From Marc Chandler at Bannockburn Global Forex:
Overview: The markets are continuing to be impacted by the possibility that Fed officials planted a press report to put 50 bp cut back on the table after the market had moved away from it after the recent jobs data and CPI. In the Fed funds futures, there is around an 80% of a half-point move on Wednesday discounted and about an 80% chance of a second 50 bp cut this year. This has taken a toll on the greenback and cut short the technical correction to last month's slide. The US dollar is off against most of the world's currencies and has been sold below JPY140 for the first time since July 2023, though Japan, China, and South Korean markets were closed for local holidays. It managed to resurface above JPY140 in late European morning activity. The Canadian dollar continues to lag in the move against the greenback amid speculation that the Bank of Canada may also move by 50 bp in one of its last two meetings of the year. Emerging market currencies are mostly higher, led by central European currencies.
Asia Pacific equity markets were mostly higher, and Europe's Stoxx 600 is posting a small gain, which if sustained would be the fourth consecutive advance. US index futures are narrowly mixed. European 10-year yields are mostly slightly higher today, while the 10-year Treasury yield is practically flat at 3.65%. The two-year yield is off nearly two basis points to3.56%. Gold likes the weaker dollar and lower rates and has set a record high near $2590. After settling near session lows before the weekend (~$67.75), November WTI is trading firmer though within Friday's range. It is near $68.20. It rose 1.15% last week to snap a four-week, 10.5% drop....
....MUCH MORE
He goes on to note that larges swaths of Asia are closed:
....Asia Pacific
Japan's markets were on holiday today, for Respect-for-the-Elderly. They will be closed next Monday for the autumn equinox. Chinese markets are closed today and will remain shut tomorrow for the mid-autumn festival. Remember Chinese markets are closed October 1-7, celebrating the national foundation, known as "Golden Week." South Korean markets also closed, and for the next two day for the Harvest Moon holiday....
And in the Americas section:
....many suspect that the Chair itself planted a press story last week to put a 50 bp cut back on the table. The derivatives market now has about an 80% chance of a 50 bp cut discounted. And more. The derivatives market is discounting 120 bp of easing over the three remaining meetings of the year. That is tantamount to at least one 50 bp cut and about an 80% chance of a second half-point move....
When we say "MUCH MORE" we mean "MUCH MORE."
