Headlines:
- UK finance minister Hunt: We will reverse almost all tax measures announced in growth plan
- The pillars of Truss have fallen
- China says will delay release of Q3 economic indicators, including tomorrow's GDP
- What's behind the sudden plunge in SNB sight deposits?
- SNB total sight deposits w.e. 14 October CHF 619.8 bn vs CHF 639.3 bn prior
- China state banks seen acting in swaps market to try and stabilise the yuan currency
Markets:
- GBP leads, JPY lags on the day
- European equities higher; S&P 500 futures up 1.2%
- US 10-year yields down 5.3 bps to 3.953%
- Gold up 1.0% to $1,657.63
- WTI crude up 0.1% to $85.63
- Bitcoin up 1.5% to $19,463
The day started with a gap higher in the pound as traders hoped for a turn in the fiscal path to be set out by newly appointed UK finance minister, Jeremy Hunt. An emergency statement was then called and Hunt delivered by ripping apart the mini-budget that was announced on 23 September.
UK bonds and the pound rallied going into the statement and largely held their ground in the aftermath. 30-year gilt yields are down 42 bps to 4.36% while GBP/USD had a kneejerk jump from 1.1280 to 1.1330 before falling back to 1.1250 and is now back up to 1.1290-00 levels.
The better mood in cable is also helped by a softer dollar overall, as equities are taking comfort amid a bid in bonds as well today. US futures are up over 1% and that is feeding into better sentiment in broader markets and among major currencies.
EUR/USD is up 0.2% to 0.9740 but off earlier highs of 0.9770. Meanwhile, USD/CAD is down 0.5% to near 1.3800 and AUD/USD is up 0.8% to 0.6245 but off its earlier high of 0.6265 during the session. USD/JPY is a notable exception as the yen stays under pressure, with the pair now up 0.1% to 148.85 - holding near fresh highs since 1990.
It looks like we're in for a calmer start to the week but all of this is right before we get to the central bank bonanza in the next two weeks, so perhaps it is just the calm before the storm.
