Earnings Analysis: Large-Caps Turn Sharply Negative After Market Close YesterdayECB’s Patsalides: European economy is showing resilienceSNB’s Chairman Schlegel: Inflation should rise slightly in the next quartersJPY intervention cheat sheet: from verbal to physical actionJapanese yen leads the major currencies space amid risk selloffUK’s Reeves: Since last year’s budget, the world has thrown more challenges our wayEuropean indices off to a rough start to the dayWhat are the main events for today?SNB’s Tschudin: We will only use negative rates when necessaryEurostoxx futures -0.9% in early European tradingECB’s Rehn: Uncertainty about future economic developments remains highFX option expiries for 4 November 10am New York cutUS futures look to reverse the start of the week gains on the dayJapan prime minister Takaichi says inflation yet to sustainably hit BOJ’s price targetRBA governor Bullock: We are not moved by outside commentary on policyRBA governor Bullock: We did not considering cutting ratesChina president Xi reaffirms pledge for cooperation, close communication with Russia
It’s been a boring day in terms of data and news releases. RBA’s Bullock remained neutral and didn’t offer much in terms of forward guidance. She said that “it’s possible that there’s no more rate cuts but also possible that there will be some more”. It will of course depend on economic data but they will need a significant deterioration in the labour market to force them to cut more.
We also heard from UK Chancellor Reeves and despite her not saying much, the GBP weakened across the board. That’s not the first time we see the pound weakening just because Reeves speaks. Interesting pattern there.
Lastly, we got SNB’s Tschudin repeating that interest rates are where they should be, basically pushing back on speculations about negative rates as the bar to go back into NIRP remains high.
In the markets, we’ve been seeing risk-off moves pretty much across the board despite lack of clear catalysts. When this happens, it usually reverses in the American session. We’ll see.
The main thing weighing on the markets is of course the recent hawkish turn from Fed Chair Powell. The hawkish repricing led to dollar strength and a pullback in stocks and bonds. We don’t have much in the American session, but tomorrow we will get the US ADP report and the US ISM Services PMI. Given the shutdown, they are the only key US releases this week.
This article was written by Giuseppe Dellamotta at investinglive.com.