Category: Uncategorized

Economic Calendar: Oct 10 – Oct 14

Monday October 10

China yuan financing, M2 money supply.

Canadian markets closed for Thanksgiving day. U.S. stock markets are open, but bond markets are closed for Columbus day.

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Tuesday October 11

UK September payrolls; Italy August industrial production

(6 am ET) NFIB Small Business Economic Trends Survey

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Wednesday October 12

Japan machine orders for August.

UK real GDP for August, services index, industrial production, manufacturing production and trade deficit.

(7 am ET) U.S. mortgage applications

(830 am ET) U.S. Producer Price Index for September. Consensus is for a 0.3% rise month over month.

(2pm ET) FOMC Minutes from September 20-21 meeting

Two-day G20 finance ministers and central bank governors meeting in Washington begins.

Earnings include: PepsiCo Inc.

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Thursday October 13

China trade surplus for September

Germany CPI for September

(830 am ET) U.S. initial jobless claims for week ended Oct. 8.

(830 am. ET) U.S. consumer prices for September. Consensus is for a monthly rise of 0.2%, or 8.1% from a year ago, slowing from an 8.3% pace a month earlier. Excluding food and energy, CPI is expected to rise 0.4%, or 6.5% year over year – faster than August’s 6.3% rise.

Earnings include: Aritzia Inc.; BlackRock Inc.; Delta Air Lines Inc.; Domino’s Pizza Inc.; Progressive Corp.; Walgreens Boot Alliance Inc.

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Friday October 14

China CPI and PPI for September.

Euro area trade deficit for August. France CPI for September.

(830 am ET) Canada manufacturing sales for August. Consensus is for a decline of 1.2%.

(830 am ET) Canada wholesale trade for August.

(9 am ET) Canada existing home sales for September. It’s expected to decline 32% from a year earlier, with average prices down 6%.

(9am ET) MLS Home Price Index for September. It’s expected to be up 2.5% year over year.

(830 am ET) U.S. retail sales for September. Consensus is a monthly rise of 0.2%, or down 0.1% when excluding autos.

(830 am ET) U.S. import prices. Consensus is for a year over year rise of 6.1%, slowing from August’s pace of 7.8%.

(10 am ET) U.S. business inventories for August.

(10 am ET) U.S. University of Michigan Consumer Sentiment for October. It’s forecast to come in at 58.8, up slightly from September’s 58.6.

Earnings include: Citigroup Inc.; JPMorgan Chase & Co.; Morgan Stanley; PNC Financial Services Group Inc.; UnitedHealth Group Inc.; U.S. Bancorp; Wells Fargo & Co.

EU countries to seek November deal on more emergency measures in bid to tackle high gas prices

European Union countries will seek a November deal on more emergency measures to tackle high gas prices, officials said, although countries still disagree on what form those measures would take and whether they should cap gas prices.

As Europe heads into a winter of scarce Russian gas supplies and high energy costs, EU energy ministers will meet in Prague on Wednesday to discuss their next move, having already rushed through emergency EU energy windfall profit levies, gas storage filling obligations and electricity demand curbs.

A majority of EU states say a gas price cap should come next, but disagree on whether it should apply to all gas trades, long-term contracts, or just gas used to produce electricity. Others, including Germany, remain opposed.

A senior EU official said Wednesday’s meeting should narrow down the options so the European Commission can propose fresh legislation this month.

“Member states use the same words, not necessarily in the same meaning, so we need to narrow that down,” the official said.

Ministers on Wednesday will also discuss joint gas buying among countries, and the potential to negotiate lower prices with non-Russian suppliers as ways for the EU to tame energy prices.

The Czech Republic, which currently chairs meetings of EU ministers, would call an emergency energy ministers’ meeting in November to approve the proposals, the official said.

Three EU country officials agreed with that timeline, but said states still disagree on what measures to take. “It’s difficult to see consensus because everyone has their own preferences,” one said.

The senior EU official said that in their view countries were leaning toward the “Iberian model” of capping the price of gas used for power generation.

Spain and Portugal capped the price of gas used in power generation in June, which has helped curb local power prices. The idea has gained traction among other countries, although some worry it could raise EU gas demand, since Spain’s gas use increased under the measure.

EU energy commissioner Kadri Simson last week said Brussels could learn from the scheme, but that it was not suitable to immediately roll out across the continent because of local specificities including Iberia’s numerous liquefied natural gas terminals, which many EU countries lack.

Countries would also need to decide how to compensate gas plants for the gap between the capped price and the higher market price at which they buy fuel, be it through public funding or a levy on other energy generators.

“It would be really costly for many member states,” one of the officials said.

Oil slips as recession fears outweigh tight supply prospects

Oil prices edged lower on Monday as investors weighed economic storm clouds that could foreshadow a global recession, and erode fuel demand, against potentially tighter supply.

Brent crude futures fell 69 cents, or 0.7%, to $97.23 a barrel. West Texas Intermediate crude declined by 36 cents, or 0.4%, to $92.57 a barrel.

U.S. Federal Reserve Chicago President Charles Evans said there was a strong consensus at the Fed to raise the target policy rate to around 4.5% by March and hold it there.

Stubbornly higher rates, which are aimed at giving the U.S. central bank time to evaluate the impact of inflation and allow clogged supply chains to clear, limited oil prices.

“There’s more of the doom and gloom from those folks and what they’re going to do to the economy, because they’re not so convinced they have inflation under control, and that’s the macro play that’s weighing on oil,” said John Kilduff, partner at Again Capital LLC in New York.

Oil prices also struggled under a strengthening U.S. dollar , which rose for a fourth session. A stronger dollar makes crude more expensive for non-American buyers.

The prospect of tightening OPEC+ oil supplies limited declines in prices. But signs that the group’s de facto leader, Saudi Arabia, would continue to serve Asian customers at full levels lowered expectations of the cuts’ impact. 

Saudi Aramco has told at least seven customers in Asia they will receive full contract volumes of crude oil in November ahead of the peak winter season, several sources with knowledge of the matter said.

The Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, decided last week to lower their output target by 2 million barrels per day.

Brent and WTI posted their biggest weekly percentage gains since March after the reduction was announced.

However, the cut has spurred a flurry of activity in the options market – but with more U.S. bettors opting for a bearish stance, data from CME Group showed.

Concerns over still relatively robust demand as the pandemic has eased meeting potentially scarce supply have been deepened as the European Union late last week endorsed a G7 plan to impose a price cap on Russian oil exports.

The complicated new sanctions package could end up shutting in considerable supplies of Russia crude, analysts have warned.

“A recessionary economic outlook will lead to lower oil demand,” Fitch Ratings said on Monday. “However, we expect pricing volatility to remain high in the short term as geopolitical factors, such as further sanctions leading to a reduction in Russian exports.”

Those political factors could alter supply patters and cause greater price volatility, Fitch said.

Meanwhile, services activity in China during September contracted for the first time in four months as COVID-19 restrictions hit demand and business confidence, data showed on Saturday.

The slowdown in China, the world’s second-largest oil consumer behind the United States, adds to growing concerns over a possible global recession triggered by numerous central banks raising interest rates to combat high inflation.

Taiwan stocks down 3% in mixed Asia trade as TSMC plunges 6%

Shares in the Asia-Pacific were mixed on Tuesday, while Taiwan’s benchmark index dropped more than 3% on its return to trade as investors weighed the impact of new U.S. rules on chipmaker TSMC.

Japan and South Korea’s markets also resumed trading after a holiday on Monday. The Nikkei 225 fell around 2% and the Topix lost about 1.5%. In South Korea, the Kospi fell 2.16% and the Kosdaq shed 3.5%.

Hong Kong’s Hang Seng index fell 0.91% and the Hang Seng Tech index dropped 1.11%. The Shanghai Composite and Shenzhen Component in mainland China were little changed.

In Australia, the S&P/ASX 200 bucked the overall trend and was 0.27% higher. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 1.41%.

“Equities continue to sell off as the impact of tighter monetary policy spooks investors,” ANZ Research analysts wrote in a note Tuesday.

https://www.cnbc.com/2022/10/11/asia-markets-interest-rates-economy-stocks-currencies.html

Happy Thanksgiving

France’s Emmanuel Macron criticizes Biden’s ‘Armageddon’ warning: We must ‘speak with prudence’

French President Emmanuel Macron criticized President Biden’s comments warning of “Armageddon” as Russia invokes the potential for using nuclear weapons.

Biden made the comments during a speech to the Democratic Senatorial Campaign Committee on Thursday night, stating that Russian President Vladimir Putin isn’t joking when it comes to using weapons of mass destruction.

“[Putin was] not joking when he talks about the use of tactical nuclear weapons or biological or chemical weapons,” Biden said. “We have not faced the prospect of Armageddon since Kennedy and the Cuban Missile Crisis.”

Gold drops as U.S. jobs data fans hefty Fed rate-hike bets (cnbc.com)

Gold drops as U.S. jobs data fans hefty Fed rate-hike bets

Gold prices fell Friday after a better-than-expected U.S. jobs report cemented expectations the Federal Reserve would implement steep interest rate hikes and lifted the dollar and bond yields.

Spot gold was down 0.9% at $1,695.40 per ounce. Prices have risen about 2% so far this week.

U.S. gold futures slipped 1% to $1,703.40.

“The market is looking at the stronger-than-expected payrolls report as further impetus for the Fed to raise yet another 75 bps at the early November meeting,” said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

“If bullion doesn’t hold support at $1,690, it could retest $1,660 level. Market will be now be focused on key inflation data next week, as well as the Fed minutes.”

Data showed U.S. employers hired more workers than expected in September, while the unemployment rate dropped to 3.5%.

Fed fund futures are now pricing in a 92% chance of a 75-basis-point (bps) rate hike by the U.S. central bank at its policy meeting next month after a strong labor market report.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Following the data, the dollar jumped 0.3% against its rivals, making gold more expensive for other currency holders. Benchmark U.S. Treasury yields also climbed.

Silver eased 2.7% to $20.10 per ounce, but was on track for its biggest weekly rise since late-July, up about 6.5% so far.

Platinum lost 1.1% to $912.07 per ounce and was headed for its best week since February 2021. Palladium dipped 3.1% to $2,190.78.

Oil jumps to 5-week high lifted by OPEC+ output cut

Oil rose about 3% to a five-week high on Friday, carried higher again by an OPEC+ decision this week to make its largest supply cut since 2020 despite concern about a possible recession and rising interest rates.

The cut from the Organization of Petroleum Exporting Countries and allies including Russia, known as OPEC+, comes ahead of a European Union embargo on Russian oil and will squeeze supply in an already tight market.

Brent crude was up $3.48, or 3.7%, to $97.90 a barrel. U.S. West Texas Intermediate, or WTI, crude gained $4.18, or 4.7%, to $92.63.

Oil kept rallying even as the dollar moved higher after data showing the U.S. economy was creating jobs at a strong pace gave the Federal Reserve a reason to continue hefty interest rate hikes. A strong dollar can pressure oil demand, making crude more expensive for other currency holders.

Both benchmarks were on track for their highest closes since Aug. 30, their fifth straight daily rise and second straight weekly gain, in technically overbought territory.

For the week, Brent was up about 10% and WTI up about 15%. Both would be the biggest weekly percentage gains since March.

U.S. heating oil futures jumped 18% this week, putting the heating oil crack spread – a measure of refining profit margins – on track for its highest close on record, according to Refinitiv data going back to December 2009.

The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, agreed this week to lower their output target by 2 million barrels per day.

“Among the key ramifications of OPEC’s latest cut is a likely return of $100 oil,” said Stephen Brennock of oil broker PVM.

UBS Global Wealth Management also projected Brent would “move above the $100 bbl mark over the coming quarters.”

The OPEC+ cut from the comes ahead of a European Union embargo on Russian oil and will squeeze supply in an already tight market.

OPEC Secretary General Haitham al-Ghais said the output target cuts will leave OPEC+ with more supply to tap in the event of any crises.

On Thursday, U.S. President Joe Biden expressed disappointment over the OPEC+ plans. He and U.S. officials said Washington was looking at all possible alternatives to keep prices from rising.

“With Brent now firmly back in the $90-100 range, the group will likely be pleased with the outcome although substantial uncertainty remains over the economic outlook,” said Craig Erlam of brokerage OANDA, referring to OPEC+.

In Europe, divisions between European Union leaders over capping gas prices and national rescue packages resurfaced, with Poland accusing Germany of “selfishness” in its response to a winter energy crunch caused by Russia’s war in Ukraine.

Petrol stations in the Paris region and throughout France were having problems getting enough fuel supplies as strikes at four TotalEnergies SE refineries continue for a tenth day.

US job growth slows again in September with just 263,000 positions added

U.S. job growth slowed for a second consecutive month in September, but hiring remained solid despite growing headwinds from higher interest rates, scorching-hot inflation and mounting recession fears.

Employers added 263,000 jobs in September, the Labor Department said in its monthly payroll report released Friday, slightly topping the 250,000 jobs forecast by Refinitiv economists. It maatch

The unemployment rate, meanwhile, unexpectedly dropped to 3.5%, the lowest since the COVID-19 pandemic began two years ago.

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This is a developing story. Please check back for updates.