US mortgage market index 277.5vs 292.3 prior

US mortgage purchase index 149.2 vs 149.3 prior

US MBA 30-year mortgage rate 6.36% vs 6.4% prior

This article was written by Arno V Venter at www.forexlive.com.

Core CPI is projected at 0.26% MM and 3.2% YY

Headline CPI is projected at of 0.09% MM and 2.3 YY

The main components to watch for tomorrow:

• Housing inflation is expected to soften, with rents anticipated to decelerate, particularly due to adjustments in the Owner’s Equivalent Rent (OER) calculations and seasonal factors.

• Used car prices are expected to accelerate, which will push goods inflation into positive territory.
• Car insurance is expected to continue its downward path, with car insurance expected around 13% YY (versus the prior of 17% YY).

In terms of the possible broader economic and Fed policy impact the bank suggests that the disinflation trend aligns with the Fed’s projections, and along with the solid labor market data should support the forecast of two more 25 basis point cuts in November and December.

This article was written by Arno V Venter at www.forexlive.com.

• ECB’s Patsalides: There seems to be room for a rate cut.
• ECB’s Patsalides: But we should discuss all new data as usual.
• ECB’s Patsalides: Middle East implications should be assessed.

This article was written by Arno V Venter at www.forexlive.com.

ECB: -25 basis points of easing implied for October 17th meeting (100% probability implied for a cut)

BoC: -32 basis points of easing implied for October 23rd meeting (100% probability implied for a cut)

BoJ: 1 basis point of tightening implied for the October 31st meeting (87% probability implied for a hold)

RBA: -2 basis points of easing implied for the November 5th meeting (91% probability implied for a hold)

BoE: -21 basis points of easing implied for the November 7th meeting (84% probability implied for a cut)

Fed: -22 basis points of easing implied for the November 7th meeting (88% probability implied for a cut)

RBNZ: -45 basis points of easing implied for the November 27th meeting (100% probability implied for a cut – almost fully priced for another 50bp move)

SNB: -30 basis points of easing implied for the December 12th meeting (100% probability implied for a cut)

This article was written by Arno V Venter at www.forexlive.com.

• Riksbank’s Bunge says more confident that high inflation is behind us
• China’s Premier Li vows stronger policy coordination with timely implementation
• PepsiCo expect higher borrowing costs to impact consumer spending
• ECB’s Centeno: Inflation in the Euro Area converged towards goal
• US September NFIB small business optimism index 91.5 vs 91.2 prior
• Japan’s Akazawa says wage-price cycle progressing but full shift not yet achieved
• ECB’s Elderson: We will continue to gradually ease our restrictive stance
• Chinese equities remains close to session lows
• ECB’s Nagel: Open to October rate cut
• ECB’s Vaslle says a rate cut in October is an option
• Sour mood for risk sentiment this morning
• Iran’s FM to visit Saudi Arabia and regional nations to address escalating tensions
• More from Fed’s Kugler: The Fed is looking at trends in the labour market, not single data
• ECB’s Kazaks: Data points to October rate cut
• Fed’s Kugler: Support additional rate cuts if progress on inflation continues
• The @Newsquawk Europe Market Open: China’s NDRC press conference met with disappointment
• French Trade Balance data for August reveals a shortfall, impacting Exports
• What are the main events for today?
• Iran Warns Israel of Stronger Retaliation if Attacked Amid Rising Tensions
• German Industrial Production Beats Expectations at 2.9% Rise in August
• ECB Elderson Warns of Materialising Risks to Economic Growth Ahead of Key October Meeting
• Fed’s Williams Signals More Rate Cuts Ahead After September Reduction
• China’s Economic Planner Confident in Achieving 2024 Goals Despite Complex Challenges

It’s been another quiet session in terms of data releases. The only notable data point was the US NFIB Small Business Optimism index which ticked higher compared to the prior month.

We had also many ECB speakers confirming a rate cut in October which the market has already priced in weeks ago. The price action in the FX market remains rangebound as we continue to wait for the US CPI release on Thursday.

In the equity space, the Chinese markets continue to trade around the daily lows while the US and European markets have been grinding higher.

In the commodities space, crude oil is down 1.88% on the day since the peak hit in the overnight session at $78.46 with the pullback in the Chinese equities being the likely culprit. Copper is another big loser as it’s been even more sensitive to the Chinese markets lately. Gold, on the other hand, remains rangebound as the recent rally in real yields continues to weigh on the market.

The American session will be empty in terms of key data releases and the Fedspeak will take the centre stage once again as we get Fed’s Bostic and Fed’s Collins speaking.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Libya’s NOC says daily production reached 1,133,133 BPD of crude oil and condensate in the last 24 hours – Statement.
• Libya’s NOC says recovery comes just days after the lifting of the force majeure – Statement.

This article was written by Arno V Venter at www.forexlive.com.

• Riksbank’s Bunge: We are more confident that the period of high inflation is behind us.
• Riksbank’s Bunge: At the same time, we are in a mild downturn and it is important that the Swedish economy now recovers.

This article was written by Arno V Venter at www.forexlive.com.

• China’s State Council held special study session on economic policies on Tuesday – State media.
• China’s Premier Li: Will strengthen policy coordination – State media.
• China’s Premier Li: Policy implementation should reflect good timing, strength, and pace – State media
• China’s Premier Li: All sides should actively roll out policy measures to stabilise growth – State media.

This article was written by Arno V Venter at www.forexlive.com.

• PepsiCo says inflation and higher borrowing costs over the last few years continue to impact consumer spending – Prepared Remarks.
• PepsiCo – Expect 2024 inflationary pressures to moderate vs prior year, but some commodity costs to remain elevated.
• PepsiCo: „Believe our snack categories remain attractive.“
• PepsiCo – Continue to see long runway of profitable growth for international business.
• PepsiCo: Sees improved Quaker Foods North America net revenue in Q4 as recall-affected production resumes.
• PepsiCo: Expects consumers to remain value conscious amid inflation.
• PepsiCo – Pockets of elevated geopolitical tension & macroeconomic pressure expected to persist in some international market in 2024.

Given the Fed and market’s focus on the labour market, there will be increased focus on the consumer for the Q3 earnings season.

This article was written by Arno V Venter at www.forexlive.com.

• Hurricane hunters sees hurricane Milton as a major hurricane
• ING says an October ECB cut is not guaranteed
• All eyes on Chinese equities after last week’s bank holidays
• US 10-year treasury yields back above 4%
• Risk is trading mostly cautious so far across major asset classes
• Eurozone retail sales YY 0.8% vs 1.0% expected
• Reserve Bank of India Urges Banks to Avoid Large Short Bets as Rupee Nears Record Low
• Euro Zone Investor Morale Rebounds in October Amid Rising Expectations
• Market Outlook for the Week of 7th – 11th October
• Japan PM’s Bold Move: No Capital Gains Tax Hike to Boost Investment
• Weekly update on interest rate expectations
• Japanese firms anticipate prolonged China slowdown, BoJ official reveals
• Goldman Sachs Slashes US Recession Odds Following Strong Jobs Report
• What are the main events for today?
• German retail sector faces economic uncertainty, no growth in consumer spending expected
• The @Newsquawk Europe Market Open – APAC stocks began on front foot. Eyes on geopolitics
• BP Shifts Strategy, Eyes Investments in Iraq and Permian Basin
• UK House Prices Rise in September, Beating Expectations Actual: 0.3% Expected: 0.2%
• German Factory Orders Plunge in August -5.8% Expected: -1.9% Previous: 2.9%
• BOJ Report: Price Hikes and Wage Increases Spreading Across Japan
• Japan’s Leading Index Falls Short of Expectations in August Report

It’s been a a quiet session in terms of data releases with the Eurozone retail sales being the only highlight. The data came in better than expected but the market ignored the release.

The most notable movers in the markets have been Treasury yields and crude oil. Regarding the former, the market priced out all the agressive rate cuts expectations and it’s now even leaning on a more hawkish side compared to the Fed’s projections. Speaking of the latter, the tensions in the Middle East remain high and that’s been supporting the price alongside a better macro outlook.

In the FX space, we are seeing a bit of a pullback in the US Dollar given that the market has already priced out the rate cuts. Looking forward, it’s now about the US CPI on Thursday as a hot report could see the market pricing in a pause for the Fed and give the greenback an extra boost.

In the American session, we have some Fedspeak. All of the scheduled speakers are known hawks, so some hawkish comments after the NFP report shouldn’t be surprising.

This article was written by Giuseppe Dellamotta at www.forexlive.com.