23 Sep 2022

The three major U.S. stock indexes closed down in shock last night. As of the close, the Dow fell 0.35%, the Nasdaq fell 1.37%, and the S&P fell 0.84%. The yield on the 10-year U.S. Treasury bond fell 5.21% to close at 3.716%, a difference of about -41 basis points compared with the yield on the two-year Treasury bond. The fear index VIX fell 2.29%. Brent crude closed up 0.61%. Spot gold closed down 0.15% at $1,671.34 an ounce. The dollar index remained high, closing at 111.29.

Initial jobless claims rose by 213,000, slightly below expectations, while continuing claims fell to 1.379 million, also below expectations. Powell may not have wanted to look for signals in the ultra-high frequency releases, but the jobless claims data provided evidence. Evidence from this series of data suggests that the labor market looks stronger than it did just a few months ago, thus making the case for the Fed's monetary tightening.

Ataman Ozyildirim, senior director of economics at the Conference Board, said the leading indicator of the U.S. economy fell for a sixth straight month, possibly signaling a recession. Of the metric's components, only jobless claims and the yield spread have played a positive role over the past six months, and the yield spread has narrowed recently. In addition, the strength of the labor market is expected to continue to moderate in the coming months. In fact, the average working week in manufacturing has contracted for four of the past six months, a notable sign as businesses cut hours before laying off workers. Economic activity across the U.S. will continue to slow more broadly, with a possible contraction. A major reason for the slowdown is the rapid tightening of monetary policy by the Federal Reserve in response to inflationary pressures.

The Japanese yen surged against the dollar for the first time since the Bank of Japan intervened in the currency market since 1998. Japan's Deputy Minister of Finance Kanda Masaru clearly denied that 145 is the defensive line of the yen exchange rate. Japanese Prime Minister Fumio Kishida said that border controls will be eased from October 11. ECB members currently expect the European economy to grow by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024. European Central Bank executive Schnabel said the risk of a recession had risen. Rail workers across the country will go on strike on October 8 to resolve a wage dispute, the RMT union said. The German economy will lose 60 billion euros in 2022 and 100 billion euros in 2023 as a result of being forced to buy high-priced energy, Germany's economy minister said.

The Fed took in a total of $2.359 trillion from 102 counterparties in fixed-rate reverse repurchase operations, a record high. Given the uncertainty surrounding the Fed's rate path, inflows from overnight instruments that do not pose a risk of capital loss, such as reverse repos, are likely to continue.

Apple fell 0.64%, releasing an iPhone 14 software update to fix camera shake issues.

Microsoft rose 1.44%, the UK will investigate the cloud computing market, and giants such as Microsoft, Google, and Amazon may face dramatic changes in policy.

Amazon fell 1.04%. Affirm cooperated with Amazon to introduce a PAY-OVER-TIME plan to customers in Canada; Amazon AWS will build a new operation center in Mexico early next year.

Tesla fell 4.06%, recalling nearly 1.1 million U.S. vehicles, because the automatic window reversal system may not respond correctly after detecting obstacles; plans to restart the rooftop photovoltaic project in the fourth quarter, this time the project focuses on New home in Easton Park.

Meta rose 0.49%. According to IDC, global AR headset shipments will drop by 8.7% to 260,000 units this year, but the compound growth rate in the next five years will reach 70.3%.

Accenture fell 1.17%, its fiscal 2022 Q4 revenue of $15.4 billion was better than expected, and its fiscal 2023 Q1 revenue guidance of $15.2-15.75 billion was less than expected.

Salesforce rose 1.71%, set its fiscal 2026 revenue target at $50 billion, and increased its fiscal 2023 revenue guidance to $30.9-31 billion from $26.5 billion in fiscal 2022.

Toyota Motor rose 1.07%. The global planned production in October was adjusted to 800,000 units, about 100,000 units less than the previous monthly average plan. The company maintained its full-year production forecast of 9.7 million units.

Target tumbled 3.82 percent, kicking off early holiday season discounts and saying the retailer plans to hire as many as 100,000 workers for the holiday season, the same size as last year.

Sources from: Investing.com; Reuters.com

Louis Yap

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