FPG Overnight Headlines 15/9/2022 

Overnight headlines

As the session progressed, there was no movement in the yield on the US 10-year note, which decreased by 1 basis point to 3.40 percent.

“In the near run, I expect inflation to reduce slightly as prior shocks resolve for some categories (e.g., energy),” wrote Ray Dalio in a message posted on LinkedIn. “Over the medium term, I expect inflation to trend back up towards 4.5 percent to 5%.”

According to Dalio, the Federal Reserve will respond by raising rates, which will hurt stocks. “I estimate that a rise in rates from where they are to about 4.5% will produce about a 20% negative impact on equity prices (on average, though greater for longer duration assets and less for shorter duration ones) based on the present value discount effect and about a 10% negative impact from declining incomes,” says the author.

Market movements

• AUD up 0.2% to 67.46 cents US
• Bitcoin dropped 1.9% to US$19,949
• Dow +0.1% and S&P +0.3% on Wall Street Nasdaq up 0.7%
• Stoxx 50 in Europe fell by 0.5% DAX -1.2%, CAC 0.4%, and FTSE 1.5%
• Spot gold fell by 0.1% to $1699.74 USD per ounce
• Brent crude increased by 2.2% to $95,17 per barrel
• US 3.40% for the 10-year yield. Germany is 1.71%, Australia is 3.63%

Today’s agenda

Local: expectations for consumer inflation; employment in August

The unemployment rate will decrease by a tenth to 3.3%, according to NAB, after last month’s sample-affected reading of -40,900 (consensus +30,000). (consensus 3.4 per cent). Such a result would still be consistent with a slowdown in the pace of hikes, as the RBA’s August SoMP predictions have the unemployment rate at 3.4%.

Overseas data: GDP for the second quarter of NZ; trade balance for the Eurozone in July; business inventories for the US in July; retail sales and industrial production for August; and September manufacturing and Philadelphia Fed index data