Greetings,

1. We begin in emerging markets where South Africa's 10y government bond yield jumps on Pravin Gordhan (Finance Minister) arrest rumours.

The South African rand fell again, breaching 14 to the dollar again.

Moreover, South Africa's 5y sovereign CDS widened further. The markets remain jittery about South Africa as downgrade risks loom.

2. Nigeria tries to take control of its foreign exchange rate as volatility spikes. The authorities are banning several banks from trading in the FX markets (the government is looking for a scapegoat for the currency instability).

3. Saudi bank shares came under pressure again. Some suggest that local investors express their bearish view on crude oil in the equity market. Oil traders should pay attention.

4. Argentina's economy remains a disaster as activity tumbles. It's a long road to recovery.

5. Brazil inflation is easing on soft demand and a stable real.

Brazil's consumer confidence is gradually turning, though not as quickly as some have been hoping.

6. The last chart shows the EM currency index (EMFX) vs. the broad commodity index (CRB).

Source: Natixis,  ‏@joshdigga

1. Turning to Europe, the unemployment rate in Poland hits the lowest level in a quarter of a century.

2. On the other hand, Norway's unemployment rate was higher than consensus.

Related to the above, Norway's oil firms are cutting investment plans further.

Source: Bloomberg.com

3. Iceland's central bank unexpectedly cut rates on Wednesday. The local stock market jumped in response.

4. UK's homebuilder shares are taking off as confidence returns (for now).

5. Mortgage approvals by UK banks decline to the lowest level year-to-date.

1. In the Eurozone, Germany was able to avoid a contraction due to robust exports (chart below). The second chart below shows trends in Germany's construction sector.

Source:  ‏Natixis, @joshdigga 

Source: ‏Natixis, @joshdigga

2. Italian bank shares are bouncing.

3. The number of French jobseekers seems to be gradually declining. It will be interesting to see how this plays into the French political scene next year.

1. In the United States, the 2016 rate hike probability continues to rise.

2. There has been quite a bit of talk about the declining US "natural" rate of interest, the real fed funds rate at which inflation is stable. This approach puts a cap on how much the Fed can hike.

Source:  ‏@acemaxx, @MoneyBanking1

3. US existing home sales fell for the first time since February (chart below is in million units).

4. US housing inflation eases - the chart shows quarterly price changes (FHFA).

5. US mortgage applications for house purchase are slowing.

1. In the energy markets, US crude oil in storage unexpectedly rose while Cushing, OK (settlement hub for NYMEX futures) stocks remain elevated.

2. US crude oil imports continue to rise.

3. Here is the WTI crude oil price over the past couple of days.

4. The WSJ points out that the "largest oil companies’ debts hit record high". Borrowing to pay dividend is the name of the game.

Source: WSJ

5. Global refiners' earnings converge as US refiners no longer have a significant cost advantage with domestic crude purchases (Brent-WTI spread, for example, has narrowed).

Source: EIA

6. The US has experienced a rather hot summer, with air conditioners blasting around the country.

Source: @FTMarkets

Moreover, another heat wave is on the way.

Source: @MJVentrice, ‏@slapdash__ 

That's why natural gas prices have been elevated and even coal-burning activity has picked up.

In other commodities, silver remains under pressure as record speculative net long exposure is partially reduced.

In the Funding markets, the US 1-month LIBOR continues to rise.

The S&P 500 historical volatility remains remarkably low. The Fed probably wants to see this rise in order to inject more risk aversion.

Source: Bloomberg Terminal; Function "HVG" 

Finally, according to Bloomberg, "hedge funds suffer the biggest redemptions since 2009". The industry needs a shakeout (there are too many mediocre players), and some suggest that it's already taking place.

Source: Bloomberg.com

Turning to Food for Thought, we have 5 items today:

1.The impact of globalization.

Source: ‏@wef

2. Electric cars are coming.

Source: @wef, Bloomberg

3. Voter turnout rates by generation.

Source: @pewresearch

4. The events in central Italy are tragic as rescuers race against time. Here is the European seismic hazard map.

Source: @MaxCRoser

5. Many Europeans prefer to focus on their country's problems. Should the US?

Source: ‏@pewglobal