Making Sense

 US Equities closed in the green with S&P 500 closing the day 1% higher and Nasdaq closing the day 1.20% higher. The USD index pulled back from 106.63 to 106.18 levels as risk sentiment improved on diplomatic efforts. President Biden will visit Israel on Wednesday, Secretary of State Antony Blinken said in Tel Aviv. Yields on US2s rose to 5.10% and US10s rose to 4.73% and US2s10s bear steepened to -40 bps from last week's close of -45 bps.   NY Empire State Mfg index gauges business conditions for NY manufacturers. The index came in at -4.60 f/c -7.  Fed's Harker comments: the Central Bank should not create new pressures in the economy by increasing the cost of borrowing. "We should not at this point be thinking about any increases" Earnings Results from Bank of America, Goldman Sachs and Bank of New York Mellon are on Tuesday's Calendar. Economic releases scheduled on the day - U.S. retail sales, industrial production and business inventories data.  India W...

Markets flipped overnight on the hot US CPI report with DXY taking support at the 105.50 level. I mentioned about the risk reward in favor of USD longs in yesterday's post ahead of the DXY support and to play the divergence between the Fed's guided path and market pricing.  US CPI for the month of Sep rose 0.40% mom and 3.70% yoy. The largest contributor to the monthly increase  was the shelter index. Another major component was the gasoline index. Core CPI rose 0.30% mom and 4.10% yoy. Core services excluding rent rose 0.60% mom. The Initial jobless claims came in at 209K and continuing jobless claims rose 30K to 1702K , highest in 6 weeks. Fed Fund Futures implied market pricing for Dec 24 shifted higher to 4.70% from 4.54% we saw yesterday. Yields on USTs rose sharply higher with US2s marking a high of 5.09% and US10s marking a high of 4.73%. The move in US yields was also driven by a poor $ 20 bn 30Y auction  This morning China CPI came in at 0.20% mom below cons...