- Israel decided to carry out a ground military operation in southern Lebanon, and the troops’ attacks were to target Hezbollah positions.
Despite this incident, market reaction was negligible. However, this afternoon, White House officials indicated that it was very likely that Iran would attack Israel in retaliation for the recent action. - Iran finally launched a rocket missile attack today Most reports indicate that the rockets targeted military installations, but media reports also indicated that the rockets also targeted civilian concentrations; multiple explosions have been confirmed in Tel Aviv, but so far no injuries or deaths have been reported. US President Biden has ordered the US military to help Israel and shoot down Iranian missiles, according to the White House.
- In response to this news, the price of gold rose above $2,670 per ounce. Crude oil is rising very strongly WTI oil is already up almost 5% and, from its daily low, it is 8%.
- Wall Street indexes reacted to reports of an Iranian attack with declines and opened today’s session lower; semiconductor and technology companies are mostly losing Defense and oil companies are rising; shares of drone maker AeroVironment gain nearly 7%.
- We are seeing very strong dollar strengthening today, with EURUSD trading down over 0.8% at 1,104, and USDIDX up 0.6%.
- The US ISM manufacturing index in September remained at 47.2 points, with a slight rebound expected. A significant decline marks the price subindex at 48.3 points against 54 points. The employment sub-index fell by 46 points to 43.9 points (the lowest since May 2023). Construction spending fell by -0.1% m/m against an expected rebound of 0.2% vs -0.3% previously.
- New FTEs according to JOLTS amounted to 8.04 million vs. 7.711 million previously expected at 7.655 million. The report shows improvement, but the downward trend in FTEs remains unwavering.
- The PMI indices in Europe mostly slightly exceeded the preliminary results. However, this did not lead to an improvement in the euro, under pressure today from risk aversion sentiment.
- Powell, during a speech at NABE yesterday, indicated that the Fed does not intend to rush into cuts if there is no need. In response, expectations of a reduction 50 basis points have fallen and the probability of such a move is now 40%
- From the Fed’s perspective, Friday’s NFP data, due at 1:30 BST, could be decisive. It has been suggested that the employment number is below 100,000. With such a weak report, there could be a another reduction of 50 basis points (if oil prices are low enough).
- Cryptocurrencies are losing ground amid geopolitical tensions; bitcoin falls 3.5% to $61,000, ethereum almost 6%. Wheat prices on the CBOT rebound 2%, rising above $600 per bushel, while cotton unexpectedly falls below $73 per bale today, despite oil’s recovery (demand pressure on cheaper polyester….
- Ishiba, Japan’s new prime minister, has indicated that he wants the BoJ to maintain an accommodative monetary policy in the long term, but the issue of interest rates remains a matter for the central bank. The yen weakened after these remarks, but then reacted to the escalation of the international situation
- Tonight, the United States is hosting a debate between vice presidential candidates Walz and Vance. Walz and Vance
- The Fed’s Lisa Cook noted that AI’s impact on long-term inflation trajectories is uncertain; in the long term, it could reduce it, but in the short term, there is a risk of an increase; there are no studies yet confirming that AI can lead to higher wages without a concomitant increase in inflation; there are no studies yet confirming that AI can lead to higher wages without a concomitant increase in inflation.
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