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Equities saw a decline, with the S&P 500 down 0.2%, while the Euro Stoxx 50 and FTSE 100 fell 0.5% and 0.2%, respectively. Bond yields edged up along with the DXY index, pushing the US 10-year yield 5 bps higher to 3.78%. Iron ore surged on expectations that China’s massive stimulus package would boost demand. Meanwhile, gold approached record highs again.
New home sales in the US declined last month, while another report showed mortgage rates have fallen for eight consecutive weeks, boosting homebuying demand.
US futures are still pricing in about an 80% chance of another 50bps rate cut by the Fed at their 7th November meeting. Following weaker-than-expected US consumer confidence data on Tuesday, investors slightly favoured the possibility of a second consecutive 50bps cut. It’s shaping up to be another close call.
The USD has shifted direction, strengthening broadly across the board.
Day Ahead
In the U.S. today there will be a raft of public remarks from Fed officials. Most notable of these will be from Powell, Bostic, Kugler, Williams and Barr, who are voting members in 2024. These could provide insight into the decision to cut 50bps this week and the trajectory for monetary policy ahead.
Also, the BEA will release the results of its annual update of the National Economic Accounts tonight, which will include the revised GDP figures starting from 2019Q1. This might provide a better understanding of the economy’s performance during and post-pandemic.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6827 |
| AUD/NZD | 1.0907 |
| AUD/JPY | 98.69 |
| AUD/CNH | 4.7994 |
| AUD/EUR | 0.6131 |
| AUD/GBP | 0.5123 |
| AUD/HKD | 5.3148 |
Chart of the day
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