CURRENCY MARKET WRAP 

As of Thu Oct 10th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.02%, 99.11
USDJPY, +0.03%, $107.11
EURUSD, +0.28%, $1.0987
GBPUSD, -0.05%, $1.2213
USDCAD, +0.13%, $1.3342
AUDUSD, -0.23%, $0.6714
NZDUSD, -0.25%, $0.6282

U.S. Wholesale inventories increased 0.2% m/m in August (consensus +0.4%), on top of an unrevised 0.2% increase in July. Wholesale sales were flat in August after increasing 0.2% in July. It could prove difficult for wholesalers to gain pricing power given that inventory growth remains well ahead of sales growth on a yr/yr basis. August Job Openings and Labor Turnover Survey showed that job openings declined to 7.051 million from a revised 7.174 million in July (from 7.217 million).

In trade, China is still open to reaching a partial deal with the US, an official with direct knowledge of the talks said, signalling that Beijing is focused on limiting the damage to the world’s second-largest economy. The reported terms included China agreeing to buy more agricultural products from the U.S. in exchange for no further tariff increases on goods imported from China. Bloomberg received this information from an unnamed official with “direct knowledge of the talks,” and the Financial Times followed up with news that Beijing could increase its soybean purchases by 10 million tons annually.

U.S. Treasuries finished the session on a lower note. The 2-yr yield increased four basis points to 1.46%, and the 10-yr yield increased five basis points to 1.59%. The U.S. Dollar Index finished little changed at 99.11. WTI crude declined 0.1% (-$0.03) to $52.63/bbl.

STOCK MARKET WRAP 

S&P500, +0.91%, 2,919.40
Nasdaq, +1.02%, 7,903.74
Nikkei Futures, -1.14%, 21,372.5

S&P 500 gained 0.91% on Wednesday after a report indicating China’s willingness to reach a partial trade deal seemingly improved investor sentiment.

Despite the caveat that structural trade issues were reportedly not in China’s interest to resolve this week, all 11 S&P 500 sectors were undeterred for most of the day. The information technology sector (+1.5%) led all sectors in gains, with the other ten groups rising between 0.3% (real estate) and 1.1% (energy).

CURRENCY MARKET WRAP

As of Wed Oct 9th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.12%, 99.09
USDJPY, -0.33%, $106.94
EURUSD, -0.10%, $1.0960
GBPUSD, -0.59%, $1.2220
USDCAD, -0.09%, $1.3321
AUDUSD, -0.05%, $0.6729
NZDUSD, +0.11%, $0.6297

U.S. Producer Price Index for final demand declined 0.3% m/m in September (consensus +0.1%), as did the index for final demand less food and energy (consensus +0.2%). Price declines were broad based, and not just energy-related, which is indicative of an environment characterised by weaker demand.

The U.S. Commerce Department placed 28 more Chinese firms on its Entity List for their role in fostering violations of human rights against a Muslim minority in China. Beijing’s foreign ministry spokesman denied the allegations and warned about possible retaliation, with a report suggesting China could even leave this week’s discussions one day early. Selling pressure in risk assets appeared to level off after China’s Global Times reported that China remains sincere in reaching a comprehensive deal and intends on proceeding “calmly”, more reprieve came after after Fed Chair Powell said the Fed plans on expanding its balance sheet, but quickly faded into the close on news that the U.S. will impose visa bans on Chinese officials linked to the human rights abuses.

With regards to Powell’s announcement of more easing, “I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis.” – Powell Cites. Goldman assumes a roughly $15bn/month rate of permanent OMOs, enough to support trend growth of the balance sheet plus some additional padding over the first two years to increase the size of the balance sheet by $150bn, restoring the reserve buffer and eliminating the current need for temporary OMOs. That strategy would result in balance sheet growth of roughly $180bn/year and net UST purchases by the Fed of roughly $375bn/year over the next couple of years.

U.S. Treasuries ended a volatile session on a higher note amid growth concerns and an unexpected decline in producer prices for September. The 2-yr yield declined four basis points to 1.42%, and the 10-yr yield declined two basis points to 1.54%. The U.S. Dollar Index increased 0.12% to 99.09. WTI crude declined 0.3%, or $0.13, to $52.66/bbl.

STOCK MARKET WRAP 

S&P500, -1.56%, 2,893.06
Nasdaq, -1.67%, 7,823.78
Nikkei Futures, -0.11%, 21,357.5

S&P 500 fell 1.56% on Tuesday following a series of trade developments that exacerbated concerns about upcoming trade talks and global growth prospects. All 11 S&P 500 sectors finished lower in a risk-off session. Nine sectors lost at least 1.0%, including a 2.0% drop in the financials sector. The real estate sector (-0.5%) declined the least.

Many of the China-sensitive semiconductor stocks, including Ambarella (AMBA 51.79, -5.43, -9.5%), underperformed as many of these companies derive a sizable portion of their revenue from China. The Philadelphia Semiconductor Index dropped 3.1% on Tuesday.

CURRENCY MARKET WRAP 

As of Tue Oct 8th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.20%, 98.98
USDJPY, +0.46%, $107.25
EURUSD, -0.11%, $1.0971
GBPUSD, -0.39%, $1.2287
USDCAD, -0.02%, $1.3304
AUDUSD, -0.47%, $0.6733
NZDUSD, -0.40%, $0.6291

Risk Assets retreated following a Bloomberg report that suggested China was not interested in a complete trade deal at this time, then stabalized after NEC Director Larry Kudlow said comments out of Beijing have been more positive. Throw in some conflicting tweets from a Fox Business reporter, and it was enough to inject more gyrations and confusion into the market.

U.S. Treasuries finished firmly lower, driving yields higher across the curve. The 2-yr yield increased seven basis points to 1.46%, and the 10-yr yield increased four basis points to 1.55%. The U.S. Dollar Index increased 0.2% to 98.98. WTI crude gave up an intraday gain to finish unchanged at $52.79/bbl.

Turkish warplanes have reportedly begun bombing Kurdish positions in Syria, a day after the U.S. announced it was pulling troops from the region. The bombings started late on Monday, with Turkish Air Force jets targeting the Semelka Border Crossing at the Iraq border in northeast Syria, local media reported. Turkey has two main goals in northeast Syria: to drive the Kurdish YPG militia which it deems a security threat away from its border, and to create a space inside Syria where 2 million Syria refugees currently hosted in Turkey can be settled. It had been pushing the United States to jointly establish a “safe zone” extending 20 miles (32 km) into Syrian territory, but repeatedly warned it could take unilateral military action after accusing Washington of dragging its feet. President Tayyip Erdogan has recently talked about pushing even deeper into Syria, beyond the proposed “safe zone” region to the cities of Raqqa and Deir al-Zor, in order to allow still more refugees to return to Syria.

STOCK MARKET WRAP 

S&P500, -0.45%, 2,938.79
Nasdaq, -0.33%, 7,956.29
Nikkei Futures, +0.22%, 21,482.5

S&P 500 declined 0.45% on Monday in a session replete with trade speculation and indecision. Ten of the 11 S&P 500 sectors finished lower amid relatively light trading volume. The energy sector (-0.9%) was today’s laggard, while the communication services sector (+0.04%) finished fractionally higher.

In corporate news, Silicon Motion (SIMO 38.30, +2.45, +6.8%) raised its Q3 revenue guidance, signaling that healthy demand for Apple’s (AAPL 227.06, +0.05, unch) iPhone 11 is funneling through the supply chain. Silicon Motion was one of the few gainers in the Philadelphia Semiconductor Index (-0.7%).

Elsewhere, PG&E (PCG 11.50, +0.63, +5.8%) outperformed following a report that indicated wildfire claims will be capped at $13.5 billion. Uber (UBER 30.37, +0.70, +2.4%) was upgraded to Buy from Neutral at Citigroup on improving risk vs reward. Labor talks between General Motors (GM 34.75, -0.16, -0.5%) and the UAW were said to have taken a “turn for the worse” over the weekend.

CURRENCY MARKET WRAP 

As of Mon Oct 7th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.05%, 98.81
USDJPY, +0.02%, $106.94
EURUSD, +0.11%, $1.0978
GBPUSD, +0.03%, $1.2333
USDCAD, -0.16%, $1.3316
AUDUSD, +0.40%, $0.6769
NZDUSD, +0.25%, $0.6318

U.S. trade deficit for August widened to $54.9 billion (consensus -$54.4 billion) from -$54.0 billion in July, as exports were $0.5 billion more than July exports while imports were $1.3 billion more than July imports. Trade continues to drag on GDP growth, evidenced by the average third quarter real trade deficit being 0.8% above the second quarter average.

U.S. economy added 136,000 jobs to non-farm payrolls in September, which was slightly below expectations (consensus 150,000) but also better than expected when accounting for the upward revisions in August and July. The unemployment rate hit a 50-year low at 3.5% (consensus 3.7%), while average hourly earnings were unchanged (consensus 0.3%).

Some pointed to no wage growth as a disappointment, but the modest jobs growth helped subdue this week’s general growth concerns. Powell also repeated his view that the U.S. economy is “in a good place.” The general sense of relief in the market helped the S&P 500 close above its 50-day moving average (2942).

U.S. Treasuries finished little changed despite the bullish bias in equities. The 2-yr yield increased one basis point to 1.39%, while the 10-yr yield declined basis points to 1.52%. The U.S. Dollar Index finished little changed at 99.81. WTI crude rose 0.6%, or $0.30, to $52.78/bbl.

STOCK MARKET WRAP 

S&P500, +1.42%, 2,952.01
Nasdaq, +1.40%, 7,982.47
Nikkei Futures, +0.24%, 21,320.0

S&P 500 rose 1.42% on Friday, with buying momentum picking up after the release of the Employment Situation Report for September and continuing throughout the day. It was a broad-based rally, led by shares of financial and technology companies, although trading volume was lighter than usual.

All 11 S&P 500 sectors finished higher. Eight sectors finished up at least 1.0%, including noticeable gains in the financials (+1.9%) and information technology (+1.7%) sectors. Apple (AAPL 227.01, +6.19, +2.8%) carried the tech sector higher after the Nikkei Asian Review reported the company asked suppliers to increase production for the iPhone 11 by up to 10%.

HP (HPQ 16.64, -1.76, -9.6%) was left out of today’s rally. The company announced it will reduce its global headcount by 7,000 to 9,000 employees as part of a restructuring plan. HP also authorized a $5 billion share repurchase program and raised its dividend by 10%.

CURRENCY MARKET WRAP

As of Fri Oct 4th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.12%, 98.91
USDJPY, -0.29%, $106.86
EURUSD, +0.13%, $1.0974
GBPUSD, +0.30%, $1.2339
USDCAD, +0.08%, $1.3334
AUDUSD, +0.60%, $0.6745
NZDUSD, +0.49%, $0.6300

U.S. ISM Non-Manufacturing Index for September fell to 52.6% (consensus 55.4%) from 56.4% in August. The key takeaway from the report is that it shows a slowdown in non-manufacturing growth. Accordingly, it is fanning concerns that the manufacturing recession, and trade uncertainty, are having a broader effect on the consumer-oriented services sector.

The 2-yr yield dropped ten basis points to 1.38%, and the 10-yr yield dropped seven basis points to 1.53%. The U.S. Dollar Index declined 0.12% to 98.91. WTI crude lost 0.5%, or $0.20, to $52.4/bbl.

The yield on the fed-funds sensitive 2-yr note fell to its lowest level since September 2017, as expectations for additional rate cuts continued to increase. According to the CME FedWatch Tool, the probability for a 25-basis points cut at the October FOMC meeting is about 90%, and a further quarter-point cut in December is over 50%. Both are up considerably from last week.

STOCK MARKET WRAP 

S&P500, +0.80%, 2,910.63
Nasdaq, +1.12%, 7,872.27
Nikkei Futures, -1.74%, 21,332.5

The S&P 500 dropped as much as 1.1% on Thursday after the ISM Non-Manufacturing Index for September came in weaker than expected, but the market quickly bounced back while rate-cut expectations increased. The benchmark index ended the day up 0.8%, finishing near session highs to recoup some losses from a two-day drop.

All 11 S&P 500 sectors rallied off their lows and finished in the green. The energy (+1.3%), information technology (+1.2%), and real estate (+1.2%) sectors outperformed, as did the Philadelphia Semiconductor Index (+1.7%). The financials sector (+0.2%) squeezed out a last-minute gain, even as Treasury yields continued to decline.

Corporate news included Facebook (FB 179.38, +4.78, +2.7%) announcing a camera-first messaging app, named Threads, for its Instagram platform. Shares of Snap (SNAP 14.30, -0.50) fell 3.4% in response. PepsiCo (PEP 137.93, +3.99, +3.0%) reported positive earnings results. Constellation Brands (STZ 194.26, -12.53, -6.1%) did, too, but shares still declined. Tesla (TSLA 233.03, -10.10, -4.2%) reported record Q3 deliveries but missed estimates.

CURRENCY MARKET WRAP 

As of Tue Oct 3rd, Singapore Time zone UTC+8

U.S. Dollar Index, -0.13%, 99.02
USDJPY, -0.54%, $107.17
EURUSD, +0.26%, $1.0961
GBPUSD, +0.01%, $1.2304
USDCAD, +0.81%, $1.3327
AUDUSD, +0.07%, $0.6709
NZDUSD, +0.32%, $0.6266

U.S. Private-sector payrolls were estimated to have increased by 135,000 in September (consensus 140,000) while the prior month’s print was revised down to 157,000 from 195,000. Private-sector job growth averaged 145,000 in the third quarter, according to ADP, versus 214,000 in the third quarter of 2018.

The market will focus on today’s ISM Non-Manufacturing report which not only provides the best forecast for monthly Non-Farm payrolls figures due Friday, but also will show the state of the service sector which makes up more than 70% of the US economy.

WTI crude lost 1.8%, or $0.90, to $52.64/bbl to extend its recent decline amid bearish inventory data and growth concerns. These growth concerns also contributed to another advance in Treasuries, driving yields lower across the curve. The 2-yr yield declined eight basis points to 1.48%, and the 10-yr yield declined five basis points to 1.60%. The U.S. Dollar Index declined 0.13% to 99.02.

New York Fed President John Williams (FOMC voter) said he thinks monetary policy is “in the right place” at this time. Market participants, meanwhile, increased their expectations for a 25-basis points rate cut at the October FOMC meeting, according to the CME FedWatch Tool. This probability increased to 75.4% from 53.4% one week ago.

STOCK MARKET WRAP 

S&P500, -1.79%, 2,887.61
Nasdaq, -1.56%, 7,785.25
Nikkei Futures, -2.67%, 21,382.5

S&P 500 fell 1.79% on Wednesday, as growth concerns continued to force investors to reassess earnings prospects and premium valuations. The Dow Jones Industrial Average lost 1.9%, the Nasdaq Composite lost 1.56%, and the Russell 2000 lost 0.9%.

Although the market closed off its lows, it was still a disappointing day for the stock market. Notable laggards included Delta Air Lines (DAL 54.35, -2.66, -4.7%) after it raised its FY19 unit cost outlook to +2% from +1% and Exxon Mobil (XOM 67.15, -1.80, -2.6%) after an SEC filing revealed its results could come in lighter than expected due to lower oil prices.

CURRENCY MARKET WRAP

As of Tue Oct 2nd, Singapore Time zone UTC+8

U.S. Dollar Index, -0.23%, 99.15
USDJPY, -0.30%, $107.75
EURUSD, +0.32%, $1.0934
GBPUSD, +0.02%, $1.2292
USDCAD, -0.17%, $1.3218
AUDUSD, -0.63%, $0.6708
NZDUSD, -0.32%, $0.6243

U.S. Total construction spending increased 0.1% m/m in August (consensus +0.4%) following a downwardly revised unchanged reading (from +0.1%) for July.

Risk-Assets remained resilient in early trading, as investors brushed aside another set of weak manufacturing PMIs out of Japan (48.9 vs consensus 49.3) and the eurozone (41.7 vs consensus 41.4). Investors expecting the U.S. to remain resilient in the face of global weakness were disappointed after the ISM Manufacturing Index for September declined to 47.8% (consensus 50.2%) from 49.1% in August for its worst reading since June 2009.

RBA cuts rate by 25bps to 0.75 per cent (as expected). Lowe said the global appetite to save is high relative to the appetite to invest, this has prompted low interest rates globally, which is in turn affecting the global economy. The RBA governor said this issue was a task “for governments and businesses, not for central banks”

Growth concerns were made apparent across other capital markets, too. Demand for Treasuries increased, pulling yields down from early highs; oil prices ($53.60/bbl, -0.52, -1.0%) erased gains and finished lower again; and gold futures ($1488.70/ozt, +15.40, +1.1%) increased in value. The 2-yr yield declined six basis points to 1.56%, and the 10-yr yield declined three basis points to 1.64%. The 10-yr note yield hit 1.75% at its high after a weak 10-yr debt auction in Japan caused a sell-off in Japanese bonds that trickled over to sovereign debt in Europe and the U.S. The U.S. Dollar Index declined 0.23% to 99.15.

STOCK MARKET WRAP 

S&P500, -1.23%, 2,940.25
Nasdaq, -1.13%, 7,908.69
Nikkei Futures, -0.18%, 21,720.0

The stock market gave back more than 1% on Tuesday, as weak manufacturing data for September revived growth concerns that forced investors to reconsider valuations. Today’s 1.23% decline in the S&P 500 sent it below its 50-day moving average (2948) on a closing basis.

All 11 S&P 500 sectors finished lower, with the cyclical industrials (-2.4%), materials (-2.3%), energy (-2.3%), and financials (-2.1%) sectors bearing the brunt of the damage. Even the defensive-oriented, yet richly valued, consumer staples (-0.3%) and utilities (-0.3%) sectors finished lower. This was partly due to lingering doubts if the U.S. consumer would remain resilient, given the weakening employment conditions in the manufacturing sector.

Another notable story was Charles Schwab (SCHW 37.76, -4.07, -9.7%) announcing it will eliminate commissions for stocks, ETFs, and options listed on U.S. or Canadian exchanges. Shares of E*Trade (ETFC 36.51, -7.18, -16.4%) and TD Ameritrade (AMTD 34.64, -12.06, -25.8%), which derive more of their revenue from trading fees than Schwab, plunged accordingly.

CURRENCY MARKET WRAP

As of Tue Oct 1st, Singapore Time zone UTC+8

U.S. Dollar Index, +0.30%, 99.40
USDJPY, +0.11%, $108.07
EURUSD, -0.39%, $1.0899
GBPUSD, -0.02%, $1.2290
USDCAD, +0.05%, $1.3243
AUDUSD, -0.16%, $0.6751
NZDUSD, -0.42%, $0.6261

China’s official Manufacturing PMI did improve to 49.8 in September from 49.5 August, but the reading below 50.0 indicated the sector remained in contraction territory.  The Caixin/Markit factory PMI came in at 51.4 for September, above expectations of 50.2 by analysts in a Reuters poll. The Chicago PMI for September, meanwhile, fell back into contraction territory with a reading of 47.1 (consensus 50.8).

Growth concerns weren’t evident in the stock market, though, as it pushed higher following the release of the Chicago PMI. U.S. Treasuries did see some slight buying interest after the report, which helped bring yields down to their unchanged marks in a relatively tight-ranged session.

The 2-yr yield and the 10-yr yield finished unchanged at 1.62% and 1.68%, respectively. The U.S. Dollar Index increased 0.3% to 99.40. Gold futures, which had rallied alongside a stronger dollar this quarter, declined 2.2% (-$33.10) to $1473.30/ozt.

STOCK MARKET WRAP 

S&P500, +0.50%, 2,976.73
Nasdaq, +0.75%, 7,999.34
Nikkei Futures, +0.28%, 21,807.5

The S&P 500 (+0.5%), Dow Jones Industrial Average (+0.4%), and Nasdaq Composite (+0.75%) posted respectable gains, lifted by shares of Apple (AAPL 223.97, +5.15, +2.4%) after JP Morgan raised its price target to $265 from $243. The Russell 2000 increased 0.2%.

The S&P 500 utilities sector (+0.1%) struggled to match the benchmark index, while the financials (-0.1%) and energy (-0.8%) sectors finished in negative territory. Another decline in oil prices ($54.12/bbl, -1.78, -3.2%) weighed on the oil-sensitive energy stocks, as Saudi Arabia reportedly returned to normal oil output and Chinese data continued to show weakness in the country’s manufacturing sector.’