Oct 7, 2022
VOT Research Desk

Key News – Insights and Analysis

After three major US benchmark indices extended their declines for the second trading session in a row as investors digested statements from a number of Federal Reserve officials regarding the path of future interest rate hikes in advance of the crucial monthly U.S. jobs report. Losses in the Telecoms, Utilities, and Financials sectors made up the majority of the weighting in three major stock indexes in the United States.

Charles Evans, president of the Chicago Fed, stated that the Fed “has further to go.” He anticipates that interest rates will rise to between 4.5 percent and 4.75% by the spring of 2023, indicating that house and car prices will continue to rise as the primary drivers of core inflation. Evans added, “We need a more restrictive setting of monetary policy because inflation is high right now Neel Kashkari, the president of the Minneapolis Fed, kept the same stance by saying that the Fed was still “quite a ways away” from stopping rate increases.

The probability of a rate rise of 50 basis points and a rate increase of 75 basis points, respectively, at the November monetary policy meeting are now priced into U.S. rate futures at 29.7% and 70.3%, respectively.

Today, participants in the market will closely monitor the U.S. Nonfarm Payrolls report in a few hours for additional clues regarding the direction and rate of rate increases. In September, nonfarm payrolls are expected to reach 250 thousand, up from 315 thousand in August, while the unemployment rate in the United States is expected to remain at 3.7%.

The job market is still strong, but it is getting weaker. According to Comerica Bank chief economist Bill Adams, wage growth will likely slow as the unemployment rate rises, easing some of the economy’s inflationary pressure.

Investors will likely also pay attention to U.S. Average Hourly Earnings, which increased by 5.2% year-over-year and 0.3% month-over-month in August. The September figure is expected to be +0.3% m/m and +5.1% y/y, according to economists.

The September Private Nonfarm Payrolls data for the United States will be released today. This number is expected to be 265 thousand, up from the previous value of 308,000, according to economists. Canada’s Employment Change data will also be available today. The September figure is expected to be +20.0K, up from the previous value of -39.7K. The 10-Year US Treasury rate is currently at 3.843%, up 0.49 percent.

To close out a volatile week, the Euro Stoxx 50 is up +0.23% this morning, albeit slightly. However, given that fears of a recession have returned and there are indications that central banks will continue to tighten monetary policy to combat inflation, those gains are likely to be fragile. In the meantime, weak reports from Samsung and Advanced Micro Devices pushed semiconductor companies lower.

The Unemployment Rate in Switzerland n.s.a., Today saw the release of data on Germany’s Industrial Production, Germany’s Retail Sales, and France’s Trade Balance.

The September unemployment rate in Switzerland has been reported at 1.9%, which is higher than the expected 2.0%.

In contrast to expectations of -0.5% m/m, Augusts’ industrial production in Germany was -0.8% m/m.

In August, German Retail Sales fell below expectations of -1.1% m/m to -1.3% m/m

.

Asian stock markets closed today in the red as fears of an aggressive Federal Reserve grew ahead of key U.S. labor data. The French August Trade Balance came in at -15.3 billion, which was lower than expectations of –14.8 billion. While the Chinese market was closed for the holidays, Japan’s Nikkei 225 Stock Index (NIK) closed down 0.71 percent.

After U.S. chipmaker Advanced Micro Devices cut its quarterly revenue forecast, losses in tech stocks pushed today’s decline in Japan’s Nikkei 225 Stock Index from a two-week high. The economic outlook remains uncertain due to rising inflation, a weaker yen, and mixed economic data. The implied volatility of Nikkei 225 options is taken into account in the Nikkei Volatility, which ended the day at 22.88, down 2.47 percent.

In contrast to expectations of +0.2% m/m and +6.7% y/y, Japan’s household spending in August came in at -1.7% m/m and 5.1% y/y.

Stock Indices Pivots (Daily- Oct 7)

Oct 7, 2022
VOT Research Desk

Key News – Insights and Analysis

After three major US benchmark indices extended their declines for the second trading session in a row as investors digested statements from a number of Federal Reserve officials regarding the path of future interest rate hikes in advance of the crucial monthly U.S. jobs report. Losses in the Telecoms, Utilities, and Financials sectors made up the majority of the weighting in three major stock indexes in the United States.

Charles Evans, president of the Chicago Fed, stated that the Fed “has further to go.” He anticipates that interest rates will rise to between 4.5 percent and 4.75% by the spring of 2023, indicating that house and car prices will continue to rise as the primary drivers of core inflation. Evans added, “We need a more restrictive setting of monetary policy because inflation is high right now Neel Kashkari, the president of the Minneapolis Fed, kept the same stance by saying that the Fed was still “quite a ways away” from stopping rate increases.

The probability of a rate rise of 50 basis points and a rate increase of 75 basis points, respectively, at the November monetary policy meeting are now priced into U.S. rate futures at 29.7% and 70.3%, respectively.

Today, participants in the market will closely monitor the U.S. Nonfarm Payrolls report in a few hours for additional clues regarding the direction and rate of rate increases. In September, nonfarm payrolls are expected to reach 250 thousand, up from 315 thousand in August, while the unemployment rate in the United States is expected to remain at 3.7%.

The job market is still strong, but it is getting weaker. According to Comerica Bank chief economist Bill Adams, wage growth will likely slow as the unemployment rate rises, easing some of the economy’s inflationary pressure.

Investors will likely also pay attention to U.S. Average Hourly Earnings, which increased by 5.2% year-over-year and 0.3% month-over-month in August. The September figure is expected to be +0.3% m/m and +5.1% y/y, according to economists.

The September Private Nonfarm Payrolls data for the United States will be released today. This number is expected to be 265 thousand, up from the previous value of 308,000, according to economists. Canada’s Employment Change data will also be available today. The September figure is expected to be +20.0K, up from the previous value of -39.7K. The 10-Year US Treasury rate is currently at 3.843%, up 0.49 percent.

To close out a volatile week, the Euro Stoxx 50 is up +0.23% this morning, albeit slightly. However, given that fears of a recession have returned and there are indications that central banks will continue to tighten monetary policy to combat inflation, those gains are likely to be fragile. In the meantime, weak reports from Samsung and Advanced Micro Devices pushed semiconductor companies lower.

The Unemployment Rate in Switzerland n.s.a., Today saw the release of data on Germany’s Industrial Production, Germany’s Retail Sales, and France’s Trade Balance.

The September unemployment rate in Switzerland has been reported at 1.9%, which is higher than the expected 2.0%.

In contrast to expectations of -0.5% m/m, Augusts’ industrial production in Germany was -0.8% m/m.

In August, German Retail Sales fell below expectations of -1.1% m/m to -1.3% m/m

.

Asian stock markets closed today in the red as fears of an aggressive Federal Reserve grew ahead of key U.S. labor data. The French August Trade Balance came in at -15.3 billion, which was lower than expectations of –14.8 billion. While the Chinese market was closed for the holidays, Japan’s Nikkei 225 Stock Index (NIK) closed down 0.71 percent.

After U.S. chipmaker Advanced Micro Devices cut its quarterly revenue forecast, losses in tech stocks pushed today’s decline in Japan’s Nikkei 225 Stock Index from a two-week high. The economic outlook remains uncertain due to rising inflation, a weaker yen, and mixed economic data. The implied volatility of Nikkei 225 options is taken into account in the Nikkei Volatility, which ended the day at 22.88, down 2.47 percent.

In contrast to expectations of +0.2% m/m and +6.7% y/y, Japan’s household spending in August came in at -1.7% m/m and 5.1% y/y.

Stock Indices Pivots (Daily- Oct 7)