US EARLY MORNING: US equity futures are trading with slight gains ahead of Big Bank earnings

US PRE-MARKETS: US equity futures are trading with slight gains, yields are lower across the curve, the dollar index is a touch lower, while crude futures while crude futures are higher. US CPI data released Thursday showed headline and super core consumer prices printing above expectations, which some fear could see the Fed keeping policy 'higher-for-longer', but other analysts noted that the trend is still lower; Pantheon Macroeconomics said that this months inflation data imply a 0.3% increase in September’s core PCE deflator (data released on October 27nd, before the FOMC meeting starting on the 31st), and says it is forecasting core PCE rose at a mere 2.5% annualised rate in the three months to September, compared to the previous three months, which would be the slowest rate since January 2021, and closing in on the Fed's inflation target. "The annual rate will remain elevated, dipping to 3.7% from 3.9% in August, but the Fed will not wait until 2% Y/Y is reached before starting to ease," Pantheon says. There will be further inflation updates later today, when the University of Michigan releases its prelim consumer confidence survey, which contain inflation expectations; as a point of reference, the NY Fed survey this week saw year-ahead consumer inflation expectations rise to 3.7% Y/Y (prev. 3.6%), with the 3yr ahead expectation rose to 3.0% Y/Y (prev. 2.8%), though the longer-term 5yr gauge slipped to 2.8% (prev. 3.0%). Elsewhere, US banks will begin reporting earnings from today, with BLK, PNC, JPM, WFC, C all set to report before the market open (primer below); the theme will be higher rates, for longer, with large banks poised to write off more bad loans than they have since the early days of the pandemic.

WEEKLY FLOWS: In its weekly flows report, Bank of America said USD 16.9bln went into cash, USD 3.7bln into bonds, USD 1bln from gold, and USD 8.2bln out of equities. US saw outflows resume at USD 3bln, Japan saw USD 1bln inflows (fifth straight week), USD 0.7bln of out Europe (31st straight week), and USD 4.3bln out of EM. By style, USD 1.1bln went into US large caps, USD 0.3bln out of US growth, USD 2.1bln out of US small caps, USD 2.1bln out of value. And by sector, USD 0.3bln into communication services, USD 0.3bln into energy, USD 0.2bln into real estate, USD 77ln out of utilities, USD 126mln out of tech, USD 137mln out of materials, USD 0.5bln out of health care, USD 1bln out of financials, USD 1.2bln out of consumer. In fixed income, Treasuries saw USD 7.2bln of inflows (35th straight week). The bank's Bull & Bear Indicator fell to 2.2 from 2.6.

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13 Oct 2023 - 09:30- Fixed IncomeResearch Sheet- Source: Newsquawk

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