Daily Comments

China Q3 GDP rose less than expected. China September retail sales were strong, but industrial production was weak. Asian markets settled mixed The Nikkei 225 slipped -0.56%. The Shanghai Composite initially fell again, but recovered late on signs of state intervention, ending the session up +2.58%. Tensions between the EU and Italy over the Italian budget continue to simmer. European equities were mostly lower. The DAX dropped -0.31%. Yields on 10-yr. Bunds managed to close higher at 0.434%. September Existing Home Sales missed expectations, falling to 5.150M. Baker-Hughes reported that the U.S. oil rig count rose by 4 to 873, a multi-year high. Yields on 10-Year Notes rose to 3.196%. The US$ Index fell back slightly. December gold gave up -0.1% to $1,229.10. November Crude added +0.7% to close at $69.12. A bounce in China and possibly easing tension between the EU and Italy provided a solid backdrop as equities opened in the U.S. Early on, averages erased a big portion of yesterday’s losses, but afternoon trade was choppy. At the close, markets were mostly lower.

The Japan September trade balance was a larger surplus than expected. China’s yuan dropped to a nearly 2-year low. Asian markets settled mostly lower The Nikkei 225 fell -0.80%. The Shanghai Composite was rocked by forced selling due to margin calls, falling -2.94% to lows not seen in over 4 years. ECB Governing Council member Rehn predicted the ECB would being raising rates in Q4 of 2019. European equities were nervous about Italy again. The DAX fell -1.07%. Yields on 10-yr. Bunds fell hard to 0.422%. Initial Claims for the week of 10/12 were 210K. September Leading Indicators came in +0.5% as expected. The October Philadelphia Fed Business Outlook Survey was a strong 22.2. Yields on 10-Year Notes fell back to 3.177%. The US$ Index was slightly lower. December gold moved up +0.2% to $1,230.10. November Crude lost another -1.6% to close at $68.65. A sharp selloff in China overnight got U.S. markets off to a weak start. Buyers tried to stem the tide, but were eventually overwhelmed as stocks suffered another day of steep losses. Averages came off their lows late in the session, but still finished broadly lower.

The increases in China September new yuan loans and aggregate financing were stronger than expected. Asian markets were mixed. The Nikkei 225 rose +1.29% and the Shanghai Composite added +0.60%. Despite yesterday’s U.S. rally, European equities finished soft. The DAX fell -0.52%. Yields on 10-yr. Bunds fell back to 0.462%. September Housing Starts at 1.201M and Building Permits at 1.241M were both shy of expectations. Last night, the API reported a surprise draw in crude inventories of -2.1M barrels. This morning’s EIA report surprised in the other direction with a build of +6.5M barrels. Minutes from the September FOMC meeting show an expectation of further tightening. Yields on 10-Year Notes moved up to 3.201%. The US$ Index was higher. December gold fell back -0.3% to $1,227.40. November Crude tumbled -3.0% to $69.75. After the big rally, equities got off to a flat start as traders digested the gains. Sellers came in and pushed markets lower, but buyers stemmed the early losses, eventually moving most averages into the black! A hawkish tone from the Fed minutes weighed and markets closed modestly lower.