Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Marketmind: Not nice out there

EconomyOct 05, 2021 03:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A person works on a Polaris ATV assembly line at its manufacturing and assembly plant in Roseau, Minnesota, U.S. June 7, 2021. REUTERS/Dan Koeck

A look at the day ahead from Sujata Rao.

Inflation? Reflation? Stagflation? Whichever ultimately turns out to be correct, markets are running scared, with world stocks at the lowest since July and some 6% off the record highs hit a month ago.

Brent crude has hit new three-year highs above $80 a barrel after OPEC+ producers stuck to their output policy despite pressure to pump more oil. Record high gas prices and below-average European inventories portend a winter of higher heating and power bills for consumers and small businesses alike.

China's property sector problems and a power crunch that's idling factories meanwhile pose a threat to economic growth; developer Fantasia has joined Evergrande in missing a coupon payment and borrowing costs for "junk"-rated Chinese firms have soared.

Now add in the risk of a default in the world's biggest economy. This according to Moody's (NYSE:MCO) could cause U.S. economic activity to shrink nearly 4%, eliminate at a stroke 6 million jobs and lift unemployment towards 9%.

All that is keeping U.S. 10-year bond yields well below three-month highs touched last week while sending up shortest-dated borrowing costs -- one-month Treasury bill yields are at the highest since last October.

U.S. credit default swaps, derivatives investors often use to hedge exposure, have risen to one-year highs.

For a graphic on Spiking credit default swaps:

https://fingfx.thomsonreuters.com/gfx/mkt/egvbkydkkpq/Credit%20default%20swaps.png

Energy costs, together with a dollar standing near one-year highs, will inevitably tighten global financing conditions, even as more central banks start to remove pandemic-time stimulus.

The Federal Reserve will almost certainly start unwinding stimulus from next month and New Zealand on Wednesday is expected to become the second developed country after Norway to hike rates.

Wall Street is attempting to claw back some of its losses from Wednesday when the Nasdaq plunged more than 2%. Futures are pointing higher there and European shares just opened firmer, although Japan's Nikkei slipped to one-month lows.

Key developments that should provide more direction to markets on Tuesday:

--The Reserve Bank of Australia held their monetary policy unchanged in its Tuesday meeting, as expected.

--Japan's services sector activity shrank for a 20th straight month in September

-UK passenger cars data

-BOE’s Dave Ramsden speaks

-ECB board member Fernandez Bollo speaks

-Fed speakers: Richmond Fed’s Thomas Barkin, Vice Chair for supervision Randal Quarles

-Euro zone PPI

-Romania central bank meets

-U.S. trade balance/ISM PMIs

Marketmind: Not nice out there
 

Related Articles

Four ways to navigate the holiday tipping vortex
Four ways to navigate the holiday tipping vortex By Reuters - Dec 08, 2021

By Chris Taylor NEW YORK (Reuters) - When it comes to holiday tipping, is America a nation of Scrooges? That is what Ted Rossman wondered. When CreditCards.com recently polled...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email