Archives of “October 28, 2021” day

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Pres. Biden: We have reached a historic economic framework

  
  Analysis

Pres. Biden speaking at the White House.

Pres. Biden speaking at the White House.
  • We have reached a historic economic framework
  • Framework is fiscally responsible, will reduce deficit
  • Framework includes historic investments in nation, people
  • No one got everything they wanted including me
  • Our country had stopped investing in itself
  • We need to restore US competitiveness.
  • This is not about left versus right, or moderate versus progressives
  • It’s about expanding opportunity and leading the world
  • We are going to expand services for seniors
  • Investments will make our truly consequential
  • Framework agreement includes measures to help with childcare expenses
  • Framework extends middle-class tax cut
  • Bill will make significant steps to combat climate change
  • Climate deal goes beyond advanced nations
  • We will build out a 500,000 electric charging stations nationwide
  • We will make historic investments in environmental cleanup and remediation measures
  • There our 45,000 bridges that are in poor condition
  • Severe climate change events are costing US
  • Does not want to punish success but wants wealthiest Americans to pay their fair share
  • this agenda is what Americans voted for in 2020

Major European indices close near unchanged/higher

  
Analysis, Global Indices

German Dax near unchanged

The major European indices are closing near unchanged/higher on the day. The provisional closes are showing:

  • German DAX, -0.1%
  • France’s CAC, +0.6%
  • UK’s FTSE 100, -0.2%
  • Spain’s Ibex, +0.5%
  • Italy’s FTSE MIB +0.3%
In other markets as European traders look to exit:
  • Spot gold is up six dollars or 0.34% $1802.35. Although gold is higher with the dollar lower, it’s not running like you might expect given the fall in the greenback
  • Spot silver is up six cents or 0.26% at $24.11
  • Crude oil futures are trading at $82.02, down -0.76% on the day
  • Bitcoin is trading up at $61,455 after the dip below $60,000 yesterday

In the US stock market, the NASDAQ index moved to a new all-time high of 15417.97. It has come off that level currently trading at 15404.21. That is still up 169 points or 1.1%.

  • The Dow industrial average is up 200 points or 0.57% at 35689.92
  • The S&P index is up 39.18 points or 0.86% at 4590.82
In the forex market, the USD has moved sharply to the downside in the US session. The USD is now the weakest of the majors. The EUR is the strongest after their meeting which saw policy remain unchanged.

Light changes among major currencies so far on the day

  
  Analysis

The yen leads while the euro is the laggard

But the changes are nothing too significant as price action continues to keep more contained for the most part in European morning trade.
USD/JPY H1 28-10
USD/JPY is keeping around 113.50-60 levels as sellers retain a more bearish near-term bias, working with the flattening of the yield curve this week. However, support at around 113.41 is still holding and limiting any further downside move for now.
EUR/USD H1 28-10
Meanwhile, EUR/USD is nudging a little lower to 1.1585-90 as sellers also keep a more bearish near-term bias but we’re seeing price action still keep a bit more sticky around 1.1600 amid large option expiries as we await the ECB later today.
Elsewhere, other dollar pairs are roughly sitting within 10 pips of each other and that pretty much exemplifies the lack of poise so far on the session.
European equities are more mixed with US futures creeping higher a little, up by around 0.2% currently. That might help with sentiment as a whole but bear in mind that there’s also month-end trading conditions to deal with in the latter stages of this week.
That might keep things a bit more messy and tough to get a grip on things especially if there are any sudden moves before we get to the weekend.

Eurozone October final consumer confidence -4.8 vs -4.8 prelim

  
  Analysis

Latest data released by Eurostat – 28 October 2021

  • Economic confidence 118.6 vs 116.9 expected
  • Prior 117.8
  • Industrial confidence 14.2 vs 12.5 expected
  • Prior 14.1
  • Services confidence 18.2 vs 16.5 expected
  • Prior 15.1

Euro area economic sentiment picked up in October, rising for a second straight month as confidence levels hold up despite worries surrounding the outlook.

Optimism among consumers did decline from -4.0 to -4.8 but perhaps the notable detail is that inflation expectations surged to 40.0 in October, up from 33.1 in September. That’s the highest reading since measurements began in 2000.

US 2-year yields climb to highest since March last year as curve flattens further

  
  Analysis

2-year Treasury yields up nearly 7 bps to 0.558%

USGG2YR

The yield curve in major bond markets is continuing to flatten further on the week, as the short-end is rising at a much faster pace than the long-end today.
2-year Treasury yields are up nearly 7 bps now close to 0.56% while 10-year Treasury yields are up slightly by 2.8 bps to 1.557% after the plunge lower in the latter yesterday.
That has seen 2s10s i.e. gap between 2-year yields and 10-year yields fall below 100 bps for the first time since early August this year. I’d argue that this is the key gauge when measuring yield curve flatness and this is certainly looking rather significant now.
I would say this says a lot about the market view on the economy, that being even if central banks are to hike rates in the short-term, it may snuff out real inflation and at the same time stifle the economy in the macro picture.
Sure, the rate hikes that will come can be reversed, but that just signifies that central banks are floundering all over the place just to keep the economy afloat and not really being able to do much to spur more robust growth conditions.

Chinese ambassador to Australia has left the country

  
  Analysis

ArticleBody  Chinese ambassador Cheng Jingye to Australia was “about to depart, if he has not already departed” said Australia’s Foreign Minister Payne today.

A foreign policy commentator in Australia says:
  • “China is not going to invest much in rebuilding the relationship because I think, like Australia, they think there is little hope for improvement in the near term.”
Info comes via local media. There is not really an indication of the circumstances of the departure beyond a disgruntled China.

BOJ monetary policy statement & revised forecasts

  
  Analysis

Bank of Japan leaves its key monetary policy planks unchanged, as expected.

 

  • BOJ maintains short-term interest rate target at -0.1%
  • maintains 10-year JGB yield target around 0%

 

The Bank has revised its forecasts though (lower CPI and GDP projections also expected)

 

  • core cpi median forecast for fiscal 2021/22 at 0.0% vs +0.6% in July
  • core cpi median forecast for fiscal 2022/23 at +0.9% vs +0.9% in July
  • core cpi median forecast for fiscal 2023/24 at +1.0% vs +1.0% in July
  • real GDP median forecast for fiscal 2021/22 at +3.4% vs +3.8% in July
  • real GDP median forecast for fiscal 2022/23 at +2.9% vs +2.7% in July
  • real GDP median forecast for fiscal 2023/24 at +1.3% vs +1.3% in July

 

And, from the BOJ Quarterly report:

  • Japan’s economy likely to recover, accelerate pace of growth as pandemic’s impact subsides
  • Japan’s consumer inflation likely to gradually accelerate
  • must be vigilant to risks including developments of pandemic, impact on economies
  • Japan’s economy remains in severe state but picking up as a trend
  • exports, output weak due to supply constraints but increasing as a trend
  • capex showing weakness in some sectors but picking up as a whole
  • service spending remains under pressure but consumption showing signs of pickup
  • Japan inflation expectations picking up
  • exports, output to slow temporarily on supply constraints
  • signs of improvement likely to spread from corporate to household sector
  • auto output to slow briefly on supply constraint but solid global it demand to help overall output continue to increase
  • Japan’s financial system stable as a whole
  • Japan’s financial intermediation may stagnate if bank profits come under prolonged pressure from covid-19

Headlines via Reuters

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