ASX 200 to fall, S&P 500 wobbles, Treasury yields hit 16-year high

ASX 200 futures are trading 16 points lower, down -0.22% as of 8:30 am AEST.

S&P 500 SESSION CHART

MARKETS

• S&P 500 finished lower but well off session lows of -0.64%
• Bond yields faced upward pressure from hotter-than-expected Canadian inflation
• US 2-year yield hit a session high of 5.11% – A level not seen since June 2007
• US 10-year yield advanced 5 bps to 4.36% – Highest since November 2008
• Market’s path of least resistance continues to lean on bearish factors such as surging yields, higher oil prices, negative seasonality trends, US government shutdown risk and ongoing UAW auto strikes
• Fed widely expected to pause at tomorrow’s meeting but maintain hawkish higher-for-longer messaging
• S&P 500 marks 100 days without 1.5% drop, first time since 2018 (Bloomberg)
• Hedge funds bets could spark turmoil in US Treasuries, BIS warns (FT)
• Plenty of startups looking at IPOs, but few prepared to go (Bloomberg)
• Saudi energy minister says oil cuts not about 'jacking up prices' (FT)

STOCKS

• Ford faces possible worker strike on both sides of US-Canada border (FT)
• Stellantis could close 18 US facilities under latest UAW deal (CNBC)
• Amazon considers new subscription offerings in healthcare, grocery (Insider)
• Instacart prices shares at $30 as IPO marks warms up (FT)
• Disney plans to double spending on parks and cruises, shares fall (CNBC)

CENTRAL BANKS

• Fed set to hold interest rates but leave tightening in play (FT)
• Fed faces obstacles from UAW worker strike, possible government shutdown and resumption of student loan repayments (Reuters)
• ECB to keep rates at 4% as long as needed, Villeroy says (Bloomberg)
• RBA discussed raising rates again in September, opted to pause (Bloomberg)

ECONOMY

• Canada inflation jumps, October rate hike bets rise (Reuters)
• OECD raises 2023 global growth outlook but cuts 2024 (Reuters)
• Eurozone August inflation revised slightly down(Reuters)
• US national debt tops US$33 trillion for first time ever (NY Times)
• US housing starts hit 3-year low, surge in permits point to strength (Reuters)
  
  

Canada's Inflation Surprise

Canada's inflation re-accelerated much more than expected in August.

• Headline: 4.0%, up from 3.3% in July and above the 3.8% expected
• Headline: 0.4% month-on-month, above the 0.3% expected
• Core: 3.3%, up from 32.% in July

The likelihood of another 25 bp hike from the Bank of Canada jumped to 42%, up from a prior 23%. While the Canadian dollar rallied around 0.6% to 74.6 US cents, the highest since 10 August.

Global Worker Strikes