Daily Comments

Asian markets were mixed awaiting further signals on trade. The Shanghai Composite slipped -0.56%. After being closed yesterday, the Nikkei 225 jumped +1.87%. Today is seen as the last day for the EU and the UK to reach a Brexit deal that could be implemented by October 31. More likely is another delay to give negotiators more time. European markets were higher. The DAX rose +1.15%. Yields on 10-yr. Bunds moved higher to -0.423%. The October Empire State Manufacturing Survey was released yesterday by mistake, coming in at a modest 4.0 which was above estimates. Yields on 10-Year Notes reversed to close higher at 1.774%. The December US$ Index reversed as well, falling -0.165 to 98.005. December gold fell -0.9% to $1,483.50. November crude fell -1.5% to $52.81 as the EIA increased the forecast for shale oil output for November. Buoyed by earnings, equities got off to a strong start. Averages moved steadily higher in early trade on light volume. Markets then traded sideways at elevated levels into the afternoon. Averages held most of their gains into the close, finishing broadly higher.

China exports fell -3.2% year-over-year while exports declined -8.5%. On the trade “deal”, Asian markets closed higher. The Shanghai Composite rose +1.15%. The Nikkei 225 was closed for a holiday. The BBC reported that the EU and the UK are still divided over any potential Brexit agreement. European markets were modestly lower. The DAX fell -0.20%. Yields on 10-yr. Bunds fell back to -0.458%. Banks and government offices were closed for the Columbus Day holiday. The U.S. treasury market was closed today. Futures in treasuries indicated a lower yield on 10-Year Notes. The December US$ Index rose +0.165 to 98.17. December gold added +0.6% to $1,497.60. With no new catalyst, November crude fell back -2.0% to $53.59. Equities got off to a soft start on news that the Phase I trade deal with China was not quite as complete as had been suggested. In light holiday trading, markets came back to the flat line and then traded sideways in a narrow range. Late in the session, sellers managed to push the averages into negative territory where they closed just narrowly lower.

Trade optimism spread around the world as the U.S. and China met in Washington. Asian markets closed higher. The Nikkei 225 rose +1.15% and the Shanghai Composite added +0.88%. On top of the trade news, EC President Tusk said that he had received “promising signals” on the possibility of a breakthrough on Brexit. European markets reacted positively. The DAX jumped +2.86%. Yields on 10-yr. Bunds also jumped higher to -0.439%. September Import Prices were up +0.2% while Export Prices fell -0.2%. Preliminary October Consumer Sentiment was well above expectations at 96.0. Baker-Hughes reported that the U.S. oil rig count for 10/04 rose by 2 to 712. Yields on 10-Year Notes jumped to 1.731%. The December US$ Index fell -0.40 to 98.005. December gold fell -0.8% to $1,488.70. A reported attack on an Iranian tanker supported oil prices. November crude rose +2.2% to $54.70. Equities jumped out to strong gains on an improved outlook for China trade. Averages held their gains late into the session but were underwhelmed by the announced results. Markets gave up half their gains in the last 15 minutes, but still close broadly higher.