Breakfast Bites - Fri Sep 29, 2023

Rise and shine everyone and Happy Friday.

The big news today is the release of US PCE inflation data - with everyone expecting a 3-handle on the core PCE number. The data is out at 8:30am ET.

Meanwhile, we’ve received the inflation numbers out of the Eurozone. We got a nice dip on Eurozone inflation from 5.2% to 4.3% at the headline level. Core inflation came in at 4.5% from 5.3%.

We have a busy weekend with the looming government shutdown on Oct 1. Odds are still favoring a shutdown as of now, and several events have been rescheduled from next week to Saturday, since the shutdown will potentially start at midnight.

US equity futures closed higher yesterday - possibly a relief rally driven by the anticipation of lower inflation numbers. We may see some continuation today. It’s PCE day, the month-end and Friday options expiration. Yields have pulled back from highs but the Yield Curve still remains steeper at -0.49%. Crude Oil and the USD Index have also pulled back from their highs settling at $91/bbl and $105.70 respectively. Gold and Bitcoin are higher.

Asia and Australia

Asian equities higher Friday. Hang Seng outperforming amid rally in tech stocks. Nikkei flat while ASX logging slight gain. Mainland Chinese and other Asian markets offline for Golden Week holiday.
Tokyo core CPI rose 2.5% YoY in September, slightly below consensus 2.6% and follows 2.5% in the previous month. Ex-fresh food & energy inflation also softened to 3.8% from 4.0%.
Japan’s Industrial production was unchanged in August, compared to expectations of a 0.8% decline, following 1.8% drop in the previous month.
Japanese Government Bonds are set for the worst quarterly sell off since 1998, losing -3% during this quarter.
Over the weekend, we have the official NBS Chinese PMI data and the Caixin PMI data - both important data points to keep track of.

Europe, Middle East, Africa

European equity markets higher. Follows broadly firmer levels in Asia.
Final UK GDP Growth rate came in at 0.2% QoQ, in line with consensus. YoY GDP Growth came in at 0.6%, higher than consensus of 0.4%.
German retail sales missed expectations in August, with a 1.2% MoM drop versus consensus for 0.5% expansion and prior 0% reading, revised up from the 0.8% drop initially reported.
UK business confidence slips lower in September. The UK Lloyds business barometer slipped lower in September, down five points to 36% after hitting an 18-month high of 41% in August

The Americas

The final GDP growth data remained unchanged at +2.1% annualized for Q2, while the consumption growth was notably adjusted downward to +0.8%, both falling short of expectations. But the report was largely positive. The yearly amendments led to a more robust multi-year GDP trend and an enhanced multi-year and recent trend for gross domestic income.
Initial jobless claims for the week to 23-Sep of 204K beat consensus for 215K, while last week revised up 1K to 202K. Continuing claims for week to 16-Sep 1.670M below consensus for 1.675M, while last week revised to 1.658M from 1.662M.
New NYC law states Uber, Grubhub, and Doordash must pay delivery drivers a minimum of $18/hr.
UAW now targeting 30% wage increase, down from initial demand of 40%
With shutdown looming GOP hardliners attempting to remove McCarthy from speakership as early as next week

SPX 200-day Moving Average of 4195 in Focus - Goldman Sachs shows that if the level doesn’t provide support, history suggests returns in the following month are significantly below average.