US MARKET WRAP: Crude, GBP endure a roller-coaster session; stocks red

Fedspeak was largely in line with expectations, with Governors Powell and Brainard sticking to script, highlighting the need for gradual monetary policy tightening (with Brainard highlighting structural inflationary headwinds), while Non-voter Bullard stuck to his overtly-dovish playbook. The latest Fed Primary Dealers Survey was released, revealing that Wall St foresees a hike in December & 3 hikes in 2018, in line with The FOMC's dot plot.

In terms of ECB speakers, President Draghi reiterated the idea that “ECB guidance reinforces stimulus from low rates and QE, while noting that the "well past" phrase in the current version of forward guidance is “very, very important in anchoring rate expectations.” Draghi also opined that wages are “not where they need to be.” ECB member Praet delivered little new as he stressed that the “measured rates of inflation are exceedingly volatile and metrics of underlying prices pressures remain weak,” while ECB hawk Weidmann stuck to script, suggesting that the ECB needs to raise rates "over time."

Brexit headlines led to the most notable market reactions today. In his lunch time address the EU’s Brexit negotiator Barnier stated that Brexit negotiations are at a deadlock,” while a Handelsblatt interview suggested that Barnier could offer the UK a two-year transitional deal. An FT sources piece didn’t get much traction, as it suggested that EU leaders are to block Brexit trade talks at the October summit.

The White House revealed that US President Trump is set to deliver an address on Friday regarding the Iranian nuclear deal.

There has also been chatter of an earthquake in North Korea, it appears to be near where a previous nuclear test took place, but there has been no verification of such a test. Since then a noted White House reporter has suggested that the Minor earthquake is likely a subsidence related to the prior DPRK nuclear test, while the USGS confirmed that it is investigating the matter.

The USd finished lower, with the NZD outperforming, and GBP managing to post gains despite the choppy Brexit newsflow-induced moves, while the CHF underperformed against its major counterparts.

US equity markets were relatively rangebound as financials weighed with JPMorgan and Citi FICC sales and trading revenues coming in light in the first batch of big bank earnings, while telecoms were the biggest loser as AT&T warned on its upcoming figures owing to the recent Hurricanes.

The S&P 500 -0.18% at 2,550.61, NASDAQ 100 -0.19% at 6,069.99, Dow -0.14% at 22,839.97
Best-performing sectors: Industrials +0.50%, Utilities +0.47%, Cons. Staples +0.36%
Worst-performing sectors: Telecoms -3.58%, Financials -0.77%, Cons. Disc. -0.67%

US yields edged lower, after the cautious Fed rhetoric and a solid 30-year bond auction. Bullish short term Eurodollar option positions have also been noted in-lieau of the FOMC meeting minutes, released yesterday. US Dec’17 10y T-note futures settled at 125.03, up 2 ticks on the day.

Oil was relatively un reactive to the weekly DoE inventory data, although some choppy price act5ion was observed later in the day without any fresh news flow, although ranges remained confined. WTI crude futures settled at USD 50.60/bbl, down USD 0.70, as Brent crude futures settled at USD 56.25/bbl, down USD 0.69.

12 Oct 2017 - 21:00- Research Sheet- Source: RANsquawk

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