In the overview we did something we usually don't do, highlighted (bolded) various factoids that Mr. Chandler points-out.
From Marc to Market:
Overview: Investors worry that surging energy prices will sap economic activity and boost prices. It is sparking a sharp drop in equities and bonds while lifting the dollar. The Nikkei fell for the eighth consecutive session, and today's 1% drop brings the cumulative decline to 9%. South Korea's Kospi also fell by more than 1%. Some of the smaller markets in the region, like Malaysia, Indonesia, and the Philippines, rose by more than 1%. They are an anomaly. Europe's Dow Jones Stoxx 600 is off nearly 2%. US S&P 500 and NASDAQ futures are also trading more than 1% lower. Bonds prices are also under pressure. The US 10-year yield is up a little to 1.54%. European benchmark yields are 2-5 bp higher and at fresh three-month highs. The dollar is broadly higher, with the Antipodean and Scandis suffering the most. The Reserve Bank of New Zealand delivered a 25 bp rate hike, signaled more to come, and the New Zealand dollar is one of the weakest major currencies, off 1% near midday in Europe. The Japanese yen and Swiss franc are among the most resilient. Emerging market currencies are under pressure. The South African rand, Hungarian forint, and Mexican peso are off more than 1%, and the JP Morgan Emerging Market Currency Index is off for the third consecutive session and eight of the past ten. Gold stalled around $1770 for the past two sessions and was sold to a four-day low by $1746 before stabilizing. Energy prices continue to climb. November WTI approached $80 a barrel, its fifth consecutive advance, before pulling back to the $78.25-$78.50 area. Nat gas advanced by more than 9% yesterday in the US and rose further today. Iron ore prices slightly changed in Singapore, while copper prices are off 1.5% after falling nearly 1.1% yesterday. In the previous two sessions, the price of copper had risen by about 3.5%.
Asia Pacific
The Reserve Bank of New Zealand became the second high-income country to hike rates. The 25 bp hike was widely expected, though yesterday, some observers seemed to have second thoughts. However, officials clearly signaled that this was the start of a cycle. The swaps market has two more hikes priced in this year. The next meeting is on November 24. Separately, the Reserve Bank of Australia lifted the interest rate buffer by 50 bp to 3% on mortgages. That is, when housing loans are made, lenders need to assume debt servicing costs are 300 bp higher than the loan product rate.
Top US and Chinese officials are to meet this week in Zurich, and among the potential outcomes could be a Biden-Xi virtual summit. Reports suggest that when Biden sought a meeting recently, Xi insisted that the US de-escalates its rhetoric, which it does not appear to have done. Around the same time, the US asked Beijing to stop the sorties into Taiwan's air defense identification zone, which it hasn't. Meanwhile, Japan's new Prime Minister, Kishida, has kept the foreign and defense ministers from the Suga government, signaling continuity. Nevertheless, as we have noted, a consensus appears to have emerged for a more assertive stance in the face of Beijing's regional aggression. In this context, we note that Malaysian officials have formally protested encroachment by Chinese ships in the waters of Borneo.
South Korea reported firm September inflation figures, which will likely spur the central bank into hiking rates as early as next week (October 12). The headline CPI stood at 2.5% last month, the sixth consecutive month above the 2% target. The core rate ticked up to 1.9% from 1.8%. The central bank hiked its seven-day repo rate by 25 bp in August to 75 bp. This year, the Korean won is off almost 9%, the worst regional performer after the Thai Baht's 11.8% fall. Around a third of the won's decline has taken place in the past month....
....MUCH MORE
There's a lot going on.
