Putin orders heightened security in zones near Ukraine.

Joe Biden looks to lower prices at the pump.

Euro-area dodges double-digit inflation, but just barely.

Putin orders heightened security in zones near Ukraine.

In the UK, yet another Tory government is teetering toward collapse.

Tesla rained on the earnings parade.

Liz Truss's leadership is on shaky ground.

Applying for EU citizenship has never been so in.

US stocks halted a two-day rally, with Treasury yields hitting multiyear highs.

On the yen—nearing 150 to the dollar—Finance Minister Shunichi Suzuki said his thinking is unchanged.

China stocks have short-lived bounce on quarantine debate.

Australia's jobs post a surprising slowdown.

When it comes to oil, it is now a battle of the U.S v OPEC+ with the U.S prepared to drive down oil prices by releasing oil from the strategic reserves they hold, which they then plan to replace at around $70. With the midterm elections next month, Biden will be keen to reduce gasoline prices at the pumps before voting starts.

Ireland will relax income-to-loan requirements for mortgage borrowers from next year in an effort to widen accessibility. This will become something to monitor as this is what caused the subprime crisis in the States!

BTC dropped perfectly to S2 before rallying to the pivot level. If you do not understand pivot points, we provide a half-day workshop on trading them or a full day technical analysis workshop covering much more. [email protected] for details.

Cable (£/$) has filled the gap on the downside.

Global News

The Fed should keep raising rates, even beyond 4.75%, if inflation is still rising, according to Minneapolis Fed President Neel Kashkari. In remarks on Tuesday, Kashkari said that if core inflation keeps surprising to the upside then "I don't see why I would advocate stopping at 4.5% or 4.75% or something like that." Higher rates raise the likelihood of a US recession, something that Citigroup analysts believe equities are pricing in more than any other asset. Still, Alex Saunders, a quantitative analyst at Citi, said that equities have not priced in enough recession risk as "earnings estimates have further to adjust." BB

· The yen breached the 150 per dollar level after a surge in Treasury yields to multi-year highs widened the gap with Japanese equivalents. The currency hit a new 32-year low. "Don't be surprised if the BOJ comes in again to intervene over the next few days," said Win Thin at Brown Brothers Harriman. BB

A 75bp hike looks like a done deal but the European Central Bank has a lot on its plate at its October meeting. Quantitative Tightening talks are premature but it will seek to mop up bank liquidity. Rates, sovereign and money market spread upside dominates with the 10Y Bund set to test 2.5%. None of this should be enough to support the EUR

When the ECB meets again next week, it looks as if the entire Governing Council could start humming the old Depeche Mode song “I just can’t get enough” as a choir. The hawks have clearly convinced the few doves left of the necessity to go big on rate hikes again. Contrary to the run-ups to the July and September meetings, there hasn’t been any publicly debated controversy on the size of the rate hike. In fact, ECB President Christine Lagarde seems to have succeeded in disciplining a sometimes very heterogeneously vocal club.ING

The BOE ended speculation about its bond sales program last night, confirming they will start early next month but initially exclude long-dated debt at the heart of recent market turmoil triggered by the government’s ill-fated fiscal plans. The decision prompted a sell off in short-term bonds and a serious rally in long-dated gilts. Meanwhile, data showed soaring food prices drove UK inflation back into double digits in September, in a reminder that the country’s problems don't end with fiscal difficulties. BB

Inflation of 9.9% in the eurozone in September marks a huge jump from the 9.1% seen in August. We discussed our first thoughts on the reading here. Now that more detail has been released, let’s see whether there are any positive signs of inflation turning around.

Let’s look at monthly developments, which we judge on a seasonally-adjusted basis to allow for month-on-month comparisons (seasonal adjustments are our own). The one bright spot was goods inflation, which fell on a seasonally-adjusted monthly basis from 0.8% to 0.3%. Other than that, jumps in services and food inflation stand out. Energy inflation continues to be too high as well, so the broad conclusion is that inflation remains far too high across all broad categories. ING

Inflation sizzles and the world's largest foodmaker warns of even higher prices. How much can shoppers take?

· By a whisker: The euro area's first brush with double-digit inflation was revised away by a fraction in a fuller sample of data for September that still revealed rampant price pressures in the region.

· But in the UK, soaring food prices drove inflation back into double figures last month, intensifying pressure on the government and central bank to act. BB

Let it flow. The Biden administration plans to release 15 million barrels of oil from US emergency reserves, and may consider significantly more this winter, officials said. The move is an effort to lower gas prices.BB

Ukrainians are going home even as the war rages on. More than 6 million people who fled have since come back, with most returning from other parts of the country and around a fifth from abroad, according to UN estimates.BB

U.S Industrial output climbed in September and the share of factory capacity in use matched the highest in more than two decades. Goldman Sachs boosted its third-quarter GDP estimate to 2.4% after Tuesday’s release

· Job gains remained robust last month and unemployment matched a five-decade low

· New-home sales surprisingly increased in August, despite surging mortgage rates that have hit sentiment in the industry

Fed policymakers, or “most” of them anyway, remarked at the September meeting that “a sizable portion of economic activity had yet to display much response” to their tightening, minutes of the session showed.BB

Jeremy Hunt is UK PM in all but name, Adrian Wooldridge writes, with Liz Truss nothing more than a specter walking the corridors of power. Hunt's survival points to the power of two great political virtues: patience and toughness. His emollient political manner may suggest a degree of wetness to certain Tories, but that perception of weakness comes from mistaking stridency for strength. BB

New US home construction declined in September and permit applications for single-family dwellings fell, adding to evidence that the highest mortgage rates in two decades are sapping demand and discouraging new builds. BB

As Russia declares martial law in territory it doesn’t fully control and tries to degrade Ukraine’s infrastructure with strikes reportedly killing scores of civilians, on the battlefront he continues to lose. Russian authorities admitted they are fleeing the occupied city of Kherson as Kyiv pushes forward with its southern counteroffensive. 

Military strategists in the West are war-gaming a possible nuclear escalation by Vladimir Putin. They’re also pondering the role disobedience could play, Andreas Kluth writes in Bloomberg Opinion. What if Putin gives the order but others in the chain of command refuse to execute it? Should the US and its allies try to sway those individuals now?BB

Tesla's disappointing results rained on IBM and P&G's parade as sales fell short of Wall Street estimates for the automaker.

· The mighty dollar, along with production and delivery bottlenecks were some of the reasons for its revenue miss. Shares fell in postmarket trading.

· The party was on with IBM and P&G as both sales beat, sending shares up on the news. P&G lowered its full year profit while IBM boosted forecasts.

· Mixed earnings do little to help the market’s “roller coaster to nowhere” trajectory—as Morgan Stanley’s Lisa Shalett put it. This "very impatient market" just wants to be done with declines, she said.

· Well, buckle up because hikes won't be over for a while. At least not until (potentially) next year, Neel Kashkari said, when there is clear evidence that core inflation is slowing.

· History tells us that once the Fed begins to change policies, it moves rates farther and lasts longer than anybody ever wants to anticipate, according to market strategist Dennis Gartman, who doesn't see the winds turning until at least late next year.BB

A growing number of Americans are applying for EU citizenship, taking advantage of their ancestry to gain a new passport and expand their options for work, life and travel. And others are simply tired of the political division in the US. “Every month is a record month,” said Giorgio Nusiner, principal at the Italian American Citizenship Assistance Program.BB

Germany is at risk of wasting billions of euros by building out liquefied natural gas imports instead of moving toward sustainable alternatives like energy efficiency, according to a new report by think tank E3G. The country could be on the line for about €200 billion of additional costs for gas imports by the end of the decade, causing a doubling of bills for consumers, and should instead focus on more sustainable measures. BB

Chinese President Xi Jinping seems to have acquired another new title—and this one is stoking fears of a Mao Zedong-style personality cult.

In the latest sign Xi is set to further consolidate even more unofficial authority within the Communist Party, this week has seen cadres increasingly referring to Xi as Lingxiu, or “leader.” It’s a revered title of praise previously reserved for Mao, the founder of the People’s Republic, who was referred to as “the great leader” when the Cultural Revolution started in 1966. At the same time, it risks stoking a backlash among those who see Xi amassing too much power. Read the full story here.

“The result of this Maoist revival will probably be a Great Slide Backward, if not worse,” according to Bloomberg Opinion’s Mark Gongloff.BB

Market levels (all analysis is based on CME futures contracts)

 
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The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest.

Chris Tubby

Senior Director Trading and Education

Symax Fintech