Eurozone consumer confidence ticks up in October

The flash Eurozone consumer confidence index for October improved marginally to reach -12.5 from -12.9 in September. The print was in line with consensus expectations and marked the highest reading since February 2022, suggesting that consumers have become marginally more optimistic as the ECB lays the ground for further rate cuts in coming months.

The latest release of the Fed’s beige book – a report of anecdotal information from regional businesses on current conditions – suggested that economic activity was largely flat from early September. The report noted increased uncertainty amongst businesses because of the upcoming election, a factor which may be causing firms to delay hiring and purchasing decisions.

The Bank of Canada cut interest rates for a fourth time yesterday, in a widely anticipated move, to take the lending rate to 3.75%. The 50bps cut marks a step change in the scale of cutting by the bank, with the previous three rate reductions having been 25bps. The move comes on the back of both weaker inflation and growth figures from Canada in recent quarters. In September, Canadian CPI fell faster-than-expected to 1.6% y/y, well below the central bank’s 2% target.

Today’s Economic Data and Events

• 11:15 FR HCOB composite PMI (Oct). Forecast: 48.9
• 11:30 GE HCOB composite PMI (Oct). Forecast: 47.6
• 12:00 EC HCOB composite PMI (Oct). Forecast: 49.7
• 12:30 UK S&P composite PMI (Oct). Forecast: 52.5
• 16:30 US initial jobless claims (w/e19 Oct). Forecast: 242k
• 17:45 US S&P composite PMI (Oct). Forecast: 53.8

Fixed Income

• US treasury yields moved higher on Wednesday, with market uncertainty about the election outcome and the pace of Fed easing growing. The 2yr yield rose by 5bps to 4.0779%, while the 10yr yield gained 4bps to 4.2456%.
• Moves in major European bond market yields were mixed. The yield on the 10yr Gilt rose 4bps to 4.1993%, while the yield on the 10yr Bund fell 1bps to 2.303%.

FX

• The dollar continued its rally on Wednesday, fueled by election and Fed rate cut uncertainty, with the spot index gaining 0.34%. EURUSD fell 0.16% to 1.0782, while GBPUSD declined by 0.48% to 1.2921. USDJPY jumped 1.1% to 152.76, increasing speculation that the BoJ may intervene in currency markets once more.
• Commodity currencies fell against the dollar. USDCAD gained 0.13% to 1.3836. AUDUSD fell 0.7% to 0.6634 and NZDUSD declined by 0.6% to close at 0.6005.

Equities

• US equity markets fell on Wednesday, with losses led by technology stocks. The Dow Jones fell 0.95%, the S&P 500 declined by 0.92%, and the NASDAQ dropped 1.6%.
• European equity markets also closed lower on the day, weighed down by concerns about the possible pace of Fed rate cuts. The EuroStoxx 50 index fell 0.34%, the CAC 40 declined by 0.5% and the DAX fell 0.23%. The FTSE 100 declined by 0.58%.
• The DFM declined marginally, falling 0.07%, while the ADX fell 0.83% on Tuesday.

Commodities

• Oil prices fell on Wednesday, following a two-day rally, with official figures showing that US stockpiles of crude rose by 5.5m barrels last week. Brent futures dropped 1.4% to USD 74.96/b, while WTI declined by 1.8% to USD 70.77/b.