DXY was weak last night, EUR and CNY strong:
But the Australian dollar was notably weak anyway:
Gold is parked in neutral:
Oil too:
Metals went a bit silly:
Miners bounced:
EM stocks too:
Junk is OK:
Treasury curve keeps on steepening vis blue wave:
Stocks tried but largely failed to rally:
Westpac has the data wrap:
Event Wrap
US House Speaker Pelosi said she’s optimistic a deal could be reached on fiscal stimulus. Pelosi and Treasury Secretary Mnuchin are set to talk again at 3pm, which Pelosi said would be a final attempt to reach agreement on a pre-election stimulus package. Senate Majority Leader McConnell said if a comprehensive stimulus package comes to the Senate that has been passed by the House and is backed by President Trump, “we would consider it”. Against that, Republican Senator Thune said that “it would be hard” to find enough GOP members to back a $1.8 trillion stimulus, the scale of the White House’s most recent proposal.
US September housing starts rose 1.9%m/m to 1.415m (vs est. 1.465m), from August’s 1.388m (revised down from 1.416m). However, the value-added single homes rose 8.5%m/m, with the total pulled down by a drop in multi-home starts. Housing permits were decidedly more robust overall, with a rise of 5.2%m/m to 1.553m (vs est. 1.520m, prior 1.476k), driven by single homes (+7.8%m/m).
Covid case counts continued to rise in Europe. Germany recorded a record rise of 8,397, Italy 10,874 and UK 21,331. Despite continued disputes with local authority leaders, UK imposed the highest level (Tier 3) restrictions on Greater Manchester.
NZ Treasury announced the syndicated launch of a new 2028 NZGB, expected to transact in the week beginning 26 October. Joint lead managers are ANZ, BNZ, UBS and Westpac.
Repeat after me: no more stimulus is coming. Meaning the bond market is pricing in reflation as the economy goes the other way entirely, driven by this:
Deaths have bottomed, sadly:
And the US economy is stalling:
As stimulus cheques dry up:
This is not unfamiliar territory. Markets addled by stimulus looking forward as the virus destroys the ground under their feet.
Looks like February 2020 and the Australian dollar is vulnerable.
