- Fed's Kashkari sees 40% chance of further rate hikes, perhaps 'significant' hikes
- US September consumer confidence 103.0 vs 105.5 expected
- Richmond Fed composite manufacturing index for September 5.0 versus -7.0 last month
- US August new home sales 675K vs 700K expected
- Italy to cut GDP target this year and next
- FHFA US July home prices +0.8% vs +0.3% prior
- Dallas Fed services outlook -8.6 vs -2.7 prior
- US July CaseShiller 20-city house price index +0.9% m/m vs +0.7% expected
- Philly Fed September non-manufacturing index -16.6 vs -13.1 prior
- Schumer: We are very close to finishing work on a stopgap funding bill
- Fed's Bowman: Higher rents underscore the need to curb inflation
- ECB Holzman: Unclear if we are at peak rate levels
- FTC sues Amazon for illegally maintaining monopoly power
- Target says it will close nine stores due to theft
Markets:
- Gold down $15 to $1900
- US 10-year yields up 0.8 bps to 4.54%
- WTI crude oil up $0.92 to $90.59
- S&P 500 down 1.5% -- worst day since March
- USD leads, CAD lags
On Monday, US equities shrugged off rising yields but today it was payback time. Stocks slumped at the open and continued to sink as Treasury yields reversed higher. That helped to put a broad -- though moderate -- bid in the US dollar. USD/JPY inched to a fresh cycle high at 149.19 early in Asia but spent most of the session below the figure.
EUR/USD fell to a fresh low dating back to March at 1.0563 in the third day of declines. Italian bond yields rose as leaked government forecasts emphasized disappointing growth. German forecasts also highlight a contraction this year and risks around winter weather are just starting to come into focus.
CAD had performed strongly yesterday but it was something of an illusion as those gains disappeared today. Still, oil has remained incredibly resilient and the spread between the first and second month contracts widened further today, highlighting the near-term tightness in the market.
Cable tracked the weakness in equities in the fifth day of selling. The bears have certainly taken control now that they feel the Bank of England won't be a problem. GBP/USD traded to the lowest since mid-March at 1.2155.
The USD strength also weighed on gold as it fell below $1900 and buying interest was siphoned into bonds.
The bigger problem for markets was summed up by Kashkari who estimated a 40% chance the Fed hiking cycle would have to continue into 2024, with rates going perhaps 'significantly' higher. Kashkari is a dove and that kind of talk is a big scare for the markets, that really need to see economic data turn lower or risk pricing in further hikes.
