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Daily digest market movers: Rate differential kicks in again

hagijeee
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  • US Treasury rates are rallying and are outpacing other sovereign rates, which means that rate differentials are widening again between the US and several other countries. This supports a stronger US Dollar across the board. 
  • At 12:30 GMT, a bulk load of data points is set to be released:
    • US Consumer Price Index data for September:
      • Monthly core inflation is expected to grow by 0.2%, compared with 0.3% in August. 
      • In line with the core reading, monthly headline inflation is expected to increase by 0.1% from 0.2% in August.
      • Yearly core inflation is expected to remain steady at 3.2%, while headline inflation should decline to 2.3% from 2.5% in August.
    • Initial Jobless Claims for the week ending October 4 are expected to jump to 230,000 compared with 225,000 the prior week. 
  • Near 13:15 GMT, Federal Reserve Governor Lisa Cook delivers a speech about entrepreneurship and innovation at the Women for Women Summit organized by the College of Charleston School of Business in Charleston, South Carolina. Cook is considered rather dovish in terms of policy stance. 
  • At 15:00 GMT, Federal Reserve Bank of New York President John Williams delivers keynote remarks at an event organized by Binghamton University in New York. Williams is considered neutral in terms of policy stance. 
  • There is some geographical dislocation in the equity markets, with Asia closing the day in a positive mode, even for Chinese indices. European equities look sluggish and are in the red, while US equity futures are subdued. 
  • The CME Fedwatch Tool shows an 80.1% chance of a 25 bps interest rate cut at the next Fed meeting on November 7, while 19.9% is pricing in no rate cut. Chances for a 50 bps rate cut have been fully priced out now. 
  • The US 10-year benchmark rate trades at 4.08%, the highest level since early August. 


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