There were no notable U.S. prints on Tuesday. An overnight spike in U.S. Treasury yields spooked investors in early U.S. trading, as the benchmark 10-yr yield rose as high as 3.26%. However, renewed buying interest drove prices up and yields down, which eased some of the early angst. The 10-yr note yield settled Tuesday’s session at 3.21%, down three basis points from Friday. Risk-Aversion overhang lingers as markets continue to be soft. USDJPY down -0.19%, $113.02.
German Trade Balance at 18.3B vs expected 15.9B. Deputy PM Salvini was again crossing the wires through the European morning, saying that the government won’t backtrack on the budget even if local yields keep soaring. He also said that the country is not planning to leave the EU, but would like to see a change in Union rules. Euro up 0.12%, $1.1506. In Brexit, according to diplomats familiar with the matter, both economies have narrowed the gap on the Ireland border issue, but some differences remain. Also, that an agreement on the future trade relationship could be done by November, while the divorce terms could be out next Monday. Sterling up 0.51%, $1.3157. WTI crude climbed 0.8% to $74.86/bbl, as some oil production has been shut down in the Gulf of Mexico in anticipation of Hurricane Michael. USDCAD down -0.21%, $1.2939. Aussie up 0.51%, $0.7114.
S&P 500 down -0.14%, 2,880.34. Nasdaq up 0.26%, 7,371.62. Nikkei down -1.34%, 23,502.00.
Stocks were confused on Tuesday amid concerns about growth, rising interest rates, and the impending arrival of Hurricane Michael in Florida’s panhandle. The broader market seemed reluctant to make a decisive move in any direction, as the S&P 500 index crossed back and forth across the unchanged line numerous times during the trading session. Markets looked to have gotten caught up on economic and earnings growth concerns that were fostered by the the International Monetary Fund (IMF) cutting its 2018 and 2019 global growth outlook to 3.7% from 3.9% and a third quarter earnings warning from specialty chemicals company PPG Industries (PPG 98.56, -11.02, -10.1%), which pinned some disappointing guidance on currency pressures, cost inflation, softer demand in China, and a lower end-user demand in Europe and the U.S. PPG’s warning rattled the materials sector, which plunged -3.4%. Several sector components finished trading at their 52-week lows.
