Asian equities followed US stocks lower after strong retail data. Treasury yields continued to shoot higher, reaching new cycle peaks. Data revived fear of an even higher Fed rate stance for an even longer period of time. Implied Fed funds futures climbed and priced in a 53% chance for a hike by the end of January. However, the market still shows only a small, less than 20% chance, for a move on November 1 since many policymakers have advocated a wait-and-see stance for now. China’s economy grew 4.9% in the third quarter. A largely positive report that confirms that China’s economy has bottomed out, even if the recovery may not be quite as strong as some had hoped.
UK inflation was higher than anticipated, against expectations for a slight deceleration in the annual rate. Core inflation decelerated to 6.1% y/y, the lowest rate since January, but still a tad higher than markets had expected.
USDIndex has nudged down to 105.75 from a session high of 106.32. Stocks: NVIDIA closed at -4.68%, as the US is restricting the sale of chips that Nvidia designed specifically for the Chinese market, part of sweeping new updates to export curbs. Asian semiconductor stocks declined. USOIL broke $87 on renewed concerns in Middle East conflict. Gold rises to 4-week high, at 1942.70, as Israel-Hamas conflict drives demand for safe-haven assets. Israel’s military has bombarded Gaza with air strikes in anticipation of a widely expected ground invasion against Hamas. Today: US Building Permits & FOMC Waller & Harker Speeches.Interesting Mover: UK100 retests the neckline of a possible inverse head and shoulder formation, at 7715-7740. A breakout could turn attention to the 7800 area.
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Andria Pichidi
Market Analyst
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