US Conference Board leading index declines in October

The US Conference Board Leading index fell 0.8% m/m in October, fractionally more than the 0.7% decline that had been expected. The October decline follows a 0.7% m/m fall in September. The components that drove the decline in the aggregate index included weaker consumer expectations of business conditions, tighter credit conditions, and a lower ISM index of new orders. The latest decline is consistent with the index signaling a near-term recession.

German PPI fell by slightly more than had been expected in October, dropping 0.1% m/m. This leaves the annual rate of change in PPI at -11% in October, slightly higher than the -14.7% y/y recorded in September. The decline in producer prices in October was largely driven by lower energy prices, which fell 27.9% y/y.

The central banks of China and Saudi Arabia have signed a currency swap agreement, worth 26bn Saudi Riyals, valid for three years. The agreement should increase the use of local currencies in bilateral trade between the nations.

Today’s Economic Data and Events

19:00 US existing home sales October: forecast -1.5% m/m

23:00 FOMC 1 November meeting minutes

Fixed Income

• In a similar pattern to the end of last week, short-end US Treasury yields edged up on Monday, while yields on the long-end declined. The 2yr UST yield rose 3bps to end at 4.9109%. The 10yr yield dropped 2bps to reach 4.4198%. There was strong demand for an auction of 20yr treasuries, worth USD 16bn.
• Major European sovereign bond yields were somewhat mixed on Monday. Yields on 10yr Gilts and Bunds both gained 2bps on the day to reach 4.1219% and 2.610%, respectively.

FX

• The dollar fell further against a basket of peer currencies on Monday, as expectations that the Fed is finished hiking rates grow. EURUSD gained 0.23% on the day to reach 1.094, and GBPUSD rose 0.35% to 1.2505. JPYUSD saw another sharp decline, dropping 0.83%, to 148.39.
• Commodity currencies also continued to appreciate against the dollar on Monday. AUSUSD rose 0.64% to reach 0.6557, while NZDUSD gained 0.77% to 0.6037. CADUSD fell only very slightly, declining 0.01% to 1.3725.

Equities

• US equity markets extended their rally on Monday, adding to gains seen since the start of the month. The Dow Jones rose 0.58%, the S&P 500 gained 0.74% and NASDAQ increased 1.13%.
• European equity markets moves were more mixed on the day, with Eurostoxx 50 gaining a marginal 0.04% and the CAC 40 up 0.18%, while the DAX and the FTSE 100 both fell 0.11%.
• Locally, the DFM closed 0.2% higher while the ADX rose only slightly, up 0.04%.

Commodities

• Oil prices gained on Monday, with continued speculation ahead of the OPEC+ meeting, that Saudi Arabia may elect to extend voluntary production cuts into the new year. Brent futures rose 2.12% to close at USD 82.32/b while WTI gained 2.25% to USD 77.6/b.