U.S. Indexes saw a gyration on Tuesday, as they were initially weighed on by continued heightened US/China tensions and mixed US bank earnings. Afterwards, Indices reversed through the majority of the US session, before once again falling near the close as Trump once again upped his rhetoric on China. Early Tuesday morning, MOFCOM said it is taking countermeasures against five US-linked firms and said the US cannot have talks while threatening new restrictions. Meanwhile, USTR’s Greer later stated they have had constructive talks with China over the past six months, but China’s rare earth measures are disproportionate, and 100% US tariffs on China could come sooner than November 1st. Trump concluded the day’s updates on China, threatening to terminate business with China on cooking oil. Sectors ended mixed, as Tech and Consumer Discretionary lagged, while Consumer Staples and Industrials outperformed. On earnings (more details below), JPM and GS were the laggards, while WFC and BLK strengthened as attention turns to MS and BAC on Wednesday. The Dollar was lower and weighed on by the aforementioned US/China news, which saw the Australian Dollar as the distinct G10 underperformer and once again fell foul towards the broader risk sentiment, while the Japanese Yen outperformed. The crude complex was weighed amid heightened US/China trade tensions and an oversupply of global oil as the IEA said the world oil market faces a surplus of almost 4mln BPD next year. Spot Gold was firmer but did not get near the highs seen in the APAC session. Treasuries saw gains across the curve, and most notable in the short-end, while Powell touted an end of balance sheet drawdown. Ahead of the Fed blackout at midnight on Friday, Fed Chair Powell said little new about the economy or on the interest rate path, but mentioned the Fed may be approaching the end of the balance sheet contraction in the coming months, and officials will be discussing the composition. In the text release, there was little new information about the economy or on the interest rate path. It appears amid the government shutdown, he is relying on data already available but added that there are other data sources used other than by the government. He does not appear to be focusing on one side of the mandate over the other, noting how downside risks to the labour market have risen, but available data shows tariffs are pushing up price pressures. Note, US CPI will be released on October 24th, the Friday before the next Fed meeting. Powell mentioned the Fed may be approaching the end of the balance sheet contraction in the coming months, and officials will be discussing the composition. The Fed have said before they want to get to a Treasury-only balance sheet – which Powell reiterated here. Reminder, in March, the Fed announced it will slow the pace of its balance sheet run off – reducing the monthly redemption cap on Treasuries to USD 5 billion from USD 25 billion, but maintained the MBS redemption cap at USD 35 billion to support a move to a Treasury-only balance sheet. Powell stated here that the Fed’s long-standing plan is to stop the balance sheet run off when reserves are somewhat above the level they judge to be consistent with an ample amount of reserves. Powell said now they may approach that point in the coming months. In the accompanying Q&A, he added data since the July meeting shows the labour market has softened considerably, and noted they will get access to the CPI and PPI report [before the next FOMC meeting]. On this, the Chair noted the Fed will start to miss data, which will become more challenging if the shutdown lingers and October is delayed. There is plausible data for the state of the job market, though private data is best as a supplement, and added substitutes are better for the job market than they are for inflation. Speaking on the balance sheet, Powell said not so far but a way to go. Fed Member Bowman maintained her view of two more 25 basis points rate cuts before the year end, putting her in line with the Fed September SEP median view and alongside 8/19 members who share the same view. Collins – The Boston Fed President said even with some additional easing, monetary policy would remain mildly restrictive, which is appropriate to ensure inflation resumes its decline once tariff effects fade. However, Collins acknowledged that policy is not a preset path; ahead, decisions will depend on data and their implication for the outlook. Given inflation risks are somewhat more contained, but with greater downside risks to employment, Collins argues that it is prudent to normalise policy a bit further this year to support the labour market. Collins expects more growth, a small climb in unemployment, and inflation to remain elevated in the near term, largely due to tariffs. Albeit, Collins’ baseline is for inflation to remain elevated into next year as tariffs get passed through, before resuming its decline. Goldman Sachs (GS): Expenses rose more than expected; note, EPS, revenue, & FICC topped with provision for credit losses better than anticipated. JPMorgan (JPM): EPS, revenue, FICC & equities revenue beat; Credit loss provision. above expected, with NII light; Solid FY NII guidance. Elsewhere, Oil closed lower by 1.5% while Gold ended Tuesday’s session with a further 0.75% gain.
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For anyone following my Platinum Service it was made 1290 points yesterday and is now ahead by 3315 points for October after closing September with a gain of 3774 points after ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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