Quiet session gives traders pause before string of US jobs data throughout rest of week

Notes/observations

- Quiet session for macro news and data, leading to indecisive direction for European indices.

- US dollar pared some of its gains in morning trade after recent melt up since Fri.

- ECB speakers reinforced that current rate level is restrictive and needs to remain that way for as long as needed.

- On look out later for EU Commission announcement on a list of critical technologies that are vulnerable to sensitive security leaks (amid heated context with China).

- Looking ahead, US jobs data fills the weekly calendar with Jolts on Tues, ADP on Wed, Jobless Claims on Thurs and Nonfarms on Fri.

- Asia closed lower with Hang Seng under-performing -3.0%. EU indices are mixed -0.2% to +0.2%. US futures are +0.2%. Gold -0.1%, DXY +0.1%; Commodity: Brent -0.1%, WTI 0.0%, TTF -5.4%; Crypto: BTC -2.4%, ETH -3.8%.

Asia

-Reserve Bank of Australia (RBA) left Cash Rate Target unchanged at 4.10%; as expected; Reiterated that further tightening of monetary policy may be required.

-Japan plans to simplify type distinctions for OTC drugs.

-Japan said to ease land regulations for chip and other plants - Nikkei.

-Japan PM Kishida said the domestic economy to reach 'new stage', cites wage gains and rising stock prices; government to establish new panel for green investments - Japanese press.

-Japan Fin Min Suzuki reiterated it is important for currencies to move in stable manner reflecting fundamentals.

- Japan FSA, Korea FSC to have first meeting since 2016 in Seoul on Dec 19-20th, 2023.

-Japan ruling LDP Senior member Seko: To mull income and corporate tax cuts; Corporate income tax cuts will 'naturally' be considered [when asked about tax policy changes] - Japan press.

-Thailand PM Srettha: Urges postponement of 2024 arms procurement.

-Malaysia Central Bank (BNM) Gov Ghaffour: Malaysia inflation to continue to trend lower.

- Indonesia Central Bank (BI): In the market to keep FX supply and demand balance, build market confidence; Said to perform 'triple intervention' in FX spot, domestic and NDF markets (third time in 2023 since Mar).

Taiwan

-Taiwan Central Bank sold net $880M intervening in FX markets in H1 2023; Sees 2024 CPI trending lower.

-Reportedly several Taiwan firms seen helping Huawei build infrastructure for a secret network of chip plants across southern China - press.

Mid-East

-US Defense Dept report: Iran not pursuing a weapons program at this time, but has the capacity to produce enough fissile material for a nuclear bomb in less than two weeks.

Europe

-UK Govt Cabinet to hold meeting later today to discuss HS2 Railway Project - press.

-UK Housing Min Maclean: Demand is spiraling for housing; Need to build more houses.

-UK BoE's Prudential Regulation Authority (PRA) to conduct general insurance stress test in 2025.

-EU Commission has prepared the list of 10 critical technologies considered highly likely to present the most sensitive and immediate risks related to technology security and technology leakage.

-Portugal PM Costa: To end non-habitual resident tax regime in 2024.

-EU said to unfreeze ~€13.0B in funding to Hungary before the end of Nov - FT.

-Australia and France sign bilateral pact on critical minerals - press.

- Hungary Economy Ministry asks banks to impose voluntary cap on interest rates from Oct 9th on new loans; Max interest rate cap on new loans for households should be set at 8.5%.

-Hungary Central Bank (MNB): Will continue to base policy decisions on curbing CPI in a lasting manner.

-ECB's Simkus (Lithuania, hawk): Rates need to stay restrictive to tame prices; Inflation shock is not over.

-ECB’s Lane (Ireland, chief economist): Food inflation is still a substantial issue, it is quite high; Would not focus on Dec as critical decision; Base case is to maintain this level for as long as needed.

-ECB's Valimaki (Finland): Further rate hikes cannot be ruled out; It does appear we can avoid wage-price spiral in Eurozone.

-Italy Industry Min Urso: Italy's inflation rate could fall to 3.4% by end-2023 from current level over 5%, thanks to measures to rein in prices of essential staple items between Oct-Dec.

Americas

-Fed's Mester (non-voter): Need for more than one rate hike is dependent on the economy; Fed is probably at or near peak rates, now assessing how long.

-United Auto Workers (UAW) reportedly makes new counteroffer - press.

-SAG-AFTRA [Screen Actors Guild], AMPTP [Hollywood studios] will resume talks Wed, Oct 4th - US press.

-US said to raise concern with Peru on China infrastructure control - FT.

Energy

-EU to seek 16.5BCM of gas in 3rd round of joint gas buying.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.13% at 446.18, FTSE +0.40% at 7,540.93, DAX +0.04% at 15,253.75, CAC-40 +0.06% at 7,072.60, IBEX-35 +0.39% at 9,355.27, FTSE MIB +0.26% at 27,922.00, SMI +0.12% at 10,876.30, S&P 500 Futures +0.20%].

Market Focal Points/Key Themes: European indices open generally lower, but turned around in the early hours to trade with a modest upward bias; risk appetite seen under pressure from rising yields; there is a bank holiday in Germany, but bourse is open; better performing sectors include telecom and health care; sectors leading the push lower include consumer discretionary real estate; reportedly Zegona taking steps to make a bid for Vodafone Espana; Vantiva to acquire CommScope’s Home networks; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Boohoo [BOO.UK] -9.5%, Zalando [ZAL.DE] -2.5%, Asos [ASC.UK] -3.0% (Boohoo earnings), Burberry [BRBY.UK] -3.0% (analyst action).

- Energy: Petrofac [PFC.UK] +1.5% (order).

- Healthcare: Novo Nordisk [NOVOB.DK] +1.5% (report of court ruling blocking Wegovy patent challenges by Mylan), AstraZeneca [AZN.UK] +0.5% (settles litigation), Sanofi [SAN.FR] -0.5% (agreement with Janssen).

- Industrials: Signify [LIGHT.NL] -6.0% (analyst action).

- Technology: Gooch & Housego [GHH.UK] +2.0% (trading update).

Speakers

-Fed's Mester (non-voter): Need for more than one rate hike is dependent on the economy; Fed is probably at or near peak rates, now assessing how long.

-Japan Fin Min Suzuki reiterated it is important for currencies to move in stable manner reflecting fundamentals.

-Malaysia Central Bank (BNM) Gov Ghaffour: Malaysia inflation to continue to trend lower.

-ECB's Simkus (Lithuania, hawk): Rates need to stay restrictive to tame prices; Inflation shock is not over.

-ECB’s Lane (Ireland, chief economist): Food inflation is still a substantial issue, it is quite high; Would not focus on Dec as critical decision; Base case is to maintain this level for as long as needed.

-ECB's Valimaki (Finland): Further rate hikes cannot be ruled out; It does appear we can avoid wage-price spiral in Eurozone.

Currencies/fixed income

- US dollar pulled back towards moving average resistance in morning session, after a significant climb since Fri. The weakness has helped USD/JPY fight the JPY (yen) weakness, but pair continues to have eyes for 150. GBP/USD and EUR/USD are little changed with news and economic data quiet.

Economic data

-(NZ) New Zealand Q3 NZIER Business Confidence: -52% v -63% prior.

-(UK) Sept BRC Shop Price Index Y/Y: 6.2% v 6.9% prior.

-(JP) Japan end-Sept Monetary Base: ¥672.6T v ¥674.4T prior.

-(AU) Australia Aug Home Loans Value M/M: 2.2% v 0.2%e.

-(AU) Australia Aug Building Approvals M/M: 7.0% v 2.5%e.

-(AU) Australia Sept ANZ Indeed Job Ads M/M: -0.1% v +1.9% prior.

-(AR) Argentina Sept Government Tax Revenue (ARS): 4.303T v 4.062T prior.

-(IN) India Sept PMI Manufacturing: 57.5 v 58.6 prior.

-(AU) Australia ANZ/Roy Morgan Weekly Consumer Confidence: 78.2 v 76.4 prior.

-(CH) Swiss Sept CPI M/M: -0.1% v 0.0%e; Y/Y: 1.7% v 1.8%e (4th straight reading within SNB's target); CPI EU-Harmonized M/M: -0.2% v 0.2% prior; Y/Y: 2.0% v 1.9% prior; CPI Core Y/Y: 1.3% v 1.5%e (lowest since mid-2022).

-(FR) France Aug YTD Budget Balance: -€187.9B v -€169.0B prior.

-(ES) Spain Sept Net Unemployment Change: +19.8K v +24.8K prior.

-(TR) Turkey Sept CPI M/M: 4.8% v 4.8%e; Y/Y: 61.5% v 61.6%e; CPI Core Index Y/Y: 68.9% v 67.2%e; PPI M/M: 3.4% v 5.9% prior; Y/Y: 47.4% v 49.4% prior.

- (BR) Brazil Sept FIPE CPI (Sao Paulo) M/M: +0.3% v 0.3%e.

-(NG) Nigeria Sept Manufacturing PMI: 51.1 v 50.2 prior.

Fixed income issuance

-Thailand Central bank sells THB50B v THB50B indicated in 3-month bills: Avg Yield: 2.28932%; bid-to-cover: 2.12x.

-Japan sells ¥2.7T v ¥2.7T indicated in 10-year JGB bonds; Avg Yield: 0.7680% v 0.6570% prior; Bid-to-cover: 3.93x v 4.02x prior.

-Taiwan sells NT$140B v NT$140B indicated in 1-year Certificates of Deposit (NCD): Avg Yield: 1.175% v 1.162% prior; bid-to-cover: 1.14x v 1.31x prior.

-Hong Kong sells total HK$84.768B in 1-month, 3-month, 6-month bills-Indonesia sells total IDR9.3T vs. IDR19.0T target in bills and bonds.

-Spain Debt Agency (Tesoro) sells total €4.55B vs. €4.0-5.0B indicated range in 6-month and 12-month bills.

-UK DMO sells £2.25B vs £2.25B indicated in 1.5% July 2053 Gilts; Avg Yield: 4.936% v 4.387% prior; Bid-to-cover: 2.83x v 2.64x prior; Tail: 1.0bps v 0.3bps prior.

Looking ahead

- 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.0B in 3-month bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.9B in 2040, 2044 and 2048 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:00 (PT) Portugal Aug Industrial Production M/M: No est v 0.2% prior; Y/Y: No est v -3.2% prior.

-06:30 (EU) ESM sells €1.1B in 3-month bills.

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (BR) Brazil Aug Industrial Production M/M: 0.5%e v -0.6% prior; Y/Y: +1.0%e v -1.1% prior.

- 08:00 (MX) Mexico Aug Leading Indicators M/M: No est v 0.11 prior.

- 08:00 (MX) Mexico July Gross Fixed Investment M/M: 1.0%e v 3.1% prior; Y/Y: 29.0%e v 28.8% prior; Private Consumption Y/Y: 4.8%e v 4.3% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

-08:45 (EU) ECB’s Villeroy.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (SG) Singapore Sept Purchasing Managers Index: No est v 49.9 prior; Electronics Sector Index Sep: No est v 49.5 prior.

- 10:00 (US) Aug JOLTS Job Openings: 8.82Me v 8.83M prior.

- 11:00 (DK) Denmark Sept Foreign Reserves (DKK): No est v 606.4B prior.

- 11:00 (CO) Colombia Aug Exports FOB: $4.0Be v $4.1B prior.

- 11:30 (US) Treasury to sell 52-Week Bills.

- 16:30 (US) Weekly API Oil Inventories.

- 18:00 (AU) Australia Sept Final PMI Services: No est v 50.5 prelim; PMI Composite: No est v 50.2 prelim.

- 19:00 (KR) South Korea Aug Industrial Production M/M: +0.2%e v -2.0% prior; Y/Y: -5.8%e v -8.0% prior.

- 20:01 (IE) Ireland Sept PMI Services: No est v 55.0 prior; PMI Composite: No est v 52.6 prior.

- 20:30 (JP) Japan Sept Final PMI Services: No est v 53.3 prelim; PMI Composite: No est v 51.8 prelim.

- 20:30 (KR) South Korea Sept PMI Manufacturing: No est v 48.9 prior.

- 20:30 (SG) Singapore Sept PMI (whole economy): No est v 53.6 prior.

- 21:00 (NZ) Reserve Bank of New Zealand (RBNZ) Interest Rate Decision: Expected to leave Official Cash Rate (OCR) unchanged at 5.50%.