Tin tức thì trường

• But it may be a year or longer before Fed's employment goal is met to allow for actual rate hike
• Inflation is likely to come down closer to Fed’s 2% target over next couple of years
• If economy continues to improve as expected, U.S. could potentially reach maxiumum employment and inflation mandate as soon as 2023
• Forecasts U.S. unemployment rate to drop to about 4% by the end of next year, 3.8% by 2023 and 3.6% by the end of 2024
• At that point I think economy should be healthy enough to tolerate some small increases in rates
• Low interest rates can increase financial stability risks and hurt savers and people on fixed incomes
• Emphasizes that Fed will not be removing accommodation anytime soon
• Fed will still be adding accommodation even after it starts to reduce its bond purchases 
• Winding down those asset purchases soon could give Fed more “optionality” next year for responding to inflation that continues to run above its target

The Commerce Department announced on Friday that construction spending were flat m-o-m in August after an unrevised 0.3 percent m-o-m advance in July.

Economists had forecast construction spending growing 0.3 percent m-o-m in August.

According to the report, spending on private construction edged down 0.1 percent m-o-m, while investment in public construction increased 0.5 percent m-o-m.

On a y-o-y basis, construction spending climbed 8.9 percent in August. 

The final reading for the September Reuters/Michigan index of consumer sentiment came in at 72.8 compared to a preliminary reading of 71.0 and the August final reading of 70.3.

Economists had forecast the index to be unrevised at 71.0.

According to the report, the index of consumer expectations surged 4.6 percent m-o-m to 68.1 from August’s final reading of 65.1, while the index of the current economic conditions rose 2.0 percent m-o-m to 80.1 from August’s final reading of 78.5.

“Consumer sentiment edged upward in late September, although the overall gain still meant the continuation of depressed optimism, initially sparked by the Delta variant and supported by persistent inflation and unfavorable long-term prospects for the national economy,” noted Richard Curtin, Surveys of Consumers chief economist. “Consumers do not view economic conditions as conducive to establishing an inflationary psychology, a self-fulfilling prophecy. Instead, consumers have favored postponement due to what they still consider a transient spike in prices.”

A report from the Institute for Supply Management (ISM) showed on Friday the U.S. manufacturing sector’s activity expanded in September at a slightly faster pace than in August .

The ISM's index of manufacturing activity came in at 61.1 percent last month, up 1.2 percentage points from an unrevised August reading of 59.9 percent. The September reading pointed to the growth in the manufacturing sector for the 16th straight month.

Economists' had forecast the indicator to edge down to 59.6 percent.

According to the report, the Supplier Deliveries Index surged 3.9 percentage points to 73.4 percent, the Inventories Index increased 1.4 percentage points to 55.6 percent and the Employment Index rose 1.2 percentage points to 50.2 percent, returning into expansion territory. Meanwhile, the Backlog of Orders Index declined 3.4 percentage points to 64.8 percent in September and the Production Index decreased 0.6 percentage points to 59.4 percent. Elsewhere, the New Orders Index remained unchanged m-o-m at 66.7 percent in September. On the price front, the Prices Index went up 1.8 percentage points to 81.2 percent.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that the manufacturing economy continued its growth in September but Survey Committee members reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand. “All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products,” he said. “Global pandemic-related issues - worker absenteeism, short-term shutdowns due to parts shortages, difficulties in filling open positions and overseas supply chain problems - continue to limit manufacturing growth potential. However, optimistic panel sentiment remains strong, with three positive growth comments for every cautious comment.”

Fiore also said that the past relationship between the PMI and the overall economy indicated that the PMI for September (61.1 percent) corresponds to a 5.1-percent increase in real gross domestic product (GDP) on an annualized basis.

The latest report by IHS Markit revealed on Friday the seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) came in at 60.7 in September, down from 61.1 in August but slightly higher than the earlier released “flash” reading of 60.5. Still, the September reading pointed to the slowest growth in factory activity since April.

Economists had forecast the index to stay unrevised at 60.5.

According to the report, the September drop in headline figure reflected weaker production growth, which was hampered by severe material and labour shortages, as supply chain disruption worsened. Demand conditions softened from the peaks seen earlier in the year, but both domestic and foreign client orders expanded at historically elevated rates. On the price front, the pace of input cost inflation deccelarated only slightly from August's series record, causing firms to increase their charges at an unprecedented rate.

U.S. stock-index futures rose on Friday, pointing to major indexes recovering some ground following the S&P 500's worst monthly performance since March 2020, the peak of the pandemic.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Statistics Canada announced on Friday that the country’s gross domestic product (GDP) fell 0.1 percent m-o-m in July, following a revised 0.6 percent m-o-m advance in June (originally a 0.7 percent m-o-m growth).

This was slightly better than economists' forecast for a 0.2 percent m-o-m decline. Total economic activity was approximately 2 percent below its pre-pandemic level.

In y-o-y terms, the Canadian GDP grew 4.7 percent in July.

According to the report, a decrease in goods-producing industries (-1.4 percent m-o-m) in July more than offset an advance in services-producing industries (+0.4 percent m-o-m).

Overall, 13 of the 20 industrial sectors were up, led by a second solid monthly advance in the accommodation and food services sector (+12.5 percent m-o-m). These gains, however, were more than offset by declines in agriculture (-5.5 percent m-o-m), utilities (-4.9 percent m-o-m), manufacturing (-1.1 percent m-o-m), and wholesale trade (-1.9 percent m-o-m).

It was also reported that preliminary data indicates an approximate 0.7 percent m-o-m advance in real GDP for August.

Alphabet (GOOG, GOOGL) initiated with an Outperform at RBC Capital Mkts; target $3400

Amazon (AMZN) initiated with an Outperform at RBC Capital Mkts; target $4150

Facebook (FB) initiated with an Outperform at RBC Capital Mkts; target $425

IBM (IBM) initiated with a Buy at Jefferies; target $170

The Commerce Department reported on Friday that consumer spending in the U.S. climbed 0.8 percent m-o-m in August after a revised 0.1 percent m-o-m drop in July (originally a 0.3 percent advance m-o-m). Economists had forecast the reading to show a 0.6 percent m-o-m increase.

Meanwhile, consumer income rose 0.2 percent m-o-m in August, following an unrevised 1.1 percent m-o-m jump in the previous month. Economists had forecast a 0.3 percent m-o-m gain.

The August jump in personal income primarily reflected gains in compensation of employees and government social benefits.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.3 percent m-o-m in August, following an unrevised 0.3 percent m-o-m increase in July. Economists had projected the index would rise 0.2 percent m-o-m.

In the 12 months through August, the core PCE jumped 3.6 percent, the same pace as in the previous two months. Economists had forecast an increase of 3.6 percent y-o-y. 

FXStreet reports that Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, notes that USD/CHF has reached the 78.6% retracement at 0.9357 and a close above here will trigger a move to the 0.9472 March peak.

“USD/CHF has traded through but not yet closed above the 78.6% retracement at 0.9357 and we note the divergence of the daily RSI which reflects a loss of upside momentum. The pair may well consolidate in this vicinity and possibly see a small pullback. 

“A close above 0.9357 will trigger a move to the 0.9472 March peak. The 200-week ma lies at 0.9589.” 

FXStreet reports that Lee Sue Ann, Economist at UOB Group, suggests the RBA will refrain from hiking rates for the time being.

“We think the next QE taper will be in February next year, by which the rebound in the economy will be evident.”

“As for the cash rate target, we still expect that the first rise will occur only in early 2024.”  

USD slipped against most of its major rivals in the European session on Friday as investors cautiously awaited the release of the U.S. PCE inflation data for August later today (due at 13:30 GMT), looking for hints on the state of price pressures in the world’s largest economy, as it recovers from the pandemic.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged down 0.10% to 94.14.

Economists forecast that the core personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose 3.6% y/y in August, the same pace as in July. This represented the highest reading since the early 1990s. It is believed that the upcoming inflation data could provide clues on the Federal Reserve’s timeline for tapering its bond purchases and increasing key interest rates. 

The  Fed’s updated “dot plot”, which was released after the conclusion of the central bank's September gathering a week ago, showed that half of the FOMC members now see the first interest rate hike in 2022. At the same time, the U.S. central bank’s chairman Jerome Powell signaled that the Fed could begin scaling back its bond purchases in November and end the process by mid-2022.

Meanwhile, the news that U.S. President Joe Biden signed a continuing resolution to fund the government through early December, preventing a shutdown, offered cause for optimism. The fate of the looming debt ceiling, however, remains uncertain. The U.S. lawmakers still will have to suspend or raise the debt ceiling by October 18 to avoid credit default.

• Comfortable with plans to taper bond buying soon
• But does not believe Fed will need to raise interest rates until 2024
• The job market still has long way to go before healing
• Once supply chain issues are resolved, worried that Fed will have to deal with same forces that have pinned down inflation before the pandemic
• Wants to see broader measures of wages increasing to start believing that the labour market is getting tighter

FXStreet reports FX Strategists at UOB Group see USD/CNH to keep navigating within the 6.4300-6.4800 range in the next weeks.

24-hour view: “The sharp drop in USD to 6.4460 came as a surprise (we were expecting sideway-trading). The rapid drop appears to be overdone and USD is unlikely to weaken much further. Overall, USD is more likely to trade within a broad range of 6.4430/6.4680.”

Next 1-3 weeks: “...USD broke 6.4600 yesterday as it dropped to 6.4460. The risk for USD to head higher has dissipated. From here, the outlook is mixed and USD could trade between 6.4300 and 6.4800 for a period of time.”

FXStreet reports that AUD/USD is trading below the 0.7200 level. According to Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, attention reverts to the August low at 0.7106 while the aussie should hold above key support at 0.7062/0.6991 to avoid further falls. 

“AUD/USD’s outlook stays negative. The pair recently failed at the four-month downtrend at 0.7390 and we will retain a negative bias while capped here.”

“Initial resistance is the 0.7317 55-day ma.”

“We look for losses to 0.7106, the August low. Key support remains at 0.7062/0.6991. This represents the September and November 2020 lows.”

Reuters reports that a weekly round-up by BofA showed that global equity and bond funds saw modest inflows at the expense of cash and gold funds even as global markets hit a rough patch this week.

On a weekly basis, investors ploughed $9.2 billion into stocks and $8 billion into bonds, while withdrawing $0.6 billion from gold and $6.6 billion from cash respectively.

Digging deeper, broader investment flows were into financials, energy and small cap sectors while emerging market debt funds saw large outflows thanks to rising bond yields.

"If the 2010s was deflationary, driven by excess debt and ageing demographics, 2020s will be inflationary, driven by economic isolationism due to broken supply chains and government intervention as central banks want inflation," analysts led by Michael Hartnett, chief investment strategist at the bank, said in a note.

FXStreet reports that economist at UOB Group Ho Woei Chen assesses the latest set of data releases in the Chinese economy.

“China’s official manufacturing PMI slipped into a contraction for the first time since February 2020 when the country was first hit with the COVID-19 outbreak, impacted by the widespread power shortage. Meanwhile, the official non-manufacturing PMI rebounded back into the expansion territory in September.”

“Overall, China’s growth outlook has weakened going into 4Q21 given factors including: 1) power shortages that will hit its key growth engine – exports; 2) debt crisis at property giant Evergrande that could weigh on real estate investment demand and may have spillover impact into banking, construction materials and private consumption; 3) uncertainties posed by the more contagious COVID-19 Delta variant that could continue to drag on consumption. We will reassess our 2021 growth forecast which is currently at 8.6% following the 3Q21 GDP release on 18 October.”

According to a flash estimate from Eurostat, euro area annual inflation is expected to be 3.4% in September 2021, up from 3.0% in August. Economists had expected a 3.3% increase. The core figures arrived at 1.9% YoY in September when compared to 1.9% expectations and 1.6% booked last.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in September (17.4%, compared with 15.4% in August), followed by non-energy industrial goods (2.1%, compared with 2.6% in August), food, alcohol & tobacco (2.1%, compared with 2.0% in August) and services (1.7%, compared with 1.1% in August).

According to the report from IHS Markit/CIPS, supply chain delays, slower new order growth and rising material and labour shortages all constrained the UK manufacturing sector in September. 

At 57.1, down from 60.3 in August, the seasonally adjusted PMI fell to a seven-month low. Manufacturing production increased for the sixteenth consecutive month in September. However, the rate of expansion eased for the fourth month in a row and to its weakest since February. Growth slowed across the consumer, intermediate and investment goods sectors. Data broken down by company size indicated that upturns at medium and large-scale producers were offset by a continued downturn among small firms.

Production schedules were disrupted by a combination of input shortages, longer supplier lead times and capacity constraints (including difficulties with staff shortages and hiring required skills). Average vendor lead times increased to one of the greatest extents in the survey history, amid reports of delays to air, land and sea freight, staff shortages at vendors, COVID-19 and Brexit disruptions, a lack of delivery drivers and port delays.

Weaker growth of new business also stymied efforts to increase output further during September. New orders rose at the weakest pace since February, as intakes from domestic clients increased at a slower pace and new export work contracted for the first time in eight months. The decline in new export orders reflected shipping issues, cancellations due to long lead times and capacity issues at clients.

Meanwhile, manufacturers maintained a positive outlook for the year ahead in September. Over 62% of companies forecast their output would increase during the coming 12 months, compared to only 6% expecting a contraction. The confident outlook was attributed to recoveries in both domestic and global markets, reduced difficulties from supply chains, COVID-19 and Brexit and planned new product launches.

According to the report from IHS Markit, euro area manufacturers recorded another strong improvement in operating conditions during September, owing to further marked rates of expansion in output, new orders and employment. That said, notable slowdowns were seen in all three cases, causing the headline PMI to fall by its largest margin since April 2020, right at the start of the COVID-19 pandemic when virus containment measures were being implemented across the currency bloc and globally.

The final reading of the Eurozone Manufacturing PMI for September of 58.6 was a fraction below the preliminary ‘flash’ print of 58.7, but a notable step down from 61.4 seen in August and the lowest since February. 

The drop in the Manufacturing PMI was driven by the index’s two principal components, new orders and output, which signalled considerable moderations in growth when compared with August. In both cases, the expansions were still strong, but the weakest for eight months. Meanwhile, following on from the sharp rates of increase seen in previous months, new export orders grew at the slowest rate since January. Supply constraints were a key hindrance to production schedules during September, while softer demand conditions were another contributing factor.

Inflationary pressures remained acute during September. Although the rate of input price inflation was the weakest in five months, it was still above anything seen in almost 24 years of data prior to this. To protect profit margins, euro area manufacturers lifted their output prices, and to a quicker extent than seen in August.

Lastly, business confidence fractionally ticked higher during September, marking the first time since June that the level of positive sentiment has increased. That said, the degree of optimism held close to August’s nine-month low.

FXStreet reports that FX Strategists at UOB Group said that the potential advance to 112.20 in USD/JPY appears somewhat deflated for the time being.

Next 1-3 weeks: “We have expected USD to strengthen since last Friday (24 Sep, spot at 110.30). As USD surged over the past week, we noted yesterday (30 Sep) that ‘further USD strength is not ruled out but deeply overbought conditions indicate that the pace of any advance is likely to be slower’. We did not anticipate the sharp pullback to a low of 111.22 during NY session. While our ‘strong support’ level at 111.10 is still intact, the rapid loss in momentum suggests that the next resistance at 112.20 may not come into the picture this time round. In order to rejuvenate the flagging momentum, USD has to move and stay above 111.85 within these 1 to 2 days or a break of 111.10 would not be surprising.”

During today's Asian trading, the US dollar consolidated against major currencies, remaining near the current year's high.

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), rose by 0.03%.

The dollar index has grown significantly recently amid expectations that the US Federal Reserve System will begin to curtail stimulus measures in November and raise rates next year.

The Fed still expects that the period of high inflation will end, but it is difficult to determine specific deadlines, Fed Chairman Jerome Powell said on Thursday. The price increase this year is the result of problems "on the supply side that we cannot control," he said. Powell acknowledged that the Central Bank may face difficult decisions next year if inflation remains high while unemployment rises.

The House of Representatives of the US Congress on Thursday approved a temporary budget for the 2022 fiscal year in order to avoid the termination of funding for public institutions. It was approved by 254 votes in favor, 175 congressmen voted against it. After that, the document was signed by US President Joe Biden, the White House said. The "Law on the expansion of State funding and emergency assistance" will be in effect until December 3, 2021.

Reuters reports that U.S. Trade Representative Katherine Tai will unveil the Biden administration’s long-awaited strategy for the troubled U.S.-China trade relationship in a speech on Monday at a Washington think tank.

Tai will deliver remarks on her review of China trade policy at the Center for Strategic Studies in Washington and participate in a question-and-answer session.

Since taking office in March, Tai has been conducting a top-to-bottom review of Washington’s China trade policy.

U.S. Joe Biden has kept in place tariffs on hundreds of billions of dollars of Chinese imports imposed by former president Donald Trump.

Tai’s remarks at 1400 GMT on Monday will mark the start of the final three months of the “Phase 1” U.S.-China trade deal struck that Trump struck with Beijing at the start of 2019, easing a tariff war between the world’s two largest economies.

Biden administration officials say China has not met its Phase 1 trade deal commitments and they intend to hold it to its international trade commitments

FXStreet reports that UOB Group’s FX Strategists see AUD/USD could avoid a deeper pullback on a surpass of 0.7265 in the near term.

Next 1-3 weeks: “Yesterday (30 Sep), we highlighted that AUD ‘is likely to weaken further’ and that ‘the next support is at 0.7155 followed by the August’s low near 0.7110’. We did not quite expect the subsequent sharp rebound to 0.7257 during NY session. We continue to hold the same view for now but a break of 0.7265 (no change in ‘strong resistance’ level) would indicate that the current weakness is not ready to move to 0.7155 just yet.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.1707 (1306)

$1.1667 (539)

$1.1637 (287)

Price at time of writing this review: $1.1579

Support levels (open interest**, contracts):

$1.1531 (1609)

$1.1490 (6092)

$1.1445 (314)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date October, 8 is 74760 contracts (according to data from September, 30) with the maximum number of contracts with strike price $1,2200 (8606);

GBP/USD

$1.3660 (40)

$1.3580 (64)

$1.3526 (193)

Price at time of writing this review: $1.3449

Support levels (open interest**, contracts):

$1.3399 (1313)

$1.3366 (446)

$1.3286 (1372)

Comments:

- Overall open interest on the CALL options with the expiration date October, 8 is 12712 contracts, with the maximum number of contracts with strike price $1,4150 (2064);

- Overall open interest on the PUT options with the expiration date October, 8 is 22471 contracts, with the maximum number of contracts with strike price $1,3250 (1885);

- The ratio of PUT/CALL was 1.77 versus 1.71 from the previous trading day according to data from September, 30

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

According to provisional results of the Federal Statistical Office (Destatis), the real (price-adjusted) turnover of all retail enterprises in Germany was 1.1% higher and the nominal (not price-adjusted) turnover was 1.2% higher, on a calendar and seasonally adjusted basis, in August 2021 than in July 2021. Economists had expected real turnover to grow by 1.5%.

Retail turnover in real terms was up by 6.0% in August 2021 on the pre-crisis month of February 2020. Compared with August 2020, turnover increased by 0.4% in real terms and by 2.3% in nominal terms in August 2021.

The retail trade of food, beverages and tobacco in August 2021, adjusted for calendar and seasonal effects, grew by 3.4% in real terms compared to July 2021 and was 5.0% below the pre-crisis level of February 2020. The turnover of supermarkets and hypermarkets fell by 2.8% compared to the previous month and was 4.2% below the pre-crisis level. 

By contrast, the retail trade in non-food products experienced an increase in sales in August 2021. Real sales in August 2021 were 4.9% higher on a calendar and seasonally adjusted basis than in the previous month and were even 12.2% above the pre-crisis level of February 2020. 

The Internet and mail order business recorded a real, calendar and seasonally adjusted increase in sales of 9.0% compared to the previous month. At 29.8%, sales in this sector remain well above the level of February 2020.