Morning Call Script - 28 Sept 2023
Overnight asset drivers & the impending data calendar
Trends continue ... higher oil, higher USD, higher yields and weaker equities...
Overnight News/Data: In China, Evergrande shares halted (Bloomberg) whilst Aussie retail sales disappointed (Westpac). Nikkei down 2% as a number of companies went ex-dividend whilst elsewhere Asian bourses were mixed ahead of China's week long holiday.
Oil's reached a 1year high on reports US stockpiles are shrinking (Bloomberg) ... adding fuel to the higher yield story, as back-end steepen to compensate for the front fixed by CB chatter of higher for longer
FX: USD basket is at 10-month high to end Sept as 10s (4.6%) and mortgage rates (7.83%) are at levels not seen since the noughties. In particular the 500bps yield differential in USDJPY is driving us towards 150.00. A reminder of the 7 steps outlined in yesterday's TMH... escalation path of FX intervention from the jawboning to the actual physical intervention.
US Debt Ceiling: partial shutdown seems days away (Reuters, Axios, ING, Fortune) as House Rep McCarthy rejected the stopgap funding bill advancing in the Senate. 900k government employees potentially furloughed (@dailychartbook) and Moody's indicating another shutdown would be bad for the country's credit rating (Reuters).
He was in Michigan with the strikers (WSJ), but little was done by the other Reps in the latest POTUS debate to become a clear breakout contender for the nomination over front runner Trump (Axios, WSJ).
Have a great day, and keep smiling!
Morgan Stanley Thoughts on the Market: US Policy - The Economic Impact of a Government Shutdown
EUR (08:00): Spanish Inflation
EUR (10:00): Consumer Inflation Expectations
EUR (13:00): German Inflation
USD (13:30): Final GDP
USD (13:30): Initial Claims
MXN (20:00): Banxico
USD: Fed speak today from Chairman Powell (21:00), Goolsbee (14:00) and Cook (18:00)
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