General Daily Market Recap – October 8, 2024

The lack of top data releases on Tuesday left major assets room to continue pricing in existing market themes.

Can you guess which assets have undergone further adjustments?

Let’s discuss:

Titles:

• The minutes of the RBA meeting showed that members prefer “tight enough” policies until they are more confident about inflation, but do not rule out changes in the cash rate
• Japan’s Average Cash Earnings slowed from 3.4% to 3.0% y/y, in line with expectations in August
• China’s NDRC is “fully confident” it will achieve its economic targets, adds 100 billion yuan from next year’s budget and another 100 billion yuan for key investment projects by the end of the year
• industrial production in Germany rose 2.9% m/m in August (0.8% est., August reading revised lower to -2.9%)
• NFIB US Small Business Optimism Index for September 2024: 91.5 (92.0 forecast; 91.2 previous)
• US trade deficit eased from $78.9 billion to $70.4 billion ($70.1 expected) in August as exports (+2.0%) outpaced imports (-0.9%)
• Canada’s trade deficit expanded from CAD 0.3 billion to CAD 1.1 billion (CAD 0.4 billion expected) in August as exports fell due to lower energy prices
• RealClearMarkets/TIPP Economic Optimism Index rose from 46.1 to 46.9 (47.2 est.) in October
• Voting member of the FOMC Rafael Bostic said the labor market has slowed but is not sluggish and that it remains “laser focused” on inflation that is still “too high”
• FOMC Voting Member Adrian Kugler supports further interest rate cuts and favors a shift in Fed focus from reducing inflation to supporting the labor market
• FOMC Voting Member Susan Collins said that “further policy adjustments are likely to be needed,” but not in a preordained way
• FOMC Voting Member Philip Jefferson favors a meeting-by-meeting approach to rate cuts and said the Fed’s balance of risks has shifted as inflation has fallen and risks to employment have risen
• API: US crude oil stocks rose 10.9 million barrels in the week ended Oct. 4 (vs. 1.95 million barrels estimated, down 1.5 million barrels earlier)

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, US 10 Year Yield, Bitcoin Overlay Chart by TradingView

Markets opened on a calm note with the RBA and China in focus. China’s NDRC pledged to support the economy, but did not provide many details. Meanwhile, the minutes of the RBA meeting revealed a preference for keeping policy tight until inflation shows clearer signs of cooling.

European shares took some losses after China’s vague announcement, although this was tempered by reduced concerns about Israel targeting Iran’s oil facilities and several ECB members backing a potential interest rate cut in October.

WTI crude fell in Asian trade after the disappointing China meeting and faced resistance at $78.00, falling further in the US session as tensions in the Middle East eased.

In the US, attention turned to stabilizing Fed rate cut expectations after a strong NFP report, with FOMC members favoring a slower pace of easing. Gold fell from $2,650, touched a low of $2,605 and settled at $2,620. US 10-year yields rose to 4.05% before falling to 4.01%. U.S. stocks, buoyed by tech gains and pre-earnings optimism, all traded higher on Tuesday.

Currency Market Behavior: US Dollar vs. Majors:

USD Overlay vs. Major Currencies Chart by TradingView

The US dollar remained largely flat as expectations for the Fed’s next rate cuts remained steady. AUD/USD has seen some early gains thanks to RBA meeting minutes and additional stimulus announced by China’s National Development and Reform Commission (NDRC).

The greenback dipped briefly in early European trading after FOMC member Kugler backed further rate cuts, but bounced back, especially against safe havens like the CHF and JPY.

With no major US data released, the dollar remained capped for the rest of the US session. Volatility was more visible in US Treasury yields and 10-year stocks, where the Fed’s economic confidence and weakened hope for more rate cuts sent bond yields lower and encouraged some risk-taking.

Future potential catalysts for the economic calendar:

• Germany’s trade balance at 6:00 GMT
• Machine tool pre-orders from Japan at 6:00 GMT
• FOMC member Bostic will deliver a speech at 12:00 GMT
• FOMC member Logan will deliver a speech at 13:15 GMT
• EIA Crude Oil Stocks at 14:00 GMT
• FOMC member Goolsbee will deliver a speech at 12:00 GMT
• FOMC member Jefferson will deliver a speech at 16:30 GMT
• Minutes of the FOMC meeting at 18:00 GMT
• FOMC member Collins will give a speech at 21:00 GMT
• FOMC member Daly will deliver a speech at 22:00 GMT

The FOMC tape will be in the spotlight today as several voting members are scheduled to share their two cents. But all eyes will be on the minutes of the FOMC meeting, which could provide more clues about the pace and extent of potential Fed policy changes for the rest of the year.

Meanwhile, Germany’s trade balance report may take some points out of major assets during the European session. Don’t even think about missing out on these potential catalysts!

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