Asian equities declined for a second day, and USD/JPY is back above the psychological 150 level. The U.S. election dominates the macro theme, favoring a stronger dollar and higher U.S. yields. Treasury 10-year yields jumped 11 basis points to 4.20% after Federal Reserve Bank of Kansas City President Jeffrey Schmid said he favors a slower pace of interest rate reductions, given uncertainty about how low the U.S. central bank should ultimately cut rates.
Domestically, the UK Public Sector Borrowing Requirement (PSBR) increased in September and was higher than officials forecast. In fact, the £16.6 billion deficit was the third highest September figure since monthly records began in January 1993. Rachel Reeves, the Chancellor of the Exchequer, finds herself between a rock and a hard place. In short, she will have to raise taxes to finance the increase in day-to-day spending while borrowing more to invest. Cable sits at 1.3000.
In other markets, Bitcoin fell 0.5% to $67,402.76, Ether fell 1.3% to $2,639.7, Japan’s 10-year yield advanced two basis points to 0.975%, while Australia’s 10-year yield advanced 15 basis points to 4.42%. West Texas Intermediate crude fell 0.3% to $70.33 a barrel, and spot gold rose 0.6% to $2,735.91 an ounce.
As for the day ahead, BOE’s Andrew Bailey, ECB’s Klaas Knot, and Robert Holzmann are set to speak at the Bloomberg Global Regulatory Forum in New York. The ECB’s Christine Lagarde will be interviewed by Bloomberg Television. In the U.S., we’ll hear from Philadelphia Fed President Patrick Harker. Champions League football is back on the agenda this evening—how exciting!
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