Read on the Trading Floor - 02 Oct 2023

Today’s focus… quiet session, with China on holidays, quarter end moves reversing in USD/Rates and NFP back on the data docket

Theme 1: Funding approved for the US government (well until Nov 17^th at least)

• McCarthy's future now with the Dems ... will they support or remove him? The internal civil war between McCarthy and the Freedom Caucus is a key determinant of how the GOP would like to align itself and what its message will be to the electorate on the 2024 POTUS campaign trail. Afterall, a shutdown did not play well in the opinion polls (77% objected)

  • WSJ - Matt Gaetz Plans Vote to Oust Kevin McCarthy After Speaker Avoids Shutdown

  • The New Yorker - How Kevin McCarthy Defied the Freedom Caucus and Averted a Shutdown

  • Axios - McCarthy plans aggressive counter to Gaetz threat to gavel

• Ukraine funding has become a topic of debate in US politics. Will this spread around the world as stagflation hits economies hard? 

  • Reuters - Biden presses Republicans on Ukraine, says 'brinkmanship has to end'

  • FT - Robert Fico wins Slovakia election with anti-Ukraine stance... The former prime minister is set to try to form a coalition that could undermine EU support for Kyiv and brings another anti-Ukraine voice into the EU alongside Hungary's Orban. To avoid a hung parliament, Fico needs to galvanise enough support amongst Slovakia's fragmented political landscape. 

  • WSJ - As U.S. Aid to Ukraine Falters, Europe Faces Its Own Limits on Help

Theme 2: with the shutdown averted for 45 days, the focus returns to the US data... 

The docket is filled with key leading indicators (ISM Services and Manufacturing) as well as an update on how further along the economy is rolling down the labour market normalisation trail (Initial Claims, Jolts, ADP, AHE and NFP). Elsewhere, OPEC is the main event for oil (ING), RBA meeting (Westpac), RBNZ Oct MPR (Westpac) and not to be forgotten, Canadian Employment prints. 

• The Morning Hark - Oct 02

• Christophe Barraud - Week Ahead Preview: Central Bankers’ Speeches; U.S. Employment Report; BOJ Minutes; RBA, RBNZ and RBI Meetings

• Pepperstone - The Marquee Event Risks to Navigate This Week

• Yardeni Research - The Economic Week Ahead: October 2-6

Theme 3: last mile of disinflation is the hardest .... (not quite a line from a Xmas number one)

The market saw a decent moderation in inflationary readings to end last week from Tokyo, Europe and PCE in the US. However, victory has not been declared yet, oil prices continue to cause concern and i'm sure the wave of CB speak this week, especially from the Fed, will reiterate the "Higher for Longer" mantra. It will only be the aforementioned data docket that can reverse this trend in the long end, not the forward guidance. They are trying their best to not signal the end of hiking cycle and unleash the markets animal spirits. (WSJ - The Bond Regime Change That Is Whacking Stocks, in Six Charts)

• FT - 'Last mile' of disinflation the hardest, warns ECB deputy head

• Econostream Media - ECB Insight - De Guindos Attempts to Beat Back Dovish Expectations

• Odd Lots - The Fed's Barkin appears on Odd Lots

• Bloomberg - Why a US Recession Is Still Likely - and Coming Soon

H/T

Kevin Muir

The MacroTourist Weekly Wrap (link) had one outrageous nugget... "I would like to highlight a trade done earlier in the week by some whale of an account. They sold over 100,000 contracts of the November Fed Funds Future. This trade had a notional of $475 billion! This trade benefits if the market’s expectation about the chance of a November hike increases."

Theme 4: Blind Squirrel Macro

@HarksterHQ can't say enough about how much we enjoy The Monday Morning Notes from

The Blind Squirrel

. Whether it's the diligent and honest review of the Acorn portfolio, the array of topics/themes from Australia, TLT, Mercedes-Benz, Crude, Doordash, Regulatory Arb, Private Equity Holdings, IPO's, Uranium etc etc or simply just the exemplary graphics. This content is a joy to read, provides a giggle or two and most importantly is extremely informative, the perfect recipe to add to @HarksterHQ's recommended reading list.   

Source: Today’s piece from

The Blind Squirrel

- Seeing Red over Red Tape

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Some further reading of note as SBF's trial commences (Lewis also launches his book), Italian yields come under pressure, China goes on holiday, Hunt / Sunak to cut taxes via "lowering inflation" and

Doomberg

reviews their most talked about plays in 2023...  

• CBS - Michael Lewis Interview ahead of his book (Going Infinite)

• Coindesk - Sam Bankman Fried Goes on Trial Tomorrow

• ING - Italian bonds and the euro: Will it be different this time?

• SCMP - China sees travel booming in first golden week holiday since end of covid restrictions

• FT - Jeremy Hunt says no short-cuts on UK tax cuts

• FT - Rishi Sunak will not commit to tax cuts as fractious Tory conference starts

• Doomberg
  - Monday Morning in the Coop.

Have a great day and keep smiling

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Available on the Harkster Research Platform.

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