Hollis Johnson
In brief:
- US and German bonds are weaker, sending their yields higher as usual. Investors are shedding the relatively safe assets after a gauge of British manufacturing jumped to a two-year high. Also, Brent crude oil, the international benchmark of prices, is back above $50 per barrel following OPEC's agreement last week to discuss an output ceiling later this year.
- The jobs report on Friday is the big economic release of the week. During the trading session on Monday, September auto sales and data on US manufacturing are due.
And now, here's Lutz:
Good Morning! Traders anticipate a start to this Jobs Week, as Rosh Hashanah - coupled with Holidays in Asia and in Germany - [thins] trading desks globally. It's a mixed bag in Europe, with the DAX closed, but EU Fins leading to the downside, off 40bp as there is No DB Deal Yet (ADR is down 2% here). Energy shares are among the leaders across the continent, while the FTSE is Leaping 1.2% as the Pound Drops on Article 50 headers. Spain and Italy are seeing weakness as their Banks fall, but Volumes across Euro exchanges is all 30-50% light to normal. In Asia, Nikkei up nearly 1% higher as Banks and Autos rallied - Aussie closed up 80bp as the Big Banks rallied and BHP jumped nearly 2% - Hong Kong closed 1.2% higher - Macau +2.3% as September GGR was better - while South Korean and Malaysian markets were shut for holidays Monday, while Chinese markets were shut for the weeklong "Golden Week".
We continue to see hawkish moves in Bunds and Treasuries, with both yields getting upside of Friday's peaks right now. Strong Global PMI data rolling through, coupled with Oil higher, seems to be the main drivers of flows. The $ is holding a bid as it makes gains against Euro and Yen - but the "Brexit start date" headers have the pound nearing 30+Y lows against the $. Base Metals are under some pressure as the $ falls and Asian Buyers go on vacation - but interesting Gold holding a bid despite the stronger $. Oil continues to squeeze, with WTI adding 1% as BP shuts a North Sea Platform and Matthew rocks the Caribbean.
Ahead of us today, we get Total Vehicle Sales for September (est. 17.45m), along with the launch of the Tick Pilot program to widen spreads back towards 5c increments (Test Group 1: JAKK, ISCA, FET, CFI, SGA / Group 2: GBT, TTS, HUBS, RATE, ERN). At 9:45 we get Markit US Manufacturing PMI, just before the "Official" release of ISM Manufacturing at 10. At Noon, ECB's Mersch Speaks in Luxembourg - and at 3pm Fed's Loretta Mester does a Bloomberg TV interview. Quiet in Washington, with the House and Senate in recess.