Headlines:
- 10-year Treasury yields stay in retreat after brief brush above 4.30% yesterday
- Euro pushes higher on German Q3 GDP beat, higher state inflation readings
- Germany Q3 preliminary GDP +0.2% vs -0.1% q/q expected
- Bavaria October CPI +2.4% vs +1.9% y/y prior
- UK budget preview: What to expect this time around?
- Eurozone Q3 preliminary GDP +0.4% vs +0.2% q/q expected
- France Q3 preliminary GDP +0.4% vs +0.3% q/q expected
- Italy Q3 preliminary GDP 0.0% vs +0.2% q/q expected
- Spain Q3 preliminary GDP +0.8% vs +0.6% q/q expected
- Spain October preliminary CPI +1.8% vs +1.8% y/y expected
- Germany October unemployment change 27k vs 15k expected
- Switzerland October KOF leading indicator index 99.5 vs 105.0 expected
- US MBA mortgage applications w.e. 25 October -0.1% vs -6.7% prior
- SNB chairman Schlegel: Ready to intervene in currency markets as necessary
Markets:
- JPY leads, GBP lags on the day
- European equities lower; S&P 500 futures up 0.1%
- US 10-year yields down 5.2 bps to 4.220%
- Gold up 0.2% to $2,780.24
- WTI crude up 1.2% to $68.00
- Bitcoin down 0.2% to $72,167
It was a packed session with plenty of economic data releases to work through. But ultimately, they didn't do much to shake up the market landscape on the day.
With month-end approaching, that alongside upcoming US data releases continue to be key focus points in impacting trading sentiment on the week.
We got stronger inflation numbers from Spain and Germany for October but the ECB had already warned about that previously. Then, there was a surprise in German Q3 GDP as well. And put together, that saw EUR/USD nudge up slightly from 1.0835 to 1.0859 briefly.
However, large option expiries and the fact that one month's worth of numbers are not enough to change the ECB outlook saw the pair retreat back to 1.0830 currently.
Instead, the dollar is weaker at the balance but it owes to a continued retreat in Treasury yields after the highs yesterday. 10-year yields briefly touched a high of 4.32% yesterday but are now down by roughly 10 bps to 4.22%. Month-end shenanigans in play?
In any case, that is weighing on USD/JPY, with the pair down 0.3% to 152.90 currently. Meanwhile, AUD/USD and NZD/USD are both up 0.2% to 0.6575 and 0.5985 respectively as well.
Elsewhere, the pound is the laggard as traders are positioning more negatively ahead of the UK budget announcement later. The fear is that chancellor Rachel Reeves might announce a budget that is deemed "fiscally irresponsible" and that could weigh on the currency and upset the gilts market. So, there is a potential for a sterling recovery if she manages to thread the needle. But it's definitely a fine line to work that out.
In other markets, European indices are selling off while US futures are marginally higher. The latter is feeling optimistic after Alphabet's earnings beat with four more of the Magnificent 7 still to report this week. In the commodities space, gold continues to shine as it closes in on $2,800 in the bigger picture as the ascend continues.
