Zealand also gained; the ASX 200 was kept afloat by outperformance in the mining and materials sectors but with trade constricted amid quasi-holiday conditions with Victoria state on a public holiday.
- Indian stocks advanced Friday along with most Asian peers as expectations of higher spending during the upcoming Golden Week holiday in China boosted sentiment. The S&P BSE Sensex ended 0.5% higher at 65,828.41 as of 3:45 p.m. in Mumbai, while the NSE Nifty 50 Index advanced 0.6% to 19,638.30. India’s main benchmarks were up by a percent for the day before a late session selloff saw them come off their highs, as investors lightened positions due to the upcoming long weekend. Stocks closed lower on the week. Sentiment was also boosted by a slide in the dollar and some softness in Brent crude prices that are showing a struggle just under the psychological $100 a barrel mark.
In FX, the kiwi and Norwegian krone are the best performers among the G-10 currencies while the dollar fell for a second day and underperformed all G-10 peers amid quarter-end flows, with the Bloomberg Dollar Spot Index about 0.4% lower; still, the gauge is up about 2.3% this quarter, the most in a year. “The dollar is trading lower as a much-needed correction takes hold,” said Win Thin, global head of currency strategy at Brown Brothers Harriman. “The fundamental story remains in favor of the greenback as the US economy is in a much stronger position.” EURUSD rose 0.4% to 1.0604 and held its advance after euro area inflation came in below expectations. The yen briefly dipped after the central bank announced an unscheduled bond-buying operation, but later reversed losses to trade as much as 0.5% higher on the day. Meanwhile, Japan’s government bonds are poised for the worst quarterly selloff since 1998
In rates, global bond yields eased after the previous day’s selloff, with 10-year US Treasuries down about 3 basis points and Japanese 10-year yields sliding from decade-highs after an unscheduled bond-buying operation by the central bank. British and euro-area borrowing costs slid more than 5 basis points. French bonds were among the biggest gainers after data showed price growth unexpectedly slowing, a day after Germany reported inflation at the lowest in two years. Treasuries pushed higher following wider gains seen across core European rates, with yields down by 3bp to 4bp across the curve. US 10-year yields were around 4.55%, down by by 3bp on the day, with bunds and gilts outperforming by 4.5bp and 1bp in the sector, respectively; front-end lags rest of the curve slightly, flattening 2s10s spread by around 1bp on the day, sitting back around 50bp inverted. That said, the session could still see some quarter-end rebalancing flow, while highlights also include packed data slate headed by PCE deflator. Quarter and month-end re-balancing flows may still be in play for the session; Bloomberg indicies project a 0.07y October extension.
In commodities, crude prices reversed much of yesterday’s losses, trading higher in lockstep with broader risk sentiment on month and quarter end, but the range of price action this morning is narrow. Spot gold is modestly firmer amid the pullback in the Dollar after tumbling to a low of USD 1,857.79/oz this week – the lowest since early March – largely due to this week’s rise of the Greenback.
Bitcoin prices trade flat intraday around the USD 27,000 mark following yesterday’s risk-induced rally.
US economic data slate includes August wholesale inventories, personal income/spending, PCE deflator (8:30am), September MNI Chicago PMI (9:45am), University of Michigan sentiment (10am) and Kansas City Fed services activity (11am). Scheduled Fed speakers include Williams at 12:45pm
- S&P 500 futures up 0.5% to 4,357.50
- STOXX Europe 600 up 1.0% to 452.79
- MXAP up 0.6% to 157.66
- MXAPJ up 1.3% to 493.22
- Nikkei little changed at 31,857.62
- Topix down 0.9% to 2,323.39
- Hang Seng Index up 2.5% to 17,809.66
- Shanghai Composite up 0.1% to 3,110.48
- Sensex up 0.9% to 66,087.90
- Australia S&P/ASX 200 up 0.3% to 7,048.64
- Kospi little changed at 2,465.07
- German 10Y yield little changed at 2.86%
- Euro up 0.4% to $1.0606
- Brent Futures down 0.3% to $95.10/bbl
- Gold spot up 0.4% to $1,872.18
- U.S. Dollar Index down 0.43% to 105.77
Top Overnight News
- The BOJ announced an unscheduled bond-purchase operation after yields on long and super-long debt climbed to decade highs. The operation is small and probably not strong enough to bring a big reduction in yields, according to Sumitomo Mitsui, but a larger one may weaken the yen toward 150 versus the dollar. BBG
- Japan’s Tokyo CPI ex-food/energy for Sept comes in at +3.8%, down from +4% in Aug and below the Street’s +3.9% forecast (headline was +2.8%, down from +2.9% in Aug but ahead of the Street’s +2.7% forecast). BBG
- A senior executive at American risk advisory firm Kroll has been barred from leaving mainland China, the latest example of Chinese authorities imposing exit bans on the employees of foreign firms. Michael Chan, a Hong Kong-based managing director who specializes in corporate restructuring, is assisting an investigation into a case that dates back a few years, according to people familiar with the matter. Neither Chan nor Kroll is the target of the investigation, the people said. WSJ
- China has proposed relaxing its strict rules on data flows abroad, in its latest move to allay foreign business concerns and revive faltering growth in the world’s second-largest economy. The Cyberspace Administration of China has drafted a set of exemptions to its requirement for approval to send personal data overseas, which applied to cross-border purchases, money transfers and air and hotel reservations. BBG
- Saudi Arabia is determined to secure a military pact requiring the United States to defend the kingdom in return for opening ties with Israel and will not hold up a deal even if Israel does not offer major concessions to Palestinians in their bid for statehood, three regional sources familiar with the talks said. RTRS
- Europe’s CPI sinks to +4.3% on the headline (down from +5.2% in Aug and below the Street’s +4.5% forecast) while core falls to +4.5% (down from +5.3% in Aug and below the Street’s +4.8% forecast). France’s CPI for Sept cools to +5.6%, down from +5.7% in Aug and below the Street’s +5.9% forecast. BBG
- Credit Suisse flagged potential losses of as much as $2.2 billion in the third quarter as it exits more businesses. The losses from loan portfolios won’t affect UBS results as the impact was previously taken into account, said Vontobel analyst Andreas Venditti. UBS shares ticked up. BBG
- The world’s financial stability watchdog is launching a probe of the build-up of debt outside traditional banks, as it seeks to limit hedge funds’ borrowing and boost transparency. Klaas Knot, chair of the Financial Stability Board, told the Financial Times the review was intended to address rising risks from so-called non-banks, which include hedge funds and private capital. FT
- US income and spending data for August may complicate the Fed’s soft-landing optimism, Bloomberg Economics said. Revised data is expected to show prices running hotter than previously thought. Still, core PCE inflation and Jerome Powell’s preferred “supercore” gauge probably came in soft for a third straight month, while spending and income grew at a solid pace. BBG
A more detailed look at global market courtesy of newquawk
APAC stocks mostly took impetus from Wall St’s positive lead after risk appetite was spurred as yields and oil prices declined from recent peaks but with some of the gains in the region capped heading into quarter-end and amid several holiday closures. ASX 200 was kept afloat by outperformance in the mining and materials sectors but with trade constricted amid quasi-holiday conditions with Victoria state on a public holiday. Nikkei 225 failed to sustain early gains and pulled back from resistance around the 32,000 level despite several encouraging data releases. Hang Seng outperformed as property and tech surged after the recent easing of yields and following further supportive measures by Chinese authorities, while the index was unfazed by the absence of mainland participants and Stock Connect flows due to the Mid-Autumn Festival and next week’s National Day holidays.
Top Asian News
- Japanese Finance Minister Suzuki said don’t have a defence line in dealing with FX moves and that current FX moves suggest the Yen’s weakness has progressed, according to Reuters.
European bourses are trading higher across the board with the Stoxx 600 now virtually flat week-to-date after yesterday’s positive session helped erase losses earlier in the week, while EZ inflation metrics this morning printed below expectations. Sectors in Europe are mostly firmer with Consumer Products & Services top of the leaderboard as luxury names benefit from broker action. Other gainers include Tech, Real Estate and Basic Resources, whilst Insurance and Energy are the only sectors in the red. US futures are trading firmer as they continue to advance on yesterday’s gains, owing to a generally more positive risk tone and as yields see some downside over the past couple of sessions.
Top European News
- LVMH (MC FP) CEO Bernard Arnault and Russian oligarch Nikolai Sarkisov are under investigation for alleged money laundering, via Yahoo Finance.
- ECB’s Vasle said headline inflation is on a declining trend; growth is slowing but the labour market remains strong; transmission of ECB policy to the banking sector is strong, according to Bloomberg.
- ECB’s Vujcic said he is confident that inflation will slow in the coming months, according to Bloomberg.
- DXY succumbs to more intense selling pressure and retreats to 105.660 amid softer US Treasury yields and renewed risk appetite.
- Euro bounced from around 1.0559 to 1.0616 irrespective of weaker than consensus German retail sales, French and pan-Eurozone inflation metrics that exacerbated the revival in EGBs.
- Pound secured a firmer grip of the 1.2200 handle against the Dollar, even before better-than-expected BoE consumer credit, mortgage approvals and lending, but stalled just ahead of the 10 DMA that came in at 1.2259.
- Antipodeans sit as the top G10 performers amid the constructive risk tone while the Yen benefits from the pullback in yields.
- EGBs were already clawing back some of their heavy losses before below-forecast German retail sales provided a bit more impetus, but weaker than expected French CPI offered more incentive and the ensuing softer-than-consensus pan-Eurozone readings further bolstered the benchmarks.
- Bunds extended their rebound to exactly 100 ticks from Eurex low to 128.46 high, OATs probed 123.00 at 123.05 from 121.98 at worst and even BTPs got close to 110.00 from sub-109.00 irrespective of mixed Italian inflation metrics.
- Gilts reached 94.18 compared to their early 93.62 Liffe base and the T-note is hovering close to the top of a 108-8+/107-26 range.
- Crude prices have been relatively flat throughout the European morning, but the contracts have been tilting higher in lockstep with broader risk sentiment on month and quarter end, but the range of price action this morning is narrow.
- Spot gold is modestly firmer amid the pullback in the Dollar after tumbling to a low of USD 1,857.79/oz this week – the lowest since early March – largely due to this week’s rise of the Greenback.
- Base metals are also on a firmer footing amid the Dollar pull-back and the broader constructive risk profile.
- UK treasury minister Penn said the efficacy of the Russian oil price cap must be kept under review.
- US President Biden administration’s 5-year offshore oil plan will be released on Friday but does not include any sales for 2024 and will have no more than 1 auction in each of the final four years, according to Reuters sources.
- Russia may introduce quotas on overseas fuel exports if the complete export ban (imposed last week) does not bring down high domestic gasoline and diesel prices, according to Russian Deputy PM Novak cited by Reuters.
- Saudi Arabia is reportedly determined to secure a military pact requiring the US to defend the kingdom in return for opening ties with Israel, and will not hold up a deal even if Israel does not offer major concessions to Palestinians, via Reuters citing sources A pact might fall short of the NATO-style defence guarantees the kingdom initially sought when the issue was first discussed between MBS and US President Biden during the Biden’s visit to Saudi Arabia in July 2022. Washington could also sweeten any deal by designating Saudi Arabia a Major Non-NATO Ally, a status already given to Israel, according to the source.
- US Assistant Secretary of State Kritenbrink met with China’s Vice Foreign Minister in Washington and the two sides held candid, in-depth and constructive consultations on regional issues. Furthermore, Kritenbrink reaffirmed the importance of maintaining peace and stability across the Taiwan Strait and the sides discussed regional issues including Myanmar, North Korea and maritime matters.
- US Treasury Secretary Yellen is to use improved communications with China to discuss contentious issues and gain new insights into China’s economy, via Axios.
US Event Calendar
- 08:30: Aug. Personal Income, est. 0.4%, prior 0.2%
- 08:30: Aug. Personal Spending, est. 0.5%, prior 0.8%
- 08:30: Aug. Real Personal Spending, est. 0%, prior 0.6%
- 08:30: Aug. PCE Core Deflator YoY, est. 3.9%, prior 4.2%
- 08:30: Aug. PCE Core Deflator MoM, est. 0.2%, prior 0.2%
- 08:30: Aug. PCE Deflator YoY, est. 3.5%, prior 3.3%
- 08:30: Aug. PCE Deflator MoM, est. 0.5%, prior 0.2%
- 08:30: Aug. Advance Goods Trade Balance, est. -$91.4b, prior -$91.2b, revised -$90.9b
- 08:30: Aug. Wholesale Inventories MoM, est. -0.2%, prior -0.2%
- 09:45: Sept. MNI Chicago PMI, est. 47.6, prior 48.7
- 10:00: Sept. U. of Mich. Sentiment, est. 67.7, prior 67.7
- 10:00: Sept. U. of Mich. Current Conditions, est. 69.8, prior 69.8
- 10:00: Sept. U. of Mich. Expectations, est. 66.4, prior 66.3
- 10:00: Sept. U. of Mich. 1 Yr Inflation, est. 3.2%, prior 3.1%
- 10:00: Sept. U. of Mich. 5-10 Yr Inflation, est. 2.8%, prior 2.7%
- 11:00: Sept. Kansas City Fed Services Activ, prior -1
DB’s Jim Reid concludes the overnight wrap
As we arrive at the last business day of the month, it’s fair to say that September has lived up to its reputation as the worst month of the year for markets. The sour mood dominated the early part of yesterday, with yields hitting new highs for the cycle on both sides of the Atlantic. For instance, 10yr bund yields rose +9.1bps to a post-2011 high of 2.93%, whilst 10yr Treasury yields hit an intraday high of 4.69%, before a sharp turn that took them down over 10bps intraday to 4.57% by the close. We’ve pointed out recently that a 10yr Treasury yield at 4.5% is actually in line with the long-term historical average, but as markets got increasingly used to a decade-and-a-half of historically low rates since the GFC, this is coming as a big adjustment to lots of investors. Indeed, it was only three-and-a-half years ago that the 10yr Treasury yield hit an all-time intraday low of 0.31%. But since then we’ve seen an astonishing turnaround, and it’s worth remembering that the annual rise in the 10yr yield of 236bps over 2022 was already the biggest annual increase since 1788. So even though yesterday saw a breather by the end of the session, it’s no exaggeration to say we’re in the midst of a historic sell-off.
That rates sell-off dominated in Europe, with the UK seeing the biggest declines. At one point intraday, the 1 0yr gilt yield was even on track to close more than +20bps higher, which would have been the biggest daily increase since the aftermath of the mini-budget last year. But it then pared back those moves to “only” close up by +12.9bps. It was the same story elsewhere in Europe, with yields on 10yr bunds (+9.1bps), OATs (+8.8bps) and BTPs (+7.7bps) all rising significantly. What was also striking was that higher real yields drove those moves, and the German 10yr real yield closed at a post-2011 high of 0.50%.
Those bond losses occurred despite some downside surprises in the latest inflation data. For instance, the September flash CPI release for Germany fell to a two-year low of +4.3% on the EU-harmonised measure (vs. +4.5% expected). Meanwhile in Spain, we did see CPI move up by eight-tenths to +3.2%, but that was still beneath the +3.3% reading expected by the consensus. So both were less than expected. All eyes will now be on the CPI release for the entire Euro Area today, which is out at 10am London time.
We also got several data releases from the US yesterday, but for now the biggest question surrounds the potential government shutdown, which could happen over the weekend. As it stands, there’s still no sign that the House and Senate will be able to agree on a new funding package, with current funding set to expire this Sunday, October 1. For the economy, the main issue is that federal employees would be furloughed, which would act as a drag on growth. And for markets, there’s the added point that we could miss out on some upcoming data releases, including the jobs report next Friday. So if a shutdown does happen, markets may well have to rely more on alternative survey indicators that will still come out like the ISM manufacturing and service prints. See Brett Ryan’s piece here on how previous shutdowns have impacted the economy and data releases.
Another ongoing issue for the US economy is the autoworkers strike, and several outlets including CNN have reported that the United Auto Workers union could announce an expansion of strikes today if progress isn’t made. On that topic, Olga Cotaga and Luke Templeman on our team have published a report which argues that, regardless of inflation, this is just the beginning of greater labour demands. Large corporates stand to have their margins squeezed as a result. Their report can be found here.
As we await developments on a potential shutdown and the strikes, the US labour market still appeared resilient, with the weekly jobless claims coming in at 204k (vs. 215k expected) over the week ending September 23. That takes the 4-week moving average down to 211k, which is the lowest it’s been since February. Separately, we got the latest benchmark GDP revisions from the US, which showed the economy growing a bit faster than previously thought. For example, over 2017-22, it showed GDP grew by 2.2% on average, a tenth higher than before. For Q1 2023, growth was revi sed up to 2.2% on an annualised basis (vs. 2.0% before), and Q2 2023 was left unchanged at an annualised +2.1%. There was some less encouraging news on the housing front, however, with monthly pending home sales for August showing their sharpest fall in 11 months, down -7.1% .
The claims and GDP revisions data initially gave more steam to the Treasuries sell-off, with 10yr Treasury yields reaching a high 4.69% shortly after. But yields saw a steady turn lower during the rest of the session, with 10yr closing -3.3bps lower at 4.57% and the 2yr down -7.8bps to 5.06%. So once again, there was a big steepening in the yield curve, with the 2s10s curve up +4.6bps to -48.5bps, which is the least inverted it’s been since May. And despite yesterday’s reversal, 10yr yields have since moved up +1.9bps overnight to 4.59%, are still up +16.0bps since last Friday – which means they’re on course for the biggest rise in yields since early July.
Despite a volatile rates backdrop, equities rebounded yesterday and the S&P 500 (+0.59%) posted its strongest day in two weeks. The advance was fairly broad-based, and tech stocks were an outperformer with the NASDAQ (+0.83%) and the FANG+ index (+1.18%) both seeing even bigger gains. Nevertheless, even with yesterday’s recovery, the S&P 500 remains on track for its worst monthly performance of 2023 so far, having shed -4.61% since the start of the month. Furthermore, it’s on course for a 4th consecutive weekly loss for the first time since December. Over in Europe, both the STOXX 600 (+0.36%) and the DAX (+0.70%) ended a run of 5 consecutive declines .
Overnight in Asia, there’s been a pretty mixed performance from the major indices. On the one hand, the Hang Seng (+2.71%) is currently on course for its best day since July, whereas the Nikkei (-0.12%) has posted a modest decline this morning. Otherwise, markets in mainland China are closed today and into next week, and they’re also closed in South Korea. Looking forward, European and US equity futures are trading modestly higher, with those on the DAX (+0.30%) and the S&P 500 (+0.06%) in positive territory.
Otherwise overnight, the Bank of Japan announced an unscheduled bond-purchase operation, which came as the 10yr yield has hit its highest level in a decade overnight, at 0.77%. They’ve since fallen back to 0.76%, although that would still be their highest closing level in the last decade. At the same time, we’ve had several data releases from Japan overnight. That included the unemployment rate for August, which held at 2.7% (vs. 2.6% expected), as well as the Tokyo CPI reading for September, where core-core inflation slowed to +3.8% (vs. +3.9% expected) .
To the day ahead, and the main data highlight will be the Euro Area flash CPI release for September. Alongside that we’ll get German unemployment for September, UK mortgage approvals for August. Over in the US, we’ll get PCE inflation for August, along with personal income and spending data, as well as the University of Michigan’s final consumer sentiment index for September, and the MNI Chicago PMI for September. Central bank speakers include ECB President Lagarde, the ECB’s Kazaks and Visco, and the Fed’s Williams.