- US September consumer confidence 108.0 vs 104.5 expected
- Richmond Fed manufacturing index for September 0 vs. -8 last month
- US new home sales 685K vs 500K expected
- US August durable goods orders -0.2% vs -0.4% expected
- US July CaseShiller 20-city price index +16.1% y/y vs +17.0% expected
- BOE's Pill: BOE must ensure orderly and well-functioning markets
- BOE's Pill: We will not sell gilts into a dysfuncational market
- Russia will likely propose OPEC+ reduce output by 1 million bpd at the next meeting
- Fed's Kashkari: There is a risk of overdoing it
- Fed's Bullard: We have a serious inflation problem in the US
- Fed's Harker: The FOMC is working to stabilize inflation
- US treasury auctions off $44 billion and 5 year notes at a high yield of 4.228%
- US says 190k/bpd of oil production shut down in the Gulf of Mexico ahead of hurricane Ian
- Fed's Powell: There's a real need for more appropriate regulation on decentralised finance
- Saudi Crown Prince to become prime minister in cabinet reshuffle
- Kwarteng set to hold meeting with Wall St bankers on Wednesday - report
- ECB's Villeroy: Any French recession would be limited and transitory
- ECB's De Guindos: Over the coming months, we will continue to raise rates
Markets
- Gold up $7 to $1628
- WTI crude oil up $1.75 to $78.46
- US 10-year yields up 7 bps to 3.95%
- S&P 500 down 8 points to 3647
- GBP leads, AUD lags
We're now clearly in a good-news-is-terrible-news trading environment as a four-pack of strong US data points helped to kick off another rout in the bond market and turned a US dollar seloff into a modest rally. Along with the data, comments from the BOE indicated that no immediate help is coming and gilts led the rout once again.
Every additional day of selling in governments is another nail in the coffin of the era of easy-spending governments. We've priced in +400 bps of global central bank tightening and now we may have to price in at least the equivalent amount of government fiscal tightening.
That thinking was one of the reasons that risk appetite turned to risk aversion once again today. On the FX side, the Australian dollar was hard hit, falling 35 pips on the day to a new two-year low at 0.6430 -- about 85 pips from the highs of the day.
USD/JPY also benefitted from rising yields and broad USD strength. That pushed it as high as 144.90, or just a shade below the area that appeared to trigger intervention previously.
The euro and GDP finisehd the day relatively flat but that hides the disappointment of a failed bounce after many days of selling.
Even the loonie failed to make any progress despite a $2 rise in oil.
To wrap it all up, here's an ominous warning from BMO's Ian Lyngen:
"The next area of focus is increasingly becoming the fallout in other economies, and while the UK has garnered the bulk of investors’ attention recently, currency defense and default risk in other, less developed geographies promises to be a space to watch as month-end approaches."
