- Canada September employment change +46.7K vs +27.0K expected
- US PPI final demand August YoY 1.8% vs 1.6% est. Ex Food and energy 2.8% vs 2.7% est.
- US October UMich prelim consumer sentiment 68.9 vs 70.8 expected
- Bank of Canada business outlook survey says "demand is weak"
- Fed's Logan: Less-restrictive policy will still cool inflation
- Baker Hughes oil rig count up +2 to 481
- Tesla shares fall 8% after robotaxi event panned for lack of details
Markets:
- Gold up $26 to $2655
- US 10-year yields down 1 bps to 4.08%
- WTI crude down 30 cents to $75.56
- NZD leads, JPY lags
- S&P 500 up 0.7%, touches fresh record
Friday turned into a classic risk-on day but it's not entirely clear why. Stock futures were negative and the US dollar was steady in pre-market trading but big bids hit at the US equity open and FX followed the same pattern, with Treasury yields falling led by the front end.
Data was mixed with PPI following CPI slightly higher while UMich sentiment missed to the downside slightly. A more-likely culprit was bank earnings, including comments from J.P. Morgan that consumer spending was steady and not deteriorating. Earnings at JPM and Wells Fargo were also good, boosting financial shares broadly.
There is anticipation of announcements of further Chinese fiscal stimulus at press events on Saturday and Monday so that could dictate early-week trading.
Overall moves were small but the yen was a notable underperformer. That's most-likely a product of the risk trade but there could also be some position squaring as we count down to the US and Japanese elections. The S&P 500 rose to record intraday and closing highs with small caps particularly strong today and the Russell 2000 up 2%.
The loone was a notable underperformer once again. The session high came before the strong jobs data and that led to a 50 pip decline initially. However that drop didn't entirely last as buyers stepped in quickly and then more-strongly after the BOC business outlook survey. The Oct 23 BOC decision is likely to become a litmus test for global central bank easing. Current pricing is 50/50 for 25 bps or 50 bps. The loonie has now declined for eight straight days, which is ominous given the backdrop in oil and stocks in that time period.
Note that US bonds and Canadian markets are closed Monday for a holiday.
Have a great weekend.
