US stocks notched mild gains with trade choppy amid massive Treasury bear-steepening - Newsquawk Asia-Pac Market Open

• US stocks were marginally firmer on what was a choppy session in the face of massive Treasury bear-steepening momentum despite the absence of any major catalyst, while the data releases were light with the Chicago Fed's national activity index and Dallas Fed's manufacturing survey both worsening.
• USD continued to strengthen and the DXY briefly rose above 106.00 amid further upside in yields. EUR was pressured by the firmer buck and despite the better-than-expected German ifo data, while there were several ECB speakers again and an insider suggested that the probability of another ECB hike may be a bit less than 50% with any further rate hikes likely to be in December at the earliest.
• Looking ahead, highlights include Japanese Services PPI & BoJ Core CPI, Singapore Industrial Production, Speech from Fed's Kashkari, Supply from Australia & Japan.

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LOOKING AHEAD

• Highlights include Japanese Services PPI & BoJ Core CPI, Singapore Industrial Production, Speech from Fed's Kashkari, Supply from Australia & Japan.

US TRADE

• US stocks were marginally firmer on what was a choppy session in the face of massive Treasury bear-steepening momentum despite the absence of any major catalyst, while the data releases were light with the Chicago Fed's national activity index and Dallas Fed's manufacturing survey both worsening.
• SPX +0.40% at 4,337, NDX +0.46% at 14,769, DJIA +0.13% at 34,007, RUT +0.44% at 1,784.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Goolsbee (voter) said there is a bigger risk of inflation staying too high and thinks they are getting inflation down to the target, according to a CNBC interview.
• US House Speaker McCarthy said the House will vote on an appropriations bill on Tuesday.
• Moody's said a US government shutdown would be credit negative for the US sovereign, while it was separately reported that a government shutdown would delay the release of key economic data.

DATA RECAP

• US Dallas Fed Manufacturing Business Index (Sep) -18.1 (Prev. -17.2)
• US National Activity Index (Aug) -0.16 (Prev. 0.12)

FIXED INCOME

• US Treasuries bear-steepening momentum continued at full force in the absence of fresh catalysts.

FX

• USD continued to strengthen and the DXY briefly rose above 106.00 amid further upside in yields.
• EUR was pressured by the firmer buck and despite the better-than-expected German ifo data, while there were several ECB speakers again and an insider suggested that the probability of another ECB hike may be a bit less than 50% with any further rate hikes likely to be in December at the earliest.
• GBP marginally softened but with the downside in GBP/USD stemmed by support around 1.2200.
• JPY remained pressured and approached just shy of the 149.00 level against the dollar.

COMMODITIES

• Crude was little changed after having recovered off lows seen in the NY morning and battled off headwinds from a firmer dollar.
• Chevron (CVX) is readying a new oil drilling push in Venezuela to boost output and wants to add two drilling rigs in early 2024 as it aims to ramp output to 200k BPD by 2024-end, while the drilling plan will not require new US approvals as the areas involved are included in Chevron's license that it received last November, according to Reuters sources.
• Natural Gas Pipeline Co declared a force majeure for remediation work on the AM#2 mainline.
• Nigeria's Qua Iboe crude stream is to load 158k BPDin November vs. 153k BPD in October, according to a trade source cited by Reuters.
• Russia is looking to secure additional budget revenues by raising gas prices for domestic industrial consumers and a subsequent increase in mineral extraction tax, according to a Reuters source.
• Russia is mulling tweaks to exempt some oil production from the export ban with exemptions on bunker fuel and gasoil, according to Bloomberg.

GEOPOLITICAL

• US imposed trade restrictions on additional Chinese and Russian companies over a scheme to supply Russia with components to make drones, according to the Commerce Department cited by Reuters.
• Philippines successfully removed "hazardous" floating barriers in the South China Sea upon instruction of the President and special task force.

ASIA-PAC

NOTABLE HEADLINES

• China's MOFCOM said China and the EU reached agreements on supply chain cooperation in which the agreements also include WTO reform and financial opening, while China urged the EU to exercise prudence in trade remedy.
• Chinese Vice Premier said in a meeting with the EU Trade Commissioner that China is willing to expand imports from the EU and hopes the EU will lift restrictions on high-tech products to China. Furthermore, they agreed to further opening up in the financial sector and will strengthen cooperation and coordination of macroeconomic policies.
• EU Trade Commissioner Dombrovskis said they are setting up a new working group on financial regulation with China.
• China's gaming regulator granted the approval for 89 domestic games in September in which the list of approved games includes titles belonging to Baidu (BIDU).
• Evergrande (3333 HK) missed interest payments on a CNY bond issued in 2020 and its unit missed payments on a CNY 4bln onshore bond, according to Bloomberg.
• Japanese PM Kishida said they are aiming to make this year the beginning of doubling assets and shifting the flow of funds away from saving and towards investment. It was also reported that PM Kishida is to instruct ministers to compile an economic package on Tuesday and is to strengthen tax breaks to boost wage hikes.
• BoJ Governor Ueda said it is important for FX to move stably reflecting fundamentals and the BoJ hopes to work closely with the government and scrutinise the impact of FX moves on the economy and prices. Ueda also commented that the BoJ will not directly target FX in guiding monetary policy and may end YCC when a stable and sustainable achievement of the 2% inflation target is foreseen. However, he added that he does not have a clear image in mind yet on how to tweak YCC including the 10yr JGB yield target.
• BoJ Deputy Governor Uchida said they need to patiently continue monetary easing and need to closely watch currency market moves, while he added they are not in a situation where the achievement of 2% inflation is in sight.

EU/UK

NOTABLE HEADLINES

• EU member states discussed the UK's request for a 3yr postponement to delay tariffs on EV sales between the UK and EU, while Berlin received some support from other members in backing the tariff delay but France and the EU Commission are holding out, according to FT sources.
• ECB's Lagarde said recent indicators point to further weakness in the third quarter and reiterated that policy rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target. Lagarde also commented that the labour market is finally adjusting and that the rate level and duration are both key, while she added that a recession is not part of the baseline and the ECB is not talking about rate cuts.
• ECB's De Cos said must avoid insufficient and excessive tightening, while he added that if rates are kept at the current 4.0% level long enough, they should reach the 2% goal.
• ECB's Schnabel said since they started raising interest rates, broad money growth M3 had slowed down sharply and turned negative on an annual basis in July, while lending to firms and households had essentially stalled.
• ECB's Villeroy said maintaining the current level of interest rates will lower inflation and he sees a risk that the ECB could do too much in the future, while he added they should focus on the persistence of rates rather than pushing rates up.
• ECB insider said the probability of another rate hike by the ECB may be a bit less than 50% and any further hike would likely be in December at the earliest. It was also stated that an October hike would probably only be considered if new inflation data was very bad and predicting the timing of the first rate cut is a guessing game under such high uncertainty, according to Econostream.
• Italy is to target the 2024 budget deficit at between 4.1% to 4.3% of GDP vs 3.7% goal set in April, according to Reuters sources.

DATA RECAP

• German Ifo Current Conditions New (Sep) 88.7 vs. Exp. 88.0 (Prev. 89.0)
• German Ifo Business Climate New (Sep) 85.7 vs. Exp. 85.2 (Prev. 85.7, Rev. 85.8)
• German Ifo Expectations New (Sep) 82.9 vs. Exp. 82.9 (Prev. 82.6, Rev. 82.7)