Record highs defy looming risks

00:00:00: Major U.S.

00:00:00: indices reached record high levels yesterday as oil prices and bond yields east, but the relief remains fragile because crude oil is rebounding again this morning, geopolitical tensions persist and depleted oil inventories across the globe keep energy prices elevated.

00:00:19: And could continue to do so.

00:00:21: now on the bonds front yesterday's three year treasury auction in the west attracted softer indirect demand despite offering the highest yields since two thousand six and today's ten-year bond auction will test appetite for longer term debt later.

00:00:36: this may sound a bit hawkish, but they predict softer inflation and jobs data.

00:00:41: So where do all of these leads us to?

00:00:44: Let's discuss!

00:00:45: Hi I'm Yipega Skardeshkaya.

00:00:47: we are the seventh October.

00:00:48: This is Swiss Coats Daily Market Talk And everything i say here Is based on my own opinion and analysis And this is not financial advice.

00:01:05: So the global bonds fell off slowly yesterday, crude oil fell and the US dollar eased.

00:01:10: Lower oil and less pressure on yields from gay support to major U.S.

00:01:15: indices pushing the S&P-Five hundred and NASDAQ a hundred to fresh record high levels.

00:01:22: But this morning, oil rebounds again, yields are pushing higher And the US Dollar is stronger against most majors as risks boom.

00:01:30: Now Bloomberg spent early week highlighting how criticized US Treasury Secretary Mr.

00:01:36: Scott Besant was for being too optimistic regarding the U.S ability to rein on debt and also his ability to control yields, that's obviously bad for confidence and bad for bond appetite.

00:01:49: yesterdays us three year treasury auction cleared at four point ninety-three percent level.

00:01:53: That was a highs yield since May.

00:01:55: two thousand six.

00:01:57: yet In direct bidders, a group that includes foreign investors built fifty-seven point six percent of the offering.

00:02:03: That's below their twelve month average of around sixty three percent.

00:02:07: suggesting higher yields have yet to revive appetite fully.

00:02:12: Today's thirty-nine billion dollar ten year auction will be the real test release.

00:02:16: We'll get to know whether elevated yields are enough to convince investors to commit for longer horizon and that despite inflation uncertainty, rising government debt.

00:02:30: Now looking at oil, US credit slip below is fifty-day moving average.

00:02:33: yesterday as a series of headlines strengthened the bearers' hands since last week.

00:02:38: Reports are recovering.

00:02:39: Middle East exports ease immediate supply concerns with Reuters for example putting September Gulf flows excluding Iran at more than eighty one percent of pre-war levels.

00:02:51: Meanwhile The G-Seven agreed to release hundred million barrels of crude and diesel from their emerging reserves and pledge to avoid energy export restrictions.

00:03:00: In the US Trump temporarily eased restrictions on red diesel, this is to fuel normally reserved for off-road use allowing it onto public roads with excise tax payments deferred through year end.

00:03:14: so together all these measures and news help ease concerns about new term fuel availability.

00:03:20: but note that none of these news or fixes solve a problem at source!

00:03:24: The Middle East tensions are not resolved Even more so, as world oil reserves have started running low.

00:03:32: Saudi even warned that the oil reserves are running scarily low and when the strait is fully open price pressures may not fully dissipate while the refined product prices also take time to follow the crude prices lower.

00:03:47: So we're NOT out of the woods just yet.

00:03:49: in terms of energy prices It's not surprising to see U.S.

00:03:53: square rebound extending gains again above a fifty day moving average this morning.

00:03:57: inflation risk, loom and combined with higher global yields apply pressure to some pockets of the market.

00:04:03: By some packets off-the-market I mean the packages that don't have AI wins behind their backs.

00:04:09: Now

00:04:09: in the effects your

00:04:10: dollar rebounded after tipping a toe below the one-to-out level day before while all the French student protests and economic data were not necessarily screaming by the year.

00:04:19: In fact, Le Pen pledged to bring deficit down in France maybe helping pull the French yield lower yesterday while the German factory orders tanked more than ten percent in August adding another brick-to-the-gloomy outlook narrative for Germany that already grapples with high energy prices rising bargain costs competition from China and some political instability as well.

00:04:41: so my conclusion is overall yesterday's FX moves were mostly driven and the greenback will continue to remain in the driver's seat as investors focus on the latest FOMC Minutes, in absence of other major data & events later today.

00:05:00: Today's menace belongs to the latest FIMC meeting where, The Federal Reserve decided raise interest rates by twenty-five basis points to address persistently a bull target inflation in the US.

00:05:12: That decision is also thought be beginning of fresh tightening cycle from the federal reserve that could follow two or three more interest rate hikes next twelve months.

00:05:23: But no one nor the menace today can tell what the Feds' next move will be precise because the speed and intensity of monetary policy tightening will depend on economic data.

00:05:35: The balance between inflation and jobs will determine when, by how much, the Federal Reserve will be raising its interest rates if it is at all.

00:05:45: So for those who watch, what's important to remember today is that these men as described the rate debate at the Fed before the latest jobs and PC report.

00:05:54: That were released last week so they could sound a bit more hawkish than with the latest and softer than expected.

00:06:00: PC inflation and job data suggests They should be taken with a pinch of salt!

00:06:05: That being said since the latest FIMC meeting Marcus have already significantly scaled back their expectations For another rate hike in October.

00:06:14: now most happened during the course of last week, the latest pricing puts the probability for an October pose at around Eighty-one percent already.

00:06:22: And truly, looking at the long-term inflation expectations while they have been mostly steady near the Federal Reserve's two percent inflation target meaning that there is no need for back to back rate hikes in the US right now.

00:06:34: So I wouldn't expect another rate action before December the earliest and January the likeliest.

00:06:40: if this was a case you could see the Harkish Fed Expectations rear just little bit more.

00:06:45: The extra Harkisch Mile Could Be Walked Back Further slow down the US dollars September to October, appreciation and short term yields with ease as well.

00:06:59: But in the medium run The dollar could continue find support on a relative growth story.

00:07:04: It's even catch safe haven demand if European debt headaches worsen from price perspective.

00:07:10: The US dollar index will remain in the bullish consolidation zone above the distant one hundred and fifteen mark, that's a major third.

00:07:17: eight point two percent Fibonacci retracement on twenty-five to twenty six depreciation of policies followed by the new U.S administration that led to this debasement trade, that weighed on the US dollar appetite and the US treasuries altogether.

00:07:40: The euro-dollar will remain in the bearish consolidation zone below the one thirteen fifty mark which stands for its own major thirty eight point two percent Fibonacci retracement On twenty five to two thousand Twenty six appreciation against us dollar while cable could step into them.

00:07:59: medium term bearish consolidation zone below the one-thirty two mark which is a major thirty eight point two percent Fibonacci retracement on twenty thousand twenty five to twenty six rally if the strong u.s.

00:08:12: dollar narrative gains field.

00:08:14: so this is all for today.

00:08:16: I'm Ipekos Kardashian and thank you for joining me and Thank You For All Your Beautiful And Supportive Comments!

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00:08:56: And until then, good day

00:09:12: trading!