Morning Reads

Morning Reads

• BOE Steps Back Into Bond Market to Restore Stability
• Pound’s Crash Creates Accidental Student-Loan Currency Traders
• On Portugal’s ‘Bitcoin Beach,’ Crypto Optimism Still Reigns
• Consumer Moods Improved in September as Gasoline Prices Fell
• 10-Year Treasury Yield Tops 4% for the First Time in 14 Years
• Larry Summers Says Hard Landing ‘Substantially More Likely’
• Texting on Private Apps
• U.S. Mortgage Interest Rates Jump
• Apple Ditches iPhone Production Increase After Demand Falters
• Meta Removes Chinese Effort to Influence U.S. Elections
• U.S. Companies Are Reshoring Jobs From China at Record Levels
• EV Tax Credits
• The Long Road to Driverless Trucks
• Best Buy, Home Depot Lock Up Goods to Fight Theft
• Alzheimer’s Drug Slows Disease Progression in Trial
• GM Delays Return-to-Office
• The 400 Richest People In America

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 S&P 500 futures are down 24 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 132 points and are trading 1.2% below fair value. The Dow Jones Industrial Average futures are down 104 points and are trading 0.7% below fair value.

Equity futures indicate a lower open, but came off their worst levels of the morning following a pullback in Treasury yields from overnight highs. The 10-yr note yield, which reached 4.01% earlier, fell to 3.89% immediately  following the Bank of England announcing a plan to conduct temporary purchases of longer-dated gilts "to restore orderly market conditions."

The 10-yr note yield has been inching back towards overnight highs, sitting at 3.95% currently, keeping pressure on investor sentiment. Notwithstanding the BoE announcement, GBP/USD is down 1.4% to 1.0575.

On a related note, the IMF came out against the policy moves in the UK, urging them to re-think tax cuts indicating the policy risks increasing inflation. 

San Francisco Fed President Mary Daly (not an FOMC voter) said the Fed wants to bring inflation down "as gently as possible" to avoid a downturn, according to Reuters.

Hurricane Ian is expected to hit Florida as a category four storm today. 

In corporate news:

• Apple (AAPL 145.93, -5.83, -3.84%): ends plans for iPhone 14 production increase as demand declines, according to Bloomberg
• Netflix (NFLX 225.39, +1.03, +0.46%): upgraded to Overweight from Neutral at Atlantic Equities
• Biogen (BIIB 290.00, +92.21, +46.62%): reports Lecanemab confirmatory Phase 3 Clarity AD study met primary endpoint, showing highly statistically significant reduction of clinical decline in large global clinical study of 1,795 participants with early Alzheimer's disease
• Lyft (LYFT 13.75, -0.41, -2.90%): slides on reports it is freezing all U.S. hiring through the end of 2022, according to NY Post
• Progress Software (PRGS 41.05, -0.52, -1.25%): beats by $0.03, beats on revs; guides NovQ EPS in-line, revs in-line, but mid-points are below consensus
• Thor Industries (THO 74.34, +2.59, +3.61%): beats by $1.26, beats on revs

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a lower note. Japan's Nikkei: -1.5%, Hong Kong's Hang Seng: -3.4%, China's Shanghai Composite: -1.6%, India's Sensex: -0.9%, South Korea's Kospi: -2.5%, Australia's ASX All Ordinaries: -0.6%.
  • In economic data:
    • Japan's August Leading Index 98.9 (last 100.3)
    • Australia's August Retail Sales 0.6% m/m (expected 0.4%; last 1.3%)
  • In news:
    • The Minutes from the Bank of Japan's July meeting showed that policymakers are ready to step up easing efforts if needed.
    • South Korea's finance ministry and central bank will conduct direct bond purchases in an effort to stabilize markets.
    • Caixin speculated that weaker demand for goods from China indicates the end of a shipping boom.
    • Chinese regulators have told banks to resume their use of a counter-cyclical factor in daily yuan fixings. North Korea conducted two missile launches off its east coast.
• Major European indices trade in the red. STOXX Europe 600: -1.2%, Germany's DAX: -1.2%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -1.1%, Italy's FTSE MIB: -1.7%, Spain's IBEX 35: -1.5%.
  • In economic data:
    • Germany's October GfK Consumer Climate -42.5 (expected -39.0; last -36.8)
    • France's September Consumer Confidence 79 (expected 80; last 82)
    • Italy's July Industrial Sales -0.1% m/m (last -0.4%); 16.3% yr/yr (last 17.9%). September Consumer Confidence 94.8 (expected 95.1; last 98.3) and Business Confidence 101.3 (expected 102.1; last 104.0)
    • Swiss September ZEW Expectations -69.2 (last -56.3
  • In news:
    • The Bank of England announced a plan to conduct temporary purchases of longer-dated gilts "to restore orderly market conditions." The announcement gave a brief boost to the pound, but the move was retraced entirely.
    • Germany is extending the operating life of two nuclear plants to reduce the risk of a winter energy shortage.
    • European Central Bank policymaker Kazimir said that a 75-bps hike would be a good option for the October meeting while policymakers Rehn and Holzmann also spoke positively about a 75-bps hike.