EQUITIES: Short-Term Weakness in E-Mini S&P Considered Corrective
Eurostoxx 50 futures are in consolidation mode and continue to trade closer to their recent lows. For now, a bear threat is present. The contract traded sharply lower on Oct 15 and pierced the 50-day EMA, at 4948.02. A clear break of this average would undermine a recent bullish theme and highlight a stronger reversal. This would open 4884.06, a Fibonacci retracement. Key resistance and the bull trigger is 5106.00, the Sep 30 high. S&P E-Minis continues to trade below its recent highs. Short-term weakness is considered corrective and the uptrend remains intact. Price has recently traded through support at the 20-day EMA, at 5854.44, but is - for now - trading above this average. A clear bearish break of the EMA would open 5753.57, the 50-day EMA. A stronger resumption of gains would refocus attention on 5961.00, a Fibonacci projection.
- Japan's NIKKEI closed higher by 691.61 pts or +1.82% at 38605.53 and the TOPIX ended 39.46 pts higher or +1.51% at 2657.78.
- Elsewhere, in China the SHANGHAI closed higher by 22.498 pts or +0.68% at 3322.198 and the HANG SENG ended 9.21 pts higher or +0.04% at 20599.36.
- Across Europe, Germany's DAX trades higher by 64.62 pts or +0.33% at 19527.72, FTSE 100 higher by 8.23 pts or +0.1% at 8257.53, CAC 40 up 66.68 pts or +0.89% at 7563.26 and Euro Stoxx 50 up 31.47 pts or +0.64% at 4974.04.
- Dow Jones mini up 213 pts or +0.5% at 42530, S&P 500 mini up 35.75 pts or +0.61% at 5882, NASDAQ mini up 161.5 pts or +0.79% at 20661.
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US: Harris To Deliver Remarks At US-Mexico Border Shortly
Vice President Kamala Harris is shortly due to deliver remarks on immigration at the US-Mexico border in Douglas, Arizona. The trip will be her second to the border since assuming the vice presidency, following a visit to El Paso, Texas in June 2021. LIVESTREAM
- Harris likely has two goals for her border trip: First, to make a case that the border crisis is now under control; second, argue that the crisis was exacerbated by Trump’s decision to tank a bipartisan border security deal.
- Data suggests that migrant encounters have dropped significantly since President Biden enacted a strict set of Executive Actions in the summer and bolstered cooperation with Mexico. Politico notes: “Border crossings are now as low as they were during Trump’s last month in office...”
- The improved situation on the border has been reflected in polling. An NBC News survey found that Trump had a 35-point lead over Biden earlier in the year. In their most recent survey, Harris has cut that lead to 14 points. A notable improvement, but still a vulnerability for Harris.
- On the second count, Harris’ case against Trump may fall flat. While voters generally accept that Trump contributed to the collapse of the bipartisan border bill, the Republican argument that Democrats waited too long to confront the border crisis is persuasive.
- Politico reports that, according to aides, Harris will call for more resources for border agents and propose new detection machines for fentanyl at border entry ports.
USDCAD TECHS: Resumes Its Downtrend
- RES 4: 1.3693 High Aug 19
- RES 3: 1.3647 High Sep 19
- RES 2: 1.3599 50-day EMA
- RES 1: 1.3546 20-day EMA
- PRICE: 1.3482 @ 15:42 BST Sep 27
- SUP 1: 1.3420 Low Sep 25
- SUP 2: 1.3413 Low Feb 9
- SUP 3: 1.3358 76.4% retracement of the Dec 27 ‘23 - Aug 5 bull run
- SUP 4: 1.3288 Low Jan 5
USDCAD remains in a clear downtrend and Tuesday's strong sell-off reinforces this condition. The pair has traded through support at 1.3441, the Aug 28 low. This breach confirms a resumption of the downtrend that started Aug 5. The move down paves the way for an extension towards 1.3358, a Fibonacci retracement. Initial firm resistance is seen at 1.3546, the 20-day EMA. Short-term gains would be considered corrective.
US TSYS: Curves Bounce as Projected Cuts Gain Momentum Post-PCE
- Treasuries are higher after the bell, trading sideways through the second half after marking session high affter noon. Dec'24 10Y Tsy futures are currently +10.5 at 114-23.5 vs. 114-25 high with initial technical resistance at 115-02.5 (Sep 19 high).
- Curves recovered some ground after Thu's flattening as morning data underscored a rise in projected rate cuts into early 2025 gained vs. pre-data levels (*): Nov'24 cumulative -38.5bp (-37.2bp), Dec'24 -76.8bp (-73.9bp), Jan'25 -109.5bp (-104.5bp).
- Personal income and spending were a little softer than expected in August on a nominal basis, but in "real" terms this was a solid report and data going back to the start of the year were largely revised in a stronger direction.
- Core PCE inflation confirmed trend rates very similar to what Fed Governor Waller had indicated last week. That leaves inflation over the latest four months a little below the 2% PCE target and “supercore” inflation almost at target (although both a little stronger more recently).
- UofM inflation expectations: 1Y: 2.7% (cons 2.7, prelim 2.7) after 2.8% in Aug to confirm a dip to its lowest since Dec 2020. 5-10Y: 3.1% (cons 3.0, prelim 3.1) after 3.0% in Aug.
- Looking ahead: relatively quiet start to next week with MNI Chicago PMI on Monday, ISMs Tuesday, ADP private employment data Wednesday and the September jobs report headlining next week Friday.
