FPG Overnight Headlines 14/9/2022

Overnight headlines

The US 10-year note’s yield increased by 6 basis points to 3.42 percent.

The Dow ended the day at 31,104 in New York, down 1276 points. S&P 500 ended the day at 3932. The VIX increased by more than 13% to reach 27.

All 11 of the S&P 500 industry groupings fell, topped by a more than 5.3% decline in communication services and information technology. Energy was the best-performing sector, down 2.5%, even though oil recovered some of its early losses following news that the Biden administration was considering steps to restock US strategic petroleum reserves.

The August report plainly conveys a hawkish message since the July’s indications of a slowing in price pressures turned out to be transient. Since Fed communications from last week clearly set the pace for 75bps for this month’s FOMC, it is unlikely that the report would significantly alter the Fed’s short-term policy course.

Despite this, the reading for this month makes it more challenging for the Fed to control a gradual decrease in the rate of tightening from 75 to 50 bps and beyond, which we anticipate will occur by the November FOMC.

Market movements

• Down 2.3% to 67.31 US cents in AUD
• Bitcoin fell 9.6% to $20,275 USD
• On Wall Street: Dow -3.9% S&P 500 -4.3% Nasdaq -5.2%
• Spot gold fell 1.2% to $1704.57 per ounce
• Brent crude decreased 1% to US$93.04 per barrel
• Ten-year yield: United States, 3.42%; Australia, 3.57%; Germany, 1.72%

Today’s agenda

Local: NZ current account for the second quarter

Overseas data: Industrial production in Japan in July, industrial production in the Eurozone in July, the UK’s August CPI, and the US’s August PPI