Close Report
Tomorrow’s Releases
7:30e—Oct. Challenger Job Cuts: -28.5% prior
8:30e—Sept. Personal Income: 0.4% estimate vs. 0.3% prior
Personal Spending: 0.4% estimate vs. 0.6% prior
Sept. Core PCE (m/m): 0.2% estimate vs. 0.1% prior
Jobless Claims: 330k estimate vs. 331k prior
Continuing Claims: 2.534 mln estimate vs. 2.53 mln prior
10:00e—Oct. ISM Manufacturing: 51.5 estimate vs. 52 prior
ISM Prices Paid: 63 estimate vs. 59 prior
10:30e—EIA Natural Gas Survey: 59 BCF estimate vs. 68 BCF prior
Oct. Vehicle Sales-throughout day
Today’s Releases
MBA Mortgage Applications: 3.8% vs. 0% prior
Oct. ADP Employment: 106k vs. 61k prior revised
Q3 GDP Annualized: 3.9% vs. 3.8% prior
Q3 GDP Price Index: 0.8% vs. 2% prior
Core PCE (Q/Q): 1.8% vs. 1.5%
Personal Consumption: 3% vs. 3.2% prior
Q3 Employment Cost Index: 0.8% vs. 0.9% prior
Sept. Construction Spending: 0.3% vs. -0.2% prior revised
Oct. NAPM-Milwaukee: 63 vs. 70 prior
FOMC cuts 25 bps from benchmark and discount rate
The FOMC cut the benchmark by 25 BPS as widely expected. The statement“the upside risks to inflation roughly balance the downside risks to growth” is the most telling going forward, as it seems to place the FED may have its hands tied with regard to rate outlook. The statement acknowledged food and energy costs as upside risks to inflation, which is a shift away from the FED’s strict focus on core inflation. Today’s rate cut was an attempt to forestall downside risks to growth as a result of continued weakness in housing.
US Treasury: short-dated maturities to help fill unexpected funding needs
The US Treasury notes an “unprecedented” variation in rates as well as demand for short-dated maturities. The Treasury said it would put more focus on short-dated maturities to fill the funding needs of the government. A Treasury official said the short end of the curve is closely analyzed when there are near-term changes in receipts or outlays. Treasury has lowered the minimum purchase amounts for Treasury auctions to $100 from $1000.
SEC examining Goldman’s Q3 results
The SEC is investigating Goldman Sachs after they reported an 88% jump in Q3 profits. Goldman avoided extensive Q3 losses linked to subprime by taking short mortgage positions. The SEC would like to examine whether or not Goldman withheld information as to the extent of the mortgage crisis in order to corner the market.
US Treasury/ Fixed Income
The FED added $5.5 bln in overnight REPOS; FED Funds are trading at 4.75%.
Bonds were sent lower following the rate announcement.
30-yr. yield: up .0552 to 4.73%
10-yr. yield: up .0761 to 4.46%
2-yr. yield: up .0393 to 3.93%
6-month yield: flat at 4.07%
3-month yield: down .04 to 3.91%
4-week yield: down .03 to 3.99%
Equities
Equities shot lower following the rate announcement before rallying into the close.
DOW Futures: up 115 to 13935
S&P Futures: up 15.5 to 1551.25
Nasdaq Futures: up 28 to 2246
Forex
The USD continues to deteriorate, extending losses following the rate announcement.
USD Index down .28% to 76.558
EUR/USD up .33% to 1.4481
USD/JPY up .61% to 115.33
Cable up .6% to 2.08
USD/CHF flat at 1.1585
USD/CAD down .81% to .9461
Commodities
Energies got a boost from an unexpected drop in crude supplies; metals got a boost following the FED rate cut.
Crude up 4.5% to 94.49
Unleaded up 3.67% to 234
Heating Oil up 3.43% to 250.78
Natural Gas up 4% to 8.339
Gold up 1.09% to 796.50
Silver up 1.2% to 14.5
Platinum up .57% to 1449.1
Copper down .13% to 347.70