The CAD is the strongest and the NZD is the weakest as the NA session.The USD is mixed to start the Friday in the NA session with gains vs the AUD, NZD, JPY and GBP, and declines vs the CAD and EUR. US stocks are lower after falling yesterday. The Nasdaq and S&P are on a 3-day losing streak, and all the major indices are lower for the week. The US yields which went a volatile run yesterday and settled higher, are lower with a modestly flatter trend. Fed Powell. We can blame Fed Chair Powell.

Powell, in his speech before the New York Economic Club, acknowledged the strength of the economy but also highlighted emerging risks. He left the possibility of more rate hikes open, emphasizing the need for caution in monetary policy decisions. This led to a brief rise in the 10-year Treasury yields to 5%, the highest since 2007, and a 0.9% decline in the S&P 500. The market is now anticipating higher rates for an extended period, as the economy has proven resilient to increased borrowing costs. The 2-10 year yield spread reached -16.5 basis points at its high (even though it is still negative – which is hard to put to words sometimes ; )). The spread is back to -18.0 basis points this morning.

This morning, Federal Reserve’s Bostic, a voter in 2024, expressed uncertainty about whether the neutral interest rate has changed and suggested it could be higher. He reiterated the possibility of the Fed cutting rates in late 2024. Bostic noted that inflation has significantly decreased and should continue to do so, while the economy has shown resilience. However, he mentioned that business contacts are anticipating a slowdown and preparing for it, but he does not foresee a recession and expects inflation to reach 2%. Bostic believes the economy still has momentum, and inflation will decrease gradually. He emphasized that the Fed needs to exercise caution, patience, and determination. He also mentioned that the economy’s long-term trend aligns with the Fed’s goals and that many businesses still hold cash, which is tempering the rise in market yields. Additionally, Bostic expressed concern that the deficit may become more problematic as debt servicing costs increase.

Meanwhile, in the UK the retail sales data came in weaker than expected due to a cost-of-living squeeze, helped by surging housing and energy costs. Retail sales in September fell by -0.9%, much more than the expected 0.2% decline. This drop is attributed to ongoing cost of living pressures and unseasonably warm weather affecting clothing sales. The impact is impacting the balance as power in government with Conservatives losing some bt-elections recently.. These results are seen as significant markers for the upcoming general election next year. In the last 3 months, retail sales have fallen -1.2%, moved up 0.4% and now moved down -0.9%. The negatives are winning. Despite the data, the GBPUSD has rebounded back higher and trades near high for the day and near the close from yesterday (the price is at 1.21405). The 100-hour MA is above at 1.21608. The low price today reached to the low from yesterday/the week at 1.2089. The low today reached 1.20924.

Crude oil prices are higher at the start of the US day, driven by heightened geopolitical anxiety from the the Middle East and also the U.S. decision to refill its strategic oil reserves. Concerns over the conflict spreading in the oil-rich Middle East, sparked by events like an explosion at a Gaza hospital and the potential ground invasion by Israeli troops, contributed to the price increase. Additionally, President Joe Biden’s move to replenish the Strategic Petroleum Reserve with 6 million barrels between December 2023 and January 2024 provided further support. The U.S. had drawn down about 200 million barrels from the reserve since early 2022 to address high gasoline prices amid the Russia-Ukraine war, leading to its lowest level in nearly 40 years. UGH.

A snapshot of the markets as the NA session gets underway shows:

• Crude oil is trading up $1.17 or 1.32% at $89.54. At this time yesterday, the price was at $86.45. For the week, prices are up 2.04%
• Spot gold is trading up $4 or 0.20% at $1977.36. At this time yesterday, the price was at $1951.40. For the week, prices are up 2.43%
• Spot silver is trading up $0.06 or 0.28% at $23.08. At this time yesterday, the price was at $22.88. For the week prices are up 1.99%
• Bitcoin is trading at $29,863. At this time yesterday, the price was at $28,443.

In the US stock market, the major indices are trading lower. The NASDAQ in S&P are down for the 4th consecutive day. The major indices are all lower for the trading week. A snapshot of the stock futures currently implies:

• Dow Industrial Average futures are implying a decline of -78 points. Yesterday the index tumbled -250.91 points. For the week the index is down -0.76%
• S&P index futures are implying a decline of -11.2 points. Yesterday the index fell -36.60 points. For the week the index is down -1.15%.
• NASDAQ futures are implying a decline of -42 points. Yesterday the index fell -128.13 points. For the week the index is down -1.65%

In the European equity markets, the major indices are trading lower

• German DAX, -1.24%. For the week the index is down -2.17%
• France’s CAC, – -1.10%. For the week the index is down -2.28%
• UK’s FTSE 100, -0.89%. For the week the index is down -2.21%
• Spain’s Ibex, -0.92%. For the week the index is down -1.84%
• Italy’s FTSE MIB, -1.06% (10 minute delay)

In the Asia Pacific market, major indices were lower:

• Japan’s Nikkei index, -0.54%. For the week the index is down -3.27%
• China’s Shanghai Composite Index, -0.74%. 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, -1.16%. 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: 5.150%, -2.1 basis points. At this time yesterday, the yield was at 5.239%
• US 5Y T-NOTE: 4.927%, -3.4 basis points. At this time yesterday, the yield was at 4.984%.
• US 10Y T-NOTE: 4.967% -2.1 basis points. At this time the yield was at 4.977%.
• US 30Y BOND: 5.098% -0.4 basis points. At this time the yield was at 5.064%.
• 2 – 10-year spread is at -18.3 basis points. At this time yesterday the spread was at -27.8 basis points.
• 2 – 30 year spread is at -4.6 basis points. At this time the spread was at -18.8 basis points.

In the European debt market, benchmark 10-year yields are trading mixed:

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