JASPER’S MARKET SQUAWK 26-09-2023
<h2>Risk Appetite Suppressed as 10-Year Soars to 2007 High</h2>
<p>Safe-have interest for US yields grew on Monday on expectations of high borrowing costs for longer, dragging on major counterparts. Despite weak economic data, the 10-year hit a 2007 high of 4.51%, sending the DXY to 106. US equities saw small gains following a 3-year agreement between the Writers Guild of America (WGA) and the Alliance of Motion Picture and TV Producers (AMPTP).</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-25911 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-2023-09-26T100948.797.png" alt="" width="1913" height="912" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-2023-09-26T100948.797.png 1913w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-2023-09-26T100948.797-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-2023-09-26T100948.797-1024×488.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-2023-09-26T100948.797-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/09/Untitled-design-2023-09-26T100948.797-1536×732.png 1536w" sizes="(max-width: 1913px) 100vw, 1913px" /><em><strong>Chart: USDJPY</strong></em></p>
<h2>Key Factors For Today</h2>
<ul>
<li>US Yields Surge to 2007 High, Dragging On Major Currencies</li>
<li>Fed Speakers Fuel Dollar Rally as USD/JPY Aims for 150 Handle</li>
<li>ECB’s Lagarde Foresees Elevated Borrowing Costs Amid ‘Strong’ Inflation</li>
<li>Record-breaking US Oil Production Forecasted for 2023 and 2024</li>
<li>Chinese Property Sector Concerns Rise After Evergrande Misses Bond Payment</li>
</ul>
<h2>Fed Speakers Add to Last Week’s Narrative, USDJPY Eyes 150</h2>
<p>During a gathering at the University of Pennsylvania’s Wharton School, Fed’s Neel Kashkari said he anticipates one more hike this year and a tighter policy for an extended period if the economy surpasses expectations. Although Monday had the Chicago Fed National Activity Index and Dallas Fed Manufacturing Index falling below expectations, the dollar still rose to a fresh November high as investors got more worried about raising costs remaining elevated for longer. Fed’s Goolbee also saw bigger risks from higher inflation. It seems that USD/JPY is marching towards the 150 handle after yesterday’s rise to 148.90 unless 148.50 sees a breakdown.</p>
<h2>Rates at High Levels Due to “Strong” Inflation, Says Lagarde</h2>
<p>ECB’s President Christine Lagarde also regurgitated that borrowing costs will stay elevated as long as price pressure “remains strong” during her speech before the European Parliament’s Committee on Economic and Monetary Affairs. She added that many indicators pointed to weakness but highlighted that the EBC expects no recession as a baseline scenario. EUR/USD plunged to a March low of $1.0575, pressured by Germany’s worse-than-expected IFO reading, to close its 5th consecutive session of losses. Next, support can be seen around $1.0540, with resistance above $1.06 at $1.0615.</p>
<h2>EIA STEO Sees Record US Production in 2023 and 2024</h2>
<p>US oil production is expected to hit 13M bpd this month, with the EIA expecting records for both 2023 and 2024, according to its STEO. In another surprise, Russia lifted the ban on low-quality diesel and marine fuel exports it imposed only last Thursday after having insisted the ban is here to stay. However, the wider gasoline and diesel bans remained in place. WTI came under pressure also due to travel stocks feeling the pain of higher rates for longer as worries around travel demand escalated after last week’s Fed event.</p>
<h2>Evengrande Bond Payment Miss Weighs on Aussie</h2>
<p>Investors had renewed concerns about the Chinese property sector after struggling Evergrande missed another bond payment and its CEO and CFO were detained. PBOC official Liu Shijin said there was unlikely to be more monetary policy easing. The Australian dollar was most affected, giving back some of its Friday gains on Monday but managed above 0.64. As it consolidates, trades will closely monitor the round support and 0.6447. On Tuesday morning, the Aussie remains under pressure following the RBA 2023 Conference on Inflation.</p>
<h2>On The Docket</h2>
<ul>
<li>ECB Lane Speech</li>
<li>S&P/Case-Shiller Home Price</li>
<li>CB Consumer Confidence</li>
<li>New Home Sales</li>
<li>Fed Bowman Speech</li>
<li>API Crude Oil Stock Change</li>
<li>BOJ Monetary Policy Meeting Minutes</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi down by 0.17% and 0.15%</li>
<li>Euro 0.08% lower, Pound down by 0.13%</li>
<li>The yen dropped 0.05%, Swiss Franc lost 0.13%</li>
<li>Canadian dollar 0.18% lower</li>
<li>Gold 0.21% lower, Silver 0.86% in red</li>
<li>Crude down by 0.32%, Brent 0.38% lower</li>
<li>Natural gas 0.86% in red</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-26-09-2023-25907/">JASPER’S MARKET SQUAWK 26-09-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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