The GBP is the strongest and the AUD is the weakest as the North American session begins. The USD is mixed with gains versus the JPY, CHF, and NZD and declines vs the EUR, GBP and CAD. The greenback is little changed vs all the major currencies with gains or losses of 0.10% or less vs all the major currencies.
U.S. bond yields are rising, with the 10-year Treasury yield reaching 5.021% (it is back down to 4.993% currently). The 10-year yield was as low as 4.65% last week, indicating that the market expects interest rates to stay elevated for an extended period, possibly above the Federal Reserve’s target of 2.5%. Fed Chair Jerome Powell has mentioned the possibility of tighter monetary policy due to the strong U.S. economy, although rising market interest rates might reduce the need for central bank intervention. This week, third-quarter GDP growth (Atlanta Fed model is at 5.4%. Economists are lower at 4.3%), and the core personal consumer expenditures price index, which the Fed closely watches will be released. Additionally, the expected substantial U.S. borrowing is contributing to the rise in yields, as the budget deficit for fiscal 2023 is significantly higher than previous years, even before the pandemic. The Federal Reserve will announce a rate decision next week (November 1). Fed officials were ambiguous as the consumer remains a strong, but the impact from rates is thought to have not been fully reflected in the economy just yet.
Crude oil prices are lower with U.S. crude futures falling by 0.5% to $87.57 a barrel. The decrease occurred despite aid convoys reaching Gaza, as geopolitical tensions remained high due to ongoing Israeli airstrikes in the area. Last week, both U.S. crude prices rose over 1% for two consecutive weeks due to concerns about potential disruptions in the oil supply if the Israel-Hamas conflict escalated further in the oil-rich Middle East region. While Israel has not initiated a ground invasion of Gaza, it is considered a potential trigger for a broader conflict, which could impact oil supply in the area.
US stocks are lower for the 5th consecutive day in premarket trading.
A snapshot of the markets as the NA session gets underway shows:
- Crude oil is trading down -$0.52 or -0.59% at $87.57. At this time Friday, the price is trading at $89.54.
- Spot gold is trading down -$3.50 or -0.18% at $1977.35. At this time Friday, the price was trading right near this level at $1977.36.
- Spot silver is trading down -$0.15 or -0.67% at $23.19. At this time on Friday, the price was trading at $23.08.
- Bitcoin is trading at higher at $30,642. At this time on Friday the price was trading at $29,863.
In the US stock market, the major indices are trading lower after closing lower Friday. The NASDAQ index and the S&P index have down for 4 consecutive days(this would be the 5th), led by the NASDAQ index which fell over 3% last week.
- Dow Industrial Average futures are implying a decline of -172 points. Friday the index tumbled -286.89 points. For the week the index is down – 1.61%
- S&P index futures are implying a decline -16.75 points. Friday the index fell -53.84 points. For the week the index -2.39%.
- NASDAQ futures are implying a decline of -67 points. Friday the index fell -202.37 points. For the week the index fell -3.16%.
This week, there will be a number of earnings that will influence trading led by 4 of the so-called “Magnificance 7” including Microsoft, Alphabet, Meta and Amazon. Overall, 17% of the companies in the S&P 500 have reported actual results for the third quarter according to Factset. Of these companies, 73% have reported actual EPS above estimates, with firms reporting earnings that are 6.6% above estimates. For this week, the list of potential big movers include:
Monday:
- Phillips*
- Logitech
Tuesday:
- Coca-Cola*
- Verizon*
- GE*
- 3M*
- GM*
- Microsoft
- Alphabet
- Visa
- Texas Instruments
Wednesday:
- Boeing*
- T-Mobile*
- Hilton*
- General Dynamics*
- Meta
- IBM
- servicenow
Thursday:
- Altria*
- Southwest*
- Northrup Grumman*
- Merck*
- Amazon
- Intel
- Ford
- Chipotle
Friday:
- Exxon Mobil*
- Chevron*
- Phillips 66*
- Colgate-Palmolive*
In the European equity markets, the major indices are trading lower
- German DAX, -0.58%. Last week the index fell -2.56%
- France’s CAC, -0.02%. Last week the index fell -2.67%
- UK’s FTSE 100, -0.59% %. Last week the index fell -2.60%
- Spain’s Ibex, -0.81%. Last week the index fell -2.21%
- Italy’s FTSE MIB, -0.14% (10 minute delay)
In the Asia Pacific market, major indices were lower:
- Japan’s Nikkei index, -0.83%. For the week the index is down -3.27%
- China’s Shanghai Composite Index, -1.47%. For the week the index is down -3.40%
- Hong Kong’s Hang Seng index, -0.72. For the week the index is down -3.6%
- Australia’s S&P/ASX index, -0.82%. For the week the index is down -2.1%
In the US debt market, yields are moving higher as the yield curve continues to steepen:
- US 2Y T-NOTE: 5.116% +3.2 basis points. At this time on Friday, the yield was at 5.150%,
- US 5Y T-NOTE: 4.918% +5.6 basis points. At this time on Friday, the yield was at 4.927%.
- US 10Y T-NOTE: 4.986% +6.3 basis points. At this time on Friday, the yield was at 4.967%.
- US 30Y BOND: 5.147% +6.0 basis points. At this time on Friday, the yield is at 5.098%
- 2 – 10-year spread is at -13.1 basis points. At this time Friday, the spread was at -18.3 basis points.
- 2 – 30 year spread is at +2.7 basis points. At this time Friday, the yield spread was at -4.6 basis points.
In the European debt market, benchmark 10-year yields are trading higher:
This article was written by Greg Michalowski at www.forexlive.com. Source