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Inflation data sets direction for US stocks next week



Inflation data sets direction for US stocks next week

The rally in US stocks, which came despite uncertainty on Wall Street, is set to be tested this week, with key inflation data threatening to shut the door on expectations that the Federal Reserve will pull back from its hawkish policy.

The S&P index faced tough challenges this summer and has rallied 13% from its mid-June lows as Wall Street hopes rate hikes will end earlier than expected.

Friday’s US jobs report bolstered the case for the increase, but weighed little on stocks as the index fell less than 0.2% on the day, snapping its third straight week of gains.

Stocks could face further upside if investors believe the central bank is winning its battle against rising consumer prices, but recent commodity prices and signs that inflation remains strong despite an easing of monetary tightening could further weigh on the outlook. Interest rate hikes will likely stop early next year, and that could lead to the destruction of risk appetite, pushing stocks back down.

“We’re now at a point where consumer price data is reaching its critical mass, which gives us some indication of what we and the central bank are facing,” said Michael Antonelli, Baird’s managing director of market strategy.

lame walk

The recovery was short-lived in the middle of the 2022 bear market, and three benchmarks reflected the S&P index reaching new lows, raising doubts about the sustainability of the recent rally. The bleak outlook for investors was highlighted by the latest data from Bank of America’s global research arm, which saw the average recommended stock allocation by US strategists, on the sell side, fall to its lowest level in more than five years in July, according to the S&P. 500 rose 9.1% in the month, its biggest gain since November 2020.

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Stock trading by institutional investors is also subdued, and the level of holdings for preferred and regular investors is at the 12th percentile of its range since January 2010, according to a Deutsche Bank report published last week. Federal Reserve officials last week said they were puzzled by bond market prices reflecting investors’ expectations that the central bank will start cutting interest rates in the first half of next year, as San Francisco Fed President Mary Daley said.

U.S. interest rate futures posted a 69% chance of a 75 basis point hike at the September meeting, up from about 41% ahead of the payrolls data, and futures traders were also taking into account a fed funds rate of 3.57% by the end of the year. Options markets offer little evidence of investors rushing to capitalize on the stock market.

Trade alert data showed the average one-month daily volume in US-listed put options fell 3% on June 16.

Matthew Timm, head of traded equity derivatives at Cantor Fitzgerald, expressed surprise: “We were surprised to see investors fearing poor market performance and chasing bullish buying. People are watching.

Corporate profits

Celia Rodgers Hobbs, portfolio manager at Brandwine Global, believes much of the recent rally has been driven by short-covering, particularly in several high-performing tech names that have underperformed this year. “The market doesn’t want to miss the next rally, but it’s hard to know if it will last or not,” he said.

Of course, investors aren’t destined to pull back en masse. Corporate earnings were stronger than expected in the second quarter, with 77.5% of S&P companies beating earnings estimates from Refinitiv data; That lifted some of Wall Street’s gains.

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Also, Bird’s Antonelli believes the lower-than-expected inflation numbers next week could push more investors into the stock market.

Tom Siomets, chief investment officer at AE Wealth Management, said the market has yet to bottom, urging investors to avoid chasing stocks. “The market is creating some wishful thinking, and investors are ignoring the old adage: Don’t fight the Fed,” he says.

Weekly calendar


11:00 New York Federal Reserve Inflation Forecast 3 years


6:00 National Federation of Independent Small Business Index

8:30 Industrial Production Report and Labor Cost Report


8:30 CBI

10:00 Total Trade Inventories Report

14:00 Union Budget Statement compared to previous year


8:30 Benefit Claims

8:30 p.m


8:30 Import Price Index

10:00 Yumich Consumer Price Index Report

10:00 Yumić 5-year inflation expectations report

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Calls to freeze oil and gas investments threaten global growth



Calls to freeze oil and gas investments threaten global growth

The Bank of Japan is trying to contain the bond crisis despite upward pressure

The yield on 10-year Japanese government bonds fell slightly from the 10-year on Tuesday after a strong bid and the Bank of Japan pledged to buy bonds in the next session.

However, global yields are still rising, and the 10-year swap rate has hit a record high, indicating strong upward pressure on Japanese government bond yields.

The yield on 10-year Japanese government bonds fell a basis point to 0.760 percent — its highest level since September 2013 — in the session, after reaching 0.780 percent.

“The Bank of Japan is trying to contain high yields with emergency bond purchases, but there are still upward pressures,” said Takeshi Ishida, strategist at Resona Holdings. He added: “The issue now is when the Bank of Japan will adjust its policy, not whether or not it will.”

The 10-year interest rate swap rose to 0.9875 percent on Tuesday. The Bank of Japan said on Monday it would hold an unscheduled bond purchase on Wednesday and another on Friday after yields hit multi-year highs.

The order in the government bond auction was 3.93 times lower than the 4.02 times it was sold in last month’s auction. But the gap between the low and the average narrowed to 0.02 yen from 0.10 yen previously, indicating strong demand.

Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, said the decision was supported by the Bank of Japan’s bond purchases. He added: “Although the Bank of Japan has widened the trading range for 10-year bond yields to give the market more flexibility, yield levels and auction results are determined by what the bank does.”

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Bids for the 10-year bond saw weak demand in the previous two months as investors were wary of buying bonds amid growing speculation that the Bank of Japan would adjust its ultra-low interest rate policy.

On the other hand, Japanese Finance Minister Shunichi Suzuki said on Tuesday that any decision on currency market intervention would depend on volatility and not a specific level of the yen, with investors bracing for a possible move if the yen crosses the 150 yen level. against the dollar.

Suzuki said authorities were closely monitoring the currency market and were ready to respond, reiterating his warning against speculative activity as the yen nears the 150-yen level against the dollar in a year.

“Currency levels won’t be a deciding factor” on intervention, Suzuki said, “it’s volatility that matters.”

The foreign exchange market showed little reaction to Suzuki’s comments, although traders were watching to see what action Japanese authorities will take as the year approaches levels that prompted intervention a year ago. Speaking at a press conference, Suzuki added that “authorities are closely monitoring market movements… It is important that currencies move stably to reflect economic fundamentals.” “We will be fully prepared to respond.”

A weaker yen pushes up prices by raising import costs, while other factors, including the war in Ukraine and production cuts by oil-producing nations, are also weighing on cost-driven inflation, Suzuki said.

As for newly issued 10-year government bonds, which yielded 0.8 percent, the highest level in a decade, Suzuki said long-term interest rates are determined by the market, reflecting various factors.

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In general, higher long-term interest rates lead to higher borrowing costs, so officials are closely monitoring the impact of movements in long-term interest rates and how they may affect households and businesses, Suzuki said.

In a separate matter, the heads of finance authorities in South Korea and Japan agreed on Tuesday to resume periodic “spacecraft meetings” as part of their efforts to boost financial cooperation between the two countries, South Korean officials said.

South Korea’s Yonhap news agency made the announcement in a joint statement after a meeting in Tokyo on Tuesday by Kim Joo-hyun, head of the Financial Services Commission in Seoul, and Teruhisa Kurita, commissioner of the Financial Services Agency in Tokyo.

The two groups will resume their regular meeting in Seoul on December 19-20 for the first time since 2016. During a meeting of the Korean and Japanese delegations on Tuesday, Kim and Kurita also agreed to exchange their experiences and ideas. Financial services of general importance, such as climate change and digitization.

Kim and Kurita discussed potential areas for deepening cooperation between the two groups to safeguard Korean-Japanese financial stability and strengthen the two countries’ financial markets.

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OPEC Secretary General: Lack of Oil Investments Threatens Energy Security



OPEC Secretary General: Lack of Oil Investments Threatens Energy Security

Oil prices rose 30 percent in the third quarter as supply shortages persisted

ABU DHABI, TOKYO – Reuters: A lack of investment is putting energy security at risk, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) Haitham Al-Qais confirmed yesterday at the ADIPEC oil conference in Abu Dhabi. OPEC’s secretary-general added: “We call for continued investment in the oil and gas sector, and we believe calls to freeze investment will be counterproductive,” Reuters reported.
Al-Qais confirmed that OPEC is optimistic about oil demand.
In the middle of last month, the chief OPEC official warned against abandoning fossil fuels in his first response to the International Energy Agency’s latest reports.
OPEC Secretary General Haitham al-Qais said that abandoning fossil fuels would “lead to energy chaos on an unprecedented scale, with dire consequences for economies and billions of people around the world.”
Major international oil major BP said countries around the world should invest in oil and gas production to avoid a sharp rise in their prices, while accelerating the energy transition to tackle greenhouse gas emissions.
(ADIPEC 2023) is considered to be the largest event in the world’s energy and oil industry and is supported by the Ministry of Energy and Infrastructure in the United Arab Emirates and a group of partners. It is a platform for exchange of ideas and global debate. Challenges affecting energy markets and their effects on prices, including political challenges and international conflicts and their impact on energy supplies, provide a roadmap and future solutions to support and develop a sustainable, secure and low-cost energy system.
In turn, oil prices rose on Monday, recovering some of their losses from last Friday, as investors focused on global supply shortages and expectations of a last-minute deal to avoid a US government shutdown, which restored their appetite for risk. By 09:49 GMT, Brent crude futures for December delivery were up 54 cents, or 0.59%, at $92.74 a barrel, after falling 90 cents in last Friday’s session. Brent crude oil for November delivery was down seven cents at $95.31 a barrel when the contract closed last Friday.
West Texas Intermediate crude futures were up 49 cents, or 0.54%, at $91.28 a barrel, after falling 92 cents.
Both crudes rose nearly 30% in the third quarter, supported by expectations that oil supply shortfalls will widen in the fourth quarter after OPEC+ extended voluntary production cuts until the end of the year.

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Emirates News Agency – “Kadem” mission showcases critical communications capabilities at Oman Defense, Security and Fire Expo



Emirates News Agency – “Kadem” mission showcases critical communications capabilities at Oman Defense, Security and Fire Expo

ABU DHABI, 2nd October, 2020 (WAM) – “Katem”, a subsidiary of EDGE Group and a leader in developing innovative and ultra-secure communication solutions, is participating in the Oman Defense, Security and Fire Exhibition 2023. Showcase an advanced portfolio of ultra-secure devices and network encryption solutions.

The international exhibition, to be held in Muscat on October 9 and 10, is an important forum for the critical communications sector in the Gulf Cooperation Council countries and the Middle East region in general.

During the event, the company will showcase its next-generation secure smartphone, which aims to offer advanced security features and capabilities to meet mission-critical needs.

Katam’s participation in the exhibition is a strategic move aimed at reaffirming its commitment to mission-critical sectors including emergency response, public safety and critical infrastructure protection. The company’s booth will showcase a range of ultra-secure devices, including KATIM X2, an ultra-secure 5G smartphone for government leaders, senior executives, emergency responders, individuals and teams handling sensitive information. and the KATIM R01, a rugged smartphone for critical communications in harsh field conditions.

KATIM will showcase its latest network encryption software, the KATIM Gateway 9011, which provides advanced post-quantum encryption for sensitive communications and data transmission to address increasing data interference during data transmission. Exhibitors can visit Katam at booth F10 to meet the company’s team and learn more about secure communications solutions for mission-critical operations.

Mustafa Badr al-Din / Ahmad al-Nu’imi

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