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Global Macro and Markets

• Global markets: Despite yesterday’s surge in oil prices following the Hamas attacks on Israel and ensuing retaliation against Gaza, US equities managed to make small gains. The S&P 500 rose 0.63% and the NASDAQ gained 0.39%. Equity futures are undecided as to the direction for today, and Chinese stocks, back from their long holiday, drifted sideways after a weak opening. Columbus Day in the US means that we had no Treasury action yesterday, but US yields are sharply down in early Asian trading today, with the 10Y currently at about 4.6466. That would also chime with recent Fed speaker hints of a pause at next month’s FOMC meeting. Jefferson and Logan yesterday both suggested that the recent rise in bond yields had done some of the Fed’s tightening for it. The USD picked up mixed support in what appears to be a very muted risk-off environment. EURUSD moved lower to 1.0574, but this was fairly steady throughout the day and only slightly lower than the previous day. The AUD actually recovered above the 64-cent level. Cable is more or less unchanged at 1.2244, but the JPY is stronger at 148.428. The CNY moved lower on its first day back from holiday, declining to 7.2926, the PHP and IDR both struggled yesterday, each weakening a little over 0.5%.
• G-7 macro: With the US out yesterday, there wasn’t much macro activity in the G-7. The pace remains slow today, though US PPI data tomorrow and CPI on Thursday could warm up markets. The September US NFIB small firm business survey is released today. Always worth a look.
• Philippines: August trade data is set for release this morning. We expect another month of contraction for exports and imports with the trade deficit staying substantial at roughly $4.5bn. Exports should struggle due to soft demand for electronics although imports could post a smaller contraction as energy imports rebound on higher global crude prices. Chronic trade deficits should mean that the PHP will remain pressured in the near term as the current account also remains in deficit.

What to look out for: Fed speakers and US inflation later in the week

• Australia Westpac consumer confidence (10 October)

• Japan trade balance Bop (10 October)

• Philippines trade (10 October)

• US wholesale inventories (10 October)

• Fed Bostic and Perli speak (10 October)

• South Korea current account balance (11 October)

• Japan machine tool orders (11 October)

• Taiwan trade (11 October)

• US PPI and FOMC minutes (11 October)

• Fed's Waller, Kashkari, Daly, Bowman, Bostic speak (11 October)

• Japan PPI and core machine orders (12 October)

• India CPI inflation (12 October)

• US CPI inflation and initial jobless claims (12 October)

• Fed's Collins and Logan speak (12 October)

• South Korea unemployment (13 October)

• China CPI inflation (13 October)

• Singapore GDP and MAS (13 October)

• US University of Michigan sentiment (13 October)

• Fed's Bostic, Collins and Harker speak (13 October)

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