JASPER’S MARKET SQUAWK 28-09-2023
<h2>Oil Surge Adds to Higher Rates Narrative</h2>
<p>On Wednesday, a potential government shutdown and higher energy prices raised market concerns, sending yields to a fresh October 2007 high. Still, the US stocks’ slump eased off after a scenic Tuesday that was driven by recent expectations of prolonged higher rates.</p>
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<p><strong>Chart: WTI</strong></p>
<h2>Key Factors For Today</h2>
<ul>
<li>Oil Surge Raises Concerns as Yields Hit October 2007 High</li>
<li>WTI Crude Oil Breaks to 1-Year High, Draw Boost Prices</li>
<li>Dollar Rally Persists on Higher Rates Narrative, Sending Gold Plunging</li>
<li>EUR/USD Hits 9-Month Low Following Disappointing Gfk Report</li>
<li>PBOC Commits to Support Amid Housing Sector Woes</li>
</ul>
<h2>WTI Soars to 1-Year High After Draw Bolsters Prices 3.60%</h2>
<p>Concerns about inflation and tight monetary policy were compounded by lower-than-expected US stockpiles, which pushed WTI to a 1-year high of over $93 a barrel. Crude stocks dropped to -2.17M compared to -2.135M expected, raising concerns about fuel demand outstripping production, pressuring longer-dated bonds. Early Thursday has oil climbing towards the $95 resistance, with prices maintaining bids above $92.50 a barrel seen as upward action.</p>
<h2>Dollar Rally Continues, Sends Gold Diving1.35% Lower</h2>
<p>The possible change in rate expectations has led sent government bond yields in the US surging, with borrowing costs expected to remain elevated for longer than anticipated. The rate-sensitive dollar index rose to a fresh high of 106.65 as markets remained uncertain about a potential government shutdown with a vote passing the Senate and up for the House on Friday. Gold slumped to $1875 an ounce, exposing $1850 while under the $1900 handle.</p>
<h2>EUR/USD Slips to a 9-month Low After Disappointing Gfk</h2>
<p>German Gfk Consumer Confidence slid to its lowest since April, at -26.5 vs. -25.6 expected. Euro Zone’s M3 Money Supply has dipped to register the biggest decline ever. Meanwhile, ECB board member Frank Elderson said the bank may still raise rates to control inflation despite slower-than-expected growth on Tuesday. Euro hit a new 9-month low against the dollar, testing $1.05 and opening up speculation for lower levels unless bulls reclaim $1.06.</p>
<h2>PBOC Vows Support as Housing Sector Weighs on Sentiment</h2>
<p>The People’s Bank of China (PBOC) stated Wednesday that it will continue to support economic recovery and will not reduce stimulus measures, but it may consider cutting the reserve requirement ratio (RRR) and interest rates if necessary. Meanwhile, Evergrande Group and its units suspended trading in Hong Kong a day after the founder of the property giant was detained by the police. China’s latest home price survey showed a decline in the real estate sector as anxiety over the finances of real estate developers, such as Country Garden, is also impacting market sentiment along with the tremendous rise in developers’ FX losses. AUD/USD was seen falling to a November low of 0.6330 yesterday but has recovered half that already at the time of writing despite weaker Retail Sales, eying 0.64.</p>
<h2>On The Docket</h2>
<ul>
<li>ECB General Council Meeting</li>
<li>EA Inflation</li>
<li>IT Business, Consumer Confidence</li>
<li>EA Economic Sentiment</li>
<li>DE Inflation</li>
<li>US GDP Growth</li>
<li>Initial Jobless Claims</li>
<li>Fed Goolsbee Speech</li>
<li>Fed Chair Powell Speech</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.43% and 0.34% higher</li>
<li>Euro muted while Pound up by 0.07%</li>
<li>Yen 0.18% up, Swiss Franc by 0.02%</li>
<li>Canadian dollar also up, at 0.06%</li>
<li>Gold and Silver up by 0.09% and 0.05%</li>
<li>Crude 0.86% higher, Brent up by 0.71%</li>
<li>Natural gas a mere 0.03% higher</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/market-analysis/jaspers-market-squawk-28-09-2023-25964/">JASPER’S MARKET SQUAWK 28-09-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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