- Saudi Arabia production for Oct, Nov and Dec will be 9 million barrels per day
- Russia's Novak: Oil exports to be cut by 300,000 barrels per day until year end
- US July factory orders -2.1% vs -2.5% expected
- Fed's Mester: We might have to go a bit higher
- Fed's Waller: I would say the risks to doing to much and too little are balanced
- New Zealand GDT price index +2.7% vs -7.4% prior
- Morgan Stanley shifts to a bearish stance on emerging market currencies
- US August employment trends 113.02 vs 115.45 prior
- ECB's Schnabel: Climate change is an existential threat with large downside tail risks.
Markets:
- Gold down $13 to $1925
- US 10-year yields down 9.9 bps to 4.27%
- WTI crude oil up $1.12 to $86.67
- S&P 500 down 0.4%
- USD leads, AUD lags
The US dollar was strong as North American traders returned from a holiday. The driver was bond yields as they rose for a second day for somewhat-mysterious reasons. Some cite flows, other cite corporate rate-lock selling ahead of a full slate of issuance this month.
In any case, USD/JPY took out the August highs and AUD/USD fell to the lowest since November. The euro also fell to the lowest since June and USD/CAD to the highest since March.
The moves were a bit clunky and the technical momentum you would expect after the breaks didn't materialize and that has the market on edge. USD/CAD was particularly choppy as oil rallied for a ninth day and the BOC decision is tomorrow. That pair bounced around the 1.3600-1.3650 range a few times.
Equities were sluggish but the Russell 2000 was a dog today in something of a warning sign, falling 2% as regional banks slumped. At the same time, tech showed some resilience as Tesla climbed nearly 5%.
Tomorrow we get the ISM services index and I expect that to be a big test for the market and the economy. It's a good forward-looking indicator of a part of the economy that's slowing, but it's not clear how much. The consensus is for a dip from 52.7 to 52.5 but economist estimates range down to 51.1.
