LiveWire

Stocks are on the rise, supported by rapidly falling government bond yields as market participants scale back bets of Fed tightening. Stocks are also supported by largely oversold technical conditions and still elevated bets of a very hawkish Fed. Today we are watching the August US job opening data, the JOLTS, for clues on whether the jobs market strength is showing signs of easing, which could strengthen the case of a Fed pivot to less tightening.

US stocks remain highly volatile after the US Personal Consumption Expenditure Core Price Index (PCE) came slightly higher than estimates for the month of August, slashing hopes of traders still hoping for an imminent Fed pivot from rapidly rising interest rates. Traders responded with slightly boosting expectations for further Fed rate hikes. Yields on 10-year Treasuries remain around 3.7%, shy from their peak at 4% earlier in the week. Meanwhile, the deflationary forces in the economy are intensifying but these can take longer to show up in the data.

Stocks are seeing positive momentum after this mornings better than expected economic data. The UK reported higher growth numbers and softer housing prices, a net positive for inflation. And the Swiss KOF leading indicator also came stronger than estimated, pointing to a better growth outlook in the region. 

Risk assets are under pressure this morning as investors weigh the implications of rather very hawkish central banks from developed economies. UK GfK September Consumer Confidence fell to -49, the lowest in records. And German PMIs too show deterioration, falling below expectations and forecasts. EU (PMIs) numbers are expected to come out soon.

The Fed raises rates by 75 basis points and sees another 125 bps room until the end of the year. Moreover, the committee sees the terminal rate for this hiking cycle at 4.6%, up from 3.8% in the June dot plot. The dollar is roaring, while stocks and bonds are down following the release.