Original insights into market moving news

[PODCAST] US Open Rundown 7th October 2021

  • Equities and US equity futures remain buoyed and in relatively contained ranges as we await tomorrow's NFP and the return of China; ES +0.7%
  • Holders of Evergrande-linked Jumbo Fortune bonds are reportedly yet to receive payment, holders next step would be to request payment from Evergrande
  • DXY remains above 94.00 but has given up gains with peers deriving some marginal benefit
  • Core debt has been dictated by Central Bank speak with BoE 'rumours' on the dovish side and followed by hawkish remarks via Pill; benchmarks firmer but off-best
  • European Commission VP Sefcovic says there will be no renegotiation on the N. Ireland protocol, but does believe solutions can be found
  • Looking ahead, highlights include US Initial Jobless Claims, ECB Minutes, ECB's Lane, Schnabel, Fed's Mester


Finland has paused the use of Moderna (MRNA) vaccine for boys and young men, according to the Public Health Agency. (Newswires)

Australia's New South Wales state Premier Perrottet said they will start relaxing restrictions on October 11th. (Newswires)


Asia-Pac stocks traded positively as the region took impetus from the mostly positive close in the US where the major indices spent the prior session clawing back opening losses, with sentiment supported amid a potential Biden-Xi virtual meeting this year, and hopes of a compromise on the debt ceiling after Senate Republican Leader McConnell offered a short-term debt limit extension to December. The ASX 200 (+0.7%) was led higher by strength in the tech sector and with risk appetite also helped by the announcement to begin easing restrictions in New South Wales from next Monday. The Nikkei 225 (+0.5%) attempted to reclaim the 28k level with advances spearheaded by tech and amid reports Tokyo is to lower its virus warning from the current top level. The Hang Seng (+3.1%) was the biggest gainer owing to strength in tech and property stocks, with Evergrande shareholder Chinese Estates surging in Hong Kong after a proposal from Solar Bright to take it private. Reports also noted that the US and China reportedly reached an agreement in principle for a Biden-Xi virtual meeting before year-end and with yesterday’s talks in Zurich between senior officials said to be more meaningful and constructive than other recent exchanges. Finally, 10yr JGBs retraced some of the prior day’s after-hours rebound with haven demand hampered by the upside in stocks and after the recent choppy mood in T-notes, while the latest enhanced liquidity auction for longer-dated JGBs resulted in a weaker bid-to-cover.

Chinese President Xi will speak on Taiwan policy in a speech on Saturday and will restate China's desire for peaceful unification, as well as steadfast opposition to external interference regarding Taiwan, according to people familiar with the matter. (Newswires)

US Senator Rubio reportedly pressed the SEC for more information on China investments, while reports also noted SEC Chair Gensler said ESG and diversity should also be applied to Chinese businesses. (Newswires)

Holders of Evergrande-linked Jumbo Fortune bonds are reportedly yet to receive payment, holders next step would be to request payment from Evergrande. (Newswires) The maturity of the bond in question was Sunday October 3rd, with a Monday October 4th effective due data, though the bond does have a five-day grace period only in the event that payment failure is due to an administrative/technical error.

Japanese Finance Minister , when asked about recent JPY weakening, said currency stability is important, closely watching FX but not commenting on current levels. (Newswires)


CNN's Raju tweeted that Democrats will agree to raise the debt limit until December although still oppose using reconciliation and will use the time to figure out what to do in the interim, while Axios also noted that Democrats seem to be leaning towards accepting McConnell's deal, citing conversations with senior leadership aides. (Newswires/CNN/Axios/Twitter)

US President Biden's administration is reportedly debating the fate of IMF chief Georgieva as the board evaluates actions, while it was earlier reported that IMF Chief Georgieva rejected the conclusion of the WilmerHale Report that she pressured World Bank staff to manipulate data to benefit China and said she did not participate in any technical discussions related to China's ranking. (Newswires)


BoE's new Chief Economist Pill says that the balance of risks is currently shifting towards great concerns about the inflation outlook, as the current strength of inflation looks set to prove more long lasting than originally anticipated. Click here for the full headline. (BoE)

ECB's Stournaras market rate hike views do not reflect guidance; no need to change stance of monetary stance; inflation will fall under 2% in the short-term; no reason why Greece should be excluded from QE. (Newswires)

ECB's Elderson says the ECB is very closely monitoring energy prices for impact on inflation, still considers it largely temporary. (Newswires)

ECB's Villeroy says inflation should come back down below 2% within a year. (Newswires)

Riksbank's Jansson is not a supporter of using monetary policy to address problems in the housing market. (Newswires)

CBRT Governor reportedly told investors that core inflation indicators are seen falling in the near-term, sources state. CBRT Governor reportedly believes that policy is sufficiently tight. (Newswires)


European Commission VP Sefcovic says there will be no renegotiation on the N. Ireland protocol, but does believe solutions can be found. (Newswires)

German SPD's Scholz is reportedly eyeing a narrow path to a 'traffic light' coalition with Greens and FDP with talks set to begin today. (FT)


Russia's Kremlin notes NATO's move to cut the size of Russia's mission undermines hopes for resumption of dialogue with the EU. (Newswires)

Russian Government spokesperson Peskov sees the potential to raise European gas supplies, and the boost does not depend on Nord Stream 2 approvals. (Newswires)


Bourses in Europe hold onto the gains seen at the cash open (Euro Stoxx 50 +1.5%; Stoxx 600 +1.1%) following on from an upbeat APAC handover, albeit the upside momentum took a pause shortly after the cash open. US equity futures are also firmer across the board but to a slightly lesser extent, with the tech-laden NQ (+1.0%) getting a boost from a pullback in yields and outperforming its ES (+0.7%), RTY (+0.6%) and YM (+0.6%). The constructive tone comes amid some positive vibes out of the States, and on a geopolitical note, with US Senate Minority Leader McConnell offered a short-term debt ceiling extension to December whilst US and China reached an agreement in principle for a Biden-Xi virtual meeting before the end of the year. Euro-bourses portray broad-based gains whilst the UK's FTSE 100 (+1.0%) narrowly lags the Euro Stoxx benchmarks, weighed on by its heavyweight energy and healthcare sectors, which currently reside at the foot of the bunch. Further, BoE's Chief Economist Pill also hit the wires today and suggested that the balance of risks is currently shifting towards great concerns about the inflation outlook, as the current strength of inflation looks set to prove more long-lasting than originally anticipated. Broader sectors initially opened with an anti-defensive bias (ex-energy), although the configuration since then has turned into more of a mixed picture, although Basic Resource and Autos still reside towards the top. Individual movers are somewhat scarce in what is seemingly a macro-driven day thus far. Miners top the charts on the last day of the Chinese Golden Week Holiday, with base metal prices also on the front foot in anticipation of demand from the nation – with Antofagasta (+5.1%), Anglo American (+4.2%) among the top gainers, whist Teamviewer (-8.2%) is again at the foot of the Stoxx 600 in a continuation of the losses seen after its guidance cut yesterday. Ubisoft (-5.1%) are also softer, potentially on a bad reception for its latest Ghost Recon game announcement.

Amazon's (AMZN) Twitch update on security breach: learnt that some data was exposed online due to error in a Twitch server configuration; no indication login details were exposed, credit card numbers were not exposed, Twitch is continuing to investigate. (Newswires)


AUD/GBP/USD - The latest upturn in broad risk sentiment as the pendulum continues to swing one way then the other on alternate days, has given the Aussie a fillip along with news that COVID-19 restrictions in NSW remain on track for being eased by October 11, according to the state’s new Premier. Aud/Usd is eyeing 0.7300 in response to the above and a softer Greenback, while the Aud/Nzd cross is securing a firmer footing above 1.0500 in wake of a slender rise in AIG’s services index and ahead of the latest RBA FSR. Conversely, the Pound is relatively contained vs the Buck having probed 1.3600 when the DXY backed off further from Wednesday’s w-t-d peak to a 94.102 low and has retreated through 0.8500 against the Euro amidst unsubstantiated reports about less hawkish leaning remarks from a member of the BoE’s MPC. In short, the word is that Broadbent has downplayed the prospects of any fireworks in November via a rate hike, but on the flip-side new chief economist Pill delivered a hawkish assessment of the inflation situation in the UK when responding to a TSC questionnaire (see 10.18BST post on the Headline Feed for bullets and a link to his answers in full). Back to the Dollar index, challenger lay-offs are due and will provide another NFP guide before claims and commentary from Fed’s Mester, while from a technical perspective there is near term support just below 94.000 and resistance a fraction shy of 94.500, at 93.983 (yesterday’s low) and the aforementioned midweek session best (94.448 vs the 94.283 intraday high, so far).

NZD - Notwithstanding the negative cross flows noted above, the Kiwi is also taking advantage of more constructive external and general factors to secure a firmer grip of the 0.6900 handle vs its US counterpart, but remains rather deflated post-RBNZ on cautious guidance in terms of further tightening.

EUR/CHF/CAD/JPY - All narrowly mixed against their US peer and mostly well within recent ranges as the Euro reclaims 1.1500+ status in the run up to ECB minutes, the Franc consolidates off sub-0.9300 lows following dips in Swiss jobless rates, the Loonie weighs up WTI crude’s further loss of momentum against the Greenback’s retreat between 1.2600-1.2563 parameters awaiting Canada’s Ivey PMIs and a speech from BoC Governor Macklem, and the Yen retains an underlying recovery bid within 111.53-23 confines before a raft of Japanese data. Note, little reaction to comments from Japanese Finance Minister, when asked about recent Jpy weakening, as he simply said that currency stability is important, so is closely watching FX developments, but did not comment on current levels.

SCANDI/EM- The ongoing recoil in Brent prices is taking a toll on the Nok, naturally, but the Rub and Mxn are gleaning some protection from the recovery in risk appetite that is weighing on the Usd, in contrast to the Try that remains unimpressed with CBRT assertions about core inflation slowing in the near term or claims that monetary policy is tight enough.


Bonds have been volatile during the first half in Europe amidst the latest revival in stocks, pull-back in crude/energy prices, sovereign supply and reports that the ECB is looking at a replacement for the PEPP to complement the original QE programme. However, the action has been really explosive in Gilts and Short Sterling futures due to dovish-sounding comments attributed to an established member of the BoE’s MPC in contrast to a hawkish view on inflation from the new chief economist. Indeed, the 10 year benchmark has been up to 125.19 and as low as 124.60 subsequently (+40/-19 ticks on the day) and 3 month contracts -3 to +4.5 ticks, while Bunds stalled just a tick above their midweek peak at 169.92 compared to being ¼ point adrift at worst and the 10 year T-note is meandering between 131-25/17 ahead of a relatively busy pm agenda.


WTI and Brent front month futures are on the backfoot, in part amid the post-Putin losses across the Nat Gas space, with the UK ICE future dropping some 20% in early trade. This has also provided further headwinds to the crude complex, which itself tackles its own bearish omens. WTI underperforms Brent amid reports that the US was mulling a Strategic Petroleum Reserve (SPR) release and did not rule out an export ban. Desks have offered their thoughts on the development. Goldman Sachs says a US SPR release would likely be of up to 60mln barrels, only representing a USD 3/bbl downside to the year-end USD 90/bbl Brent forecast and stated that relief would only be transitory given structural deficits the market will face from 2023 onwards. GS notes that any larger price impact that further hampers US shale activity would lead to elevated US nat gas prices in 2022, and an export ban would lead to significant disruption within the US oil market, likely bullish retail fuel price impact. RBC, meanwhile, believes that these comments were to incentivise OPEC+ to further open the taps after the producers opted to maintain a plan to hike output 400k BPD/m. On that note, sources noted that the OPEC+ decision against a larger supply hike at Monday's meeting was partly driven by concern that demand and prices could weaken – this would be in-fitting with sources back in July, which suggested that demand could weaken early 2022. The downside for crude prices was exacerbated as Brent Dec fell under USD 80/bbl to a low of near 79.00/bbl (vs 81.14/bbl), whilst WTI Nov briefly lost USD 75/bbl (vs high 77.23/bbl). Prices have trimmed some losses since. Metals in comparison have been less interesting; spot gold is flat and only modestly widened its overnight range to the current 1,756-66 range, whilst spot silver remains north of USD 22.50/bbl. Elsewhere, the risk tone has aided copper prices, with LME copper still north of USD 9,000/t, whilst some also cite supply concerns as a key mining road in Peru (second-largest copper producer) was blocked, with the indigenous community planning to continue the blockade indefinitely, according to a local leader. It is also worth noting that Chinese markets will return tomorrow from their Golden Week holiday.

Russia's Gazprom notes that the current European spot gas prices create the risk of destabilisation in the European economy; Gazprom offered additional volumes via Ukraine when possible. (Newswires)