US Session (10/29/2021)
Traders weighed dismal results and bond-market gyrations amid fears about inflation and monetary tightening, and equities in the US rose.
After opening lower on disappointing results from Amazon.com and Apple, the S&P 500 climbed less than 0.2%. The advances sent the benchmark index up 6.9% in October, its highest monthly rise since November last year. Meanwhile, advances in Tesla and Meta platforms after its name change from Facebook propelled the Nasdaq 100 up by 0.5%.
Inflationary pressures and the likelihood of interest-rate hikes shook bond markets around the world. The 10-year treasury rate has dropped to 1.56%. In Europe, bonds fell further after data on eurozone economic growth and inflation beat analysts' expectations, underscoring a growing belief that interest-rate hikes are on the way despite only a mild pushback from the ECB's leader.
A number of crosscurrents are having an effect on the markets. Positive corporate performance has aided in the support of global equities. However, supply-chain snarls and higher-cost raw materials are raising expectations for rate hikes and lowering the economic outlook.
The latest GDP data from the United States shows that growth slowed more than predicted in the third quarter, hurt by supply chains and an increase of COVID-19 infections. In addition, weekly unemployment claims fell to a pandemic low in September, but personal spending slowed in line with analysts' expectations.
Despite reversing losses, the Stoxx Europe 600 index gained for the fourth week in a row. The value of the US dollar increased. Crude oil gained.
Bitcoin rose to $62,600 in the crypto space, while Ethereum hit a new high.
Asia Session (10/31/2021)
Most Asian stocks rose on Monday, as the outcome of Japan's election raised expectations for fiscal stimulus and as new all-time highs for US stocks encouraged some investor optimism.
In Japan, equities rose more than 1% after Japan's PM Kishida's Liberal Democratic Party defied expectations by retaining its outright majority.
Hong Kong and China's stock markets fell. Data showed that China's economy was weakening as a result of power shortages, rising commodity prices, and supply curbs. Futures in the US advanced after the S&P 500 and Nasdaq 100 set new highs on Friday.
US treasuries dipped and the gap between 5-year and 30-yields shrank.
Short-term yields have risen from Canada to Australia on bets that monetary authorities will need to raise interest rates to combat inflation.
Short-term yields from Canada to Australia have risen on expectations that monetary authorities will need to raise interest rates to combat inflation.
A gauge of the dollar was steady.
In Australia, sovereign debt recovered from a massive drop on Friday. The rout was precipitated by the central bank's failure to defend a bond-yield target, which fueled speculation of a policy shift.
Europe Session (10/29/2021)
Traders pondered bond-market gyrations spurred by fears about inflation and monetary tightening as US futures sank along with European markets on Friday.
After announcing poor earnings on Thursday, futures on the S&P 500 and the Nasdaq 100 retreated in pre-market trade, predicting a likely loss of about $180 billion in total market value when the US reopens.
For the first time since the US government restored a two-decade maturity in 2020, the curve between 20 and 30-years has reversed. Bond markets are being tossed about by inflationary pressures and the likelihood of interest rate rises. The dollar rose off a one-month low, but crude oil prices varied. The US 10-year Treasury yield increased.
Eurozone money markets have increased their rate hike bets even further, now pricing in a more than 90% possibility of a 10-bp ECB boost in July 2022 IRPR.
OPEC+ JTC lowers 2021 oil demand growth prediction slightly to 5.7 million BPD - two sources.
ECB SPF: 2022 inflation is expected to be 1.9% versus 1.5%, with 2023 inflation expected to be 1.7% versus 1.5%.
ECB SPF: We anticipate 2021 GDP growth at 5.1%, vs 4.7% three months earlier, and 2022 growth at 4.5%, down from 4.6%.
Traders now expect an ECB rate rise of 20 BPS in October 2022 rather than December 2022 - Sources
France's Finance Min. Le Maire: 6.25% GDP growth anticipated for 2021 is now definite.
France's Finance Min. Le Maire: Q3 economic growth was exceedingly good and France's economy is on the right track.
Monday FX Options Expiries
USD/JPY: 111.00 ($935.2M), 109.80 ($610M)
EUR/USD: 1.1625 (EU816.4M), 1.2000 (EU576.7M), 1.1700 (EU522M)
USD/CAD: 1.2350 ($692M)
AUD/USD: 0.7600 (AUD500M), 0.7480 (AUD433.2M), 0.7680 (AUD362M)
GBP/USD: 1.3700 (GBP300.4M)
USD/BRL: 5.5500 ($380M), 5.6715 ($373M)