The US dollar was firm:
Other majors soft:
Commodity currencies strong:
Gold soft:
Oil strong:
Base metals soft:
Big miners strong:
US and EM high yield weak:
US bonds weak:
And stocks weak:
A strange mix. The oil rally continued but without credit or dirt support yet commodity currencies and miners rallied anyway. Stocks weakness may have been driven by a rebound in the ISM:
The September PMI® registered 51.5 percent, an increase of 2.1 percentage points from the August reading of 49.4 percent. The New Orders Index registered 55.1 percent, an increase of 6 percentage points from the August reading of 49.1 percent. The Production Index registered 52.8 percent, 3.2 percentage points higher than the August reading of 49.6 percent. The Employment Index registered 49.7 percent, an increase of 1.4 percentage points from the August reading of 48.3 percent.
Which firmed up a Fed hike for December a little.
More widely, our Q4 black swan gauntlet tightened a little as Donald Trump closed the polling gap to 2.5 points:
It was a bank holiday in Europe but Deutsche shares resumed their falls in New York, down -3%, as Friday’s rumour of a DoJ settlement disappeared, from Reuters:
The Wall Street Journal reported on Sunday that the bank’s talks with the DOJ were continuing. Details are in flux, with no deal yet presented to senior decision makers for approval on either side, the paper said, citing people familiar with the matter.
“Clearly, so long as a fine of this order of magnitude ($14 billion) is an even remote possibility, markets worry,” UniCredit Chief Economist Erik F. Nielsen wrote in a note on Sunday.
Ratings agency Moody’s said it would be positive for bondholders if the lender could settle for around $3.1 billion, while a fine as high as $5.7 billion would dent 2016 profitability but not significantly impair the bank’s capital position.
In Italy, as referendum polls sink, PM Renzi is suddenly a little less committed to resigning if he loses, also Reuters:
The government will not resign whatever happens in the forthcoming referendum on constitutional reform, Interior Minister Angelino Alfano said on Sunday, looking to allay fears over the stability of Italy.
Prime Minister Matteo Renzi has said on repeated occasions that he would stand down if he loses the Dec. 4 vote, but in recent weeks he has refused to be drawn on the question, saying it was distracting from the debate on the merits of the reform.
Most recent polls have put the ‘No’ camp ahead, raising concern in EU capitals that Italy might find itself without a strong government at a time when the bloc is still reeling from Britain’s vote to abandon the European Union.
But Alfano, who is head of a small center-right party and is not a member of Renzi’s Democratic Party (PD), said the government would stay in place, regardless, indicating that the prime minister himself would not resign.
It seems oil is holding things together for now but the higher it goes the more likely the Fed pulls the trigger.
