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Livesquawk - US Briefing - Tuesday 05.10
US Briefing - Tuesday 05.10
Headlines
  • Schumer Sets Up Debt Ceiling Vote Citing It Must Be Raised By End Of Week
  • Biden Tells Progressives Spending Package Needs To Be Between USD1.9-2.2T
  • ECB’s Holzmann: We Are 'Clinging' To The Hope That CPI Spike Is Transitory
  • Eurozone French, German Sep. Services PMIs Beat; Italian, Spanish Prints Miss
  • French August Industrial Production Jumps 1.0% M/M, Beating 0.4% Estimate
  • France's Beaune Threatens The UK's Power Supply As Brexit Tensions Escalate
  • RBA: Central Scenario Is Condition For Rate Rise Will Not Be Met Before 2024
  • UK Sep Services, Composite PMI Beat; Price Charged Inflation At Record High
  • UK Gasoline Prices Continue Surge; Rise Most Since July Amid Fuel Shortages
  • European Gas And Power Prices Surge To Fresh Records Amid Energy Crunch
  • Reports Aramco Looking For Greater Than USD15Bln For A Gas Pipeline Stake
  • SCMP: China, US Eye Further Talks With Yang Jiechi Set To Meet Jake Sullivan
  • China Has Ordered Its Banks To Ramp Up Their Funding To Boost Coal Output
  • PepsiCo Q3 Core EPS, Net Revenue Beat; Raises FY Organic Revenue View
  • Facebook Shares Advance In Premarket Trading After A Long Service Outage
  • Infineon Shares Rise; Confirms FY View & Sees Strong Revenue Rise In FY22
  • AstraZeneca Is Seeking US FDA's Emergency Approval For Covid-19 Antibody
  • Johnson & Johnson Submits Data To FDA To Support Covid-19 Booster Shot
  • Australia To Buy 300K Doses Of Merck's Covid Pill; Victoria Cases Hit Record
  • UK New Car Registrations Slide In The Weakest September For Over 23 Years
Commentary
EZ Sep Business Growth Slowed As Supply Issues, Pricing Bite

Business growth in the euro zone remained strong last month but was hit by ongoing supply issues constraining activity while elevated inflationary pressures dented demand, issues which are likely to continue, a survey showed on Tuesday. IHS Markit’s final composite Purchasing Managers’ Index (PMI), seen as a good guide to economic health, sank to 56.2 last month from August’s 59.0, although still well above the 50 mark separating growth from contraction and just above a 56.1 “flash” estimate. Demand fell to a five-month low as firms passed on part of rising input costs, which rose at a record pace, to consumers. The composite output prices index rose to 59.1 from 58.3, not far from survey highs set in the summer months.

 

“The current economic situation in the euro zone is an unwelcome mix of rising price pressures but slower growth. Both are linked to supply shortages, especially in manufacturing, which has seen a steeper fall in output growth than services,” said Chris Williamson, chief business economist at IHS Markit. “Although for now the overall rate of expansion remains relatively solid by historical standards, the economy enters the final quarter of the year on a slowing growth trajectory. On Friday, a manufacturing PMI showed growth remained strong in September but activity suffered from supply chain bottlenecks, and the bloc’s dominant service industry also saw the pace of expansion slow.

(Reuters - Continue Reading)

RBNZ Preview: Policymakers Set To Hike Rates On Positive Data

Source: RBNZ 

LONDON - The Reserve Bank of New Zealand (RBNZ) is expected to implement its first rate increase in seven years, a hike that September’s meeting failed to deliver despite positive second-quarter growth and employment data. Analysts are expecting the RBNZ to announce a 25 basis-point increase to 0.5% from 0.25%. This would be the first move since March 2020, when central bankers in the island nation cut the Official Cash Rate (OCR) to a record low 0.25% from 1%. The rate reduction came as Covid-19 first began its spread, with the bank saying, “The negative impact on the New Zealand economy is, and will continue to be, significant.”

 

Now, with GDP growth at 2.8%, unemployment down to 4%, and inflation “well above target” at 3.3% in Q2, TD Securities said, “The biggest surprise would be the bank not hiking”. The 25bp hike, if implemented, would address “price and stability concerns” according to BofA, who cautioned that the NZ rates market “expects additional policy tightening to be front-loaded over the next 12 months and for policy settings to move close to neutral.” The RBNZ could signal the start of more hawkish bent in 2022 with Wednesday’s decision, but positive growth, employment and inflation data alone might not be enough for the bank to alter their record-low rates just yet. Despite its infamously strict (and largely successful) “Zero Covid” lockdown-based policy first implemented in February 2020, New Zealand has inevitably seen its efforts to resist the virus fall short in recent weeks as the Delta variant made its way down under.

(LiveSquawk - Continue Reading)

Macron To Make Biggest ECB Job Pick For Years At Bank Of France

French President Emmanuel Macron must soon make the biggest decision for years to come on the makeup of the European Central Bank’s policy makers: whether to reappoint the Bank of France governor. Francois Villeroy de Galhau’s six-year term expires at the end of October, and the head of state could determine as soon as this week if he should get another stint. Alternatively, Macron -- who already reshaped the ECB by successfully pushing to appoint the first female president, Christine Lagarde -- might opt to revamp it even further. With Villeroy, 62, holding the seat granted to the euro area’s second-biggest economy at the Governing Council, the decision on his future is arguably the most significant before 2026, when governments must choose a successor to Vice President Luis de Guindos.

 

The case to reappoint Villeroy is that he has established himself as a safe pair of hands in France, and a distinctive and influential voice at the ECB. Taking the bolder option of a new governor has its attractions too, not least before a presidential election for an incumbent who took office on an anti-establishment ticket, and who might be keen to burnish that credential. “The default option and the path of least resistance would be to have Villeroy for the second term,” said Frederik Ducrozet, an economist at Banque Pictet & Cie in Geneva who, as a student, attended classes taught by Villeroy at Sciences Po in Paris. “That was the case in the past, if you didn’t make any obvious mistakes.”

(Bloomberg - Continue Reading)

Bulls Nursing Wounds After Rout Eye Options Market For Solace

Stocks are selling off, dragging the S&P 500 down more than 5% from its all-time high set early last month, but the options market may be signaling that the rout is nearing an end. To wit: Selling one S&P 500 put contract that’s 10% out of the money now buys fewer equivalent call options than it did three months ago. The observation by RBC Capital Markets is no guarantee that the worst of the rout is over. But it could be a sign that some options traders think so.   Derivatives traders have been preparing for this downturn since early summer, piling into puts as the stock market ascended to new highs. So when the rout finally happened, yanking more than $2 trillion in market value from from the S&P 500, few were caught by surprise. Demand for protection may be elevated, but there are few signs of panic.

 

“The market was worried for a long time (very high skew levels) even after we had drawdowns,” Amy Wu Silverman, a derivatives specialist at RBC, wrote in an email. “It is very telling that this time around the skew is not rising despite a drawdown. I think it’s the options market way of telling us that we are closer to the bottom.” One put contract expiring in November that’s 10% out of the money can be traded for 27 out-of-the-money calls, Silverman’s calculations show. That’s down from nearly 37 three months ago.

(Bloomberg – Continue Reading)

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