The presenter delivers a concise morning market update for Tuesday, 12 October 2021, beginning with a promotion for an in‑person/Zoom lecture at the Society of Technical Analysts on applying macro fundamentals to short‑term trading. He then reviews US equity performance (S&P, Dow, Nasdaq down ~0.7%), the negative hand‑over to APAC, and early European market moves (DAX down ~150 points). Currency markets show a slightly weaker dollar (DXY down) while major pairs are flat. US Treasury yields rise, with the 10‑year up about 8.5‑9 ticks. In APAC news, the MSCI Asia‑Pac index ends a three‑day rally, led by tech losses, and China intensifies regulatory inspections of its largest state‑run banks, insurers and debt managers – the first such sweep in six years. Evergrande misses its third bond payment in three weeks, with property‑issued bonds among the top losers on the Shanghai exchange. The presenter notes a risk‑off tilt: equities modestly down, fixed income and gold gaining (gold up $6). He highlights a 22% drop in US COVID cases and a 20% fall in hospitalisations, suggesting a healthier backdrop for the Fed’s November taper. UK data show unemployment at 4.5% and earnings at 6% (both in line), with little market reaction. He previews upcoming economic calendar items: German ZEW sentiment, US JOLTS, large Treasury auctions ($58 bn 3‑yr, $38 bn 10‑yr), a German Schatz auction, and speeches by ECB officials (Knot, Lane, Elderson) and Fed officials (Clarida, Bostic). Finally, he reminds listeners to register for the lecture and a live simulation with UCLA. The briefing ends with an invitation for questions and a wish for a good day.
Chapters
Okay, very good morning. It's Tuesday the 12th of October. Hope you're doing well. And before I begin, I just wanted to mention this. This is the webpage for the Society of Technical Analysts in London, and today, tonight in fact, 6:30 PM, I'm going to be giving a lecture in person to the community at the STA, and there is a live Zoom link as well. So I think the way it's going to be delivered is I'll be delivering to a lecture theater Twitter, but there's going to be a Zoom video camera doing it for online as well. So what I'm going to do is I'm going to drop the link. Feel free to register, um, love to have you on board. There'll be a Q&A afterwards, and basically I'm going to be talking about all things kind of macro fundamentals and how to apply that to short-term trading. So check that out, uh, as I said, free to join. And so if you're free tonight, love to have you with me. But otherwise, let's get straight into it and talk about what's going on in markets morning and relatively quiet overall. Equities, we finished lower on Wall Street, down around 0.7% in the case of the S&P and the Dow. Pretty uniform closes, in fact. The Nasdaq was down a similar margin as well, and that led to a kind of negative handover to the Asia-Pacific session. And consequently, this morning, the DAX is down about 150, and the Nasdaq future, S&P toward the lower end of the range that was really seen in the early part of the APAC session. So as you can see here in terms of the S&P just having a bit of a retest down at 4321.5, which was that high seen just as APAC got underway, as we saw a bit of an extension, a continuation of the general downward trend that was seen through much of the US session yesterday. Similar setup in the Nasdaq. In the currency market, the dollar just a touch weaker. The DXY is trading down a little bit this morning, having just reverted back from around the highs that we've seen in the overnight session. Otherwise then, lifting the major currency pairs, top left, EURUSD and Cable, pretty much flat at the moment, but were a little lower overnight. And in the 10-year, we're up around 8.5 ticks. And in fact, the US 10-year, as Europe just steps in, just breaking out of a bit of a consolidation range that we'd been trading through yesterday's session. And so a couple of things then, starting off with the APAC news. And the MSCI Asia-Pac Index actually snapped a 3-day climb. The technology sector was leading the losses overnight, but there's still a few things ongoing in that region, namely further on the, the crackdown that's been happening from the state. And the latest now, reports suggest overnight that China is inspecting the nation's financial regulators, the biggest state-run banks, insurers, and bad, uh, bad debt managers for the first time in about 6 years. Um, so that's the latest, you know, further broadening the remit, and that's made a little bit of people apprehensive once again. And separately as well, the other thing is China Evergrande hasn't really gone away, it's just kind of fallen out of the spotlight a little bit given the energy crisis that the globe has been facing at the moment. But The latest here is that China Evergrande missed overnight its third round of bond payments in 3 weeks. Uh, the Shanghai Stock Exchange data showed the top 5 losers among exchange-traded bonds in morning deals were all issued by property firms. So still a lot of nervousness on that particular side of things. And so yeah, getting things underway this morning, uh, you've got a little bit in terms of the equity-fixed income mix. And gold. In fact, the kind of traditional, more kind of risk-off correlation at the moment. So equities trading a little heavy, fixed income, gold seeing a moderate bid at the moment. As I said, the T-notes up 9 ticks, gold's up about $6 at the moment. Otherwise, it is really quiet actually. In fact, in terms of overnight news, there's not really too much for me to talk about. I didn't really want to start delving into stories that were inappropriate in terms of that aren't really going to move markets in the short term. So there's still other interesting things about UK politics and what are they going to do to kind of bail out some of these energy firms to ensure that consumers don't get further squeezed by impending price hikes given the, the energy price surge at the moment. But otherwise, it's fairly quiet. And so one thing that I did see in the FT was that US COVID cases down by 22%. And actually, if you're just having a look at a couple of these graphics here from the latest COVID numbers, because often you don't really hear this get mentioned as much, certainly when the case rates are going down, because generally media has much more of a narrative to spin when case rates are going up. And since the end of the summer, in case rates in the US certainly have been declining at a fairly decent and healthy pace over the last 2 weeks The case rate down 22%, hospitalisations down about a fifth as well. So consequently, the pace of deaths has slowed, which is a little bit of a lagged effect, of course, and as we've seen throughout the entire pandemic. But all kind of relative positive signs here. And, you know, another reason why as well, as far as the November timetable for tapering to commence, that this would seem appropriate in terms of further economic reopening. And so although a lowball print this time round last Friday, leisure and hospitality jobs with more in-person type service delivery to, to recommence as we go further forward in time, if these patterns are to continue going forward. However, one thing to be aware of is that it's a little bit fractured depending on where you are in the US. So actually the Northeast is seeing, is seeing more elevated cases against the South, which were some of the areas which were more hard hit during the latter part of summer, they're actually seeing the most aggressive declines at the moment. Otherwise, straight into the calendar. And this morning you've already had a couple of UK data points. Nothing really too interesting, to be quite frank. These were jobs data numbers. So the unemployment rate in the UK was in line at 4.5% and the average earnings ex bonus was in line at 6%. So if you're looking at the sterling chart this morning, there really hasn't been any move to speak of, of that greater interest. And in terms of any corporate earnings, certainly UK, Europe doesn't really kick off for another week or two. And as far as US, the big banks don't really commence until Wednesday. They're going into the second half of the week. So what else have we got? So this morning you've got the German ZEW numbers. What are we expecting there? Well, economic sentiment for October. Is expected to show investor morale fell for a 5th straight month, holding at its lowest level since the pandemic fuel drop in March 2020. And then we got JOLTS job openings, just given again the focus on the labor market, the kind of plentiful jobs at the moment and trying to diminish that, that slack at the moment, getting people back into the workforce. No doubt that number will be closely followed as well in the afternoon session. But overall, quite quiet, I would say, in terms of data. So We are welcoming the US back. Obviously the bond market was closed yesterday and that does mean that we do have a bit of a concentrated fixed income auction process this afternoon and evening. You've got $58 billion in the 3-year note auction at 4:30, $38 billion in the 10-year note auction. So two coming at you at 4:30 and 6 PM for any bond traders. You've also got UK and a Schatz auction coming out of the German Bundesbank this morning. From a speaker's perspective, quite ECB-focused. You've got ECB's Knot speaking at 12:30, Lane, who is the chief economist, speaking on the economic outlook at 1:30, ECB's Elderson at 2:00, and then you've got Fed voters Clarida and Bostic speaking at 4:15 and 5:30. So worth marking that down on your calendar as well. But that is pretty much it. So a couple of other housekeeping things. Don't forget to register on the link below. I'm speaking much more from a trading perspective on applying macro fundamentals at the Society of Technical Analysts tonight. Also, if you're in, if you're in America, we are actually— the team is doing a live simulation session with the University of UCLA in California. Later on today as well. So I'll drop some info about that as well if you're in that region, if you want to take part. All right, guys, that is it. So any questions at all, let me know. Otherwise, have yourself an excellent day ahead and I'll catch you tomorrow. Thanks very much.
