In a continuing trend, US stocks have fallen for the third consecutive month this October, with the Dow, S&P, and Nasdaq declining by 1.36%, 2.20%, and 2.78% respectively. Concurrently, the US 10-year yield has risen for six straight months, moving from 3.428% to 4.92%. The 30-year yield also saw an uptick for six of the last seven months, climbing from 3.654% to 5.08%.
The dollar index (DXY) extended its upward trajectory with a gain of 0.517% in October, marking its third straight monthly rise and an overall increase of 4.80% over the last three months. The US dollar appreciated against all major currencies except the Swiss franc (CHF), which depreciated by 0.50%. The most significant gains were against the New Zealand dollar (NZD) and Canadian dollar (CAD), with increases of 2.87% and 2.19% respectively.
Crude oil prices witnessed a decline by 10.43%, while WTI crude oil futures settled at $81.02, marking its first decline following four months of price increase. Despite the recent dip, Goldman Sachs (NYSE:GS) projects Brent crude oil prices to reach USD100/bbl by June.
Precious metals saw positive movements as gold prices rose by 7.34%, crossing the $2000 mark due to increased sovereign buying, while silver prices rose by 3%.
The US employment index rose by 1.1%, slightly above the expected increase of 1.0%. This continues a trend of quarterly increases above the pre-Covid level of 1%. In contrast, the Dallas Fed service sector outlook was -18.2 compared to -8.6 prior, indicating a less optimistic outlook.
US October consumer confidence was reported at 102.6, surpassing the expected figure of 100.0. The strengthening USD during the North American session led to the Japanese Yen (JPY) becoming the weakest of the major currencies, as USDJPY saw a gain of 1.76% on the day.
European Central Bank (ECB) officials also shared their views on inflation and interest rates. ECB's Stournaras indicated that he would consider a rate cut in mid-2024 if inflation falls below 3%. ECB's Villeroy stated that France has clearly passed its inflation peak, while ECB's Nagel insisted that rates must be sufficiently high for sufficiently long.
The Federal Reserve is anticipated to maintain its current policy in tomorrow's decision day, with keen interest in the Q&A session with the Fed chair. The Reserve Bank of New Zealand (RBNZ) flagged dairy prices and labour market as potential risks in its Financial Stability report.
The US Case-Shiller August house price index reported a +1.0% y/y increase, which was less than the expected +1.6%. Canada's GDP for August was 0.0%, lower than the expected +0.1%. The Yen continued to slide further in the aftermath of Bank of Japan's (BOJ) actions.
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