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The US treasury will complete the coupon auctions for the week with the sale of $44 billion of 7-year notes at the top of the hour. The six-month averages of the major components of the auction show:

• High yield or .215%
• WI level at the time of the auction 4.235%
• Tail -2.0 basis points vs 6-month average of 0.1 basis points
• Bid to Cover 2.74X vs 6-month average of 2.54X
• Directs (a measure of domestic demand) 20.6% vs. 6-month average of 17.3%
• Indirects (a measure of international demand) 72.0% vs. 6-month average of 70.3%
• Dealers (they take the rest) 7.5% vs. 6-month average of 12.4%

AUCTION GRADE: A

Highlights: All the components were above the 6-month averages.

The Tail was -2.0 basisi points with a bid to cover showing a large number of bids vs the issue amount. The domestic and international buyers were also comfortably above their six month average. That left a small 7.5% for the dealers to absorb which was will below the 12.4% average.

This article was written by Greg Michalowski at www.forexlive.com.

The US treasury will complete the coupon auctions for the week with the sale of $44 billion of 7-year notes at the top of the hour. The six-month averages of the major components of the auction show:

• Tail 0.1 basis points
• Bid to Cover 2.54X
• Directs (a measure of domestic demand) 17.3%
• Indirects (a measure of international demand) 17.3%
• Dealers (they take the rest) 12.4%

The yield last month came in at 3.668%. The current 7-year yield is much higher at 4.239%.

The 2 and the 5-year auctions yesterday were met with average/below average demand. WIll the buyers show up today?

This article was written by Greg Michalowski at www.forexlive.com.

The major European indices are closing the day in the red after all the indices closed higher yesterday.

The closing levels are showing:

• German DAX, -0.25%
• France’s CAC -0.61%
• UK FTSe100 -0.80%
• Spain’s Ibex -0.91%
• Italy’s FTSE MIB -0.26%

In the European debt market:

• Germany 2.338%, +5.5 basis points
• France 3.080%, +7.5 basis
• UK 4.316%, +6.4 basis points
• Spain 3.035%, +5.1 basis points
• Italy 3.563%, +6.8 basis points

Over the month of October,. 10 year yields are higher:

• Germany, +20.7 basis points
• France, +16.2 basis points
• UK, +32.0 basis points
• Spain +9.5 basis points
• Italy, +11.6 basis points

This article was written by Greg Michalowski at www.forexlive.com.

• OpenAI is using AMD chips alongside Nvidia chips
• company has dropped the foundry plans for now due to cost and time needed to build a network
• Plans instead to focus on in-house chip design efforts

OpenAI has also said that they have reserved 2026 TSMC manufacturing capacity to manufacture the chips

• Nvidia shares are trading up $1.03 at $141.52. It reached the high $142
• AMD shares are trading up $3.11 or 1.94% at $163.02. It’s high reach $164.75 today.
• Broadcom (AVGO) is trading up $5.59 or 3.25% at $177.67. It’s high price today reached $178.10.

This article was written by Greg Michalowski at www.forexlive.com.

In the hierarchy of economic indicators, JOLTS and consumer confidence are about even. Normally, I would rank consumer confidence higher as it’s more of a forward looking indicator.

However, more recently Fed officials have frequently cited falling job openings in the JOLTS report as a reason to cut rates and that indicator is now back to 2019 levels, which should keep rates on a downward path.

On the flipside, consumer confidence had its best one-month improvement since May 2021. That’s a great sign for spending but it might only represent political feelings ahead of the election and falling gasoline prices, so the market may be reluctant to embrace it. The indicator also remains within its narrow two-year range.

So after some initial back-and-forth in the FX market, we’re seeing some downward pressure on the US dollar.

This article was written by Adam Button at www.forexlive.com.

• Revenue index +9.2 vs +10.1 prior
• Employment -0.2 vs +2.0 prior
• Wages and benefits 16.3 vs 12.3 prior
• Retail sales survey -11.4 vs -8.9 prior

Comments in the report:

Utilities

• We feel that the pace of general business has increased on the positive side.

Professional, scientific and technical services

• It’s very hard to tell if the delays in starting new projects
  are due to unease about the election and any disruptions in its
  aftermath–meaning things will go back to normal once the dust settles–or
  whether there is something more systemic going on that reflects a
  longer-term downturn in IT consulting demand.
• We saw a slight improvement in revenue. We are not sure it’s sustainable.
• We are seeing many cyber scams and phishing attempts. Scammers are getting very clever, and it’s more difficult to identify.
• Post-U.S. election, the U.S. and global economies are likely to improve, per our global customer feedback.
• Still fair amount of uncertainty, especially regarding
  availability of capital (debt and equity) to upstream oil and gas
  industry. We do retained search as well as outsource recruiting for
  companies that have consistent needs over an extended period of time.
  October was a tough month. As was September, but October was worse. This
  year has been difficult in general. We know that companies want and
  need to hire, but they don’t mind waiting for the right person to come
  along rather than using a proactive process that will save them a lot of
  time. We hope that after the elections, people will have an increased
  sense of stability and optimism.
• It is difficult to evaluate activity. We’re not sure if the
  hesitation about investment is because of the election, inflation or
  overbuilding of speculative industrial space.
• Our biggest limiting factor has been our ability to find good
  engineers. In the last couple of months, that seems to be getting
  easier. We have made some good movement in hiring.
• There is an increase in wire fraud, and we have hired a
  third-party company to help with this. This is an extra expense but one
  we feel is necessary to prevent theft. There is also an increase in
  identity fraud, specifically seller fraud. The change in labor laws has
  increased our employee expense as well.
• Business is slowing down noticeably.
• The election results or uncertainty around the results is making our clients hesitant to hire our company.
• The cost of labor in the food industry has forced the
  professional service industry to raise wages for entry-level workers to
  remain competitive. Meanwhile, high interest rates have caused many
  entities to slow delivery or stop construction and renovation projects,
  resulting in an overall slowing of business.

Management of companies and enterprises

• There’s an overwhelming amount of time and money spent trying to stay in compliance with rules and regulations.
• The election is so close. Once that is behind us, we are very
  optimistic, regardless of the candidate at the top of the ticket that
  wins the election.

Administrative and support services

• Expectation of lower interest rates looks promising. Recent increases in 10- and 20-year treasuries are concerning.
• Corporate travel tends to slow down in our market during the fourth quarter of federal election cycles.
• Difficult to fill in the circle on revenue and employee
  projections for six months from now when we are still not through the
  election. We are cautiously optimistic, but we are not investing in
  additional technology or tools until we can determine where the dust
  settles economically post-election. There has been a slight uptick in
  hiring from our clients; however, the roles are one-off,
  difficult-to-fill roles that require unique skill sets. We have not seen
  an uptick in hiring for professional mainstream roles in accounting,
  finance, HR, marketing or administrative capacities. Candidates are
  still receiving multiple offers because there is still a shortage of
  strong, experienced candidates for professional positions.

Educational services

• The political environment will remain highly uncertain until at
  least after the election, and possibly through January. This has some
  direct impact on our business.

Accommodation

• Our food cost continues to be high, especially for commodities
  like orange juice. Our outlook for the first quarter of 2025 is good but
  is being hurt by a renovation that will take out 60 rooms from our
  inventory beginning in early January.

Personal and laundry services

• We think there is uncertainty about the presidential election.

Rental and leasing services

• Blanket tariffs and mass deportations would be horrible for the
  Texas business community. We hope that professional economists will
  prevail over populists and keep the business conditions strong,
  regardless of who wins the general election.

Air transportation

• Hurricanes have impacted travel.

Support activities for transportation

• Uncertainty may not have changed, but optimism has improved.

Warehousing and storage

• We believe our outlook for the near and midterm remains pretty
  consistent. We do expect higher selling costs and costs to provide
  services, including the wages we pay, in the new year as inflation
  continues to put pressure on the business.

Publishing industries (except internet)

• Across 2024 we saw a slowdown in new business activity. We are
  hopeful that this turns around as optimism returns to the market. As a
  business-to-business company, we rely on the willingness and ability of
  companies to forward invest in new capabilities, which they have not and
  will not do in periods of economic uncertainty. We are still feeling
  the impacts of the rate environment and volatile consumer spending
  environment of the last 18 to 24 months. We are hopeful this will
  change, but we also believe that positive economic signals and
  appropriate Federal Reserve action are required in order to hasten the
  return of optimism.

Data processing, hosting, and related services

• As buyers wait to make decisions until after the election and
  any post-election repercussions, the market feels very soft. As such,
  our decisions on hiring and investments are on hold.

Credit intermediation and related activities

• Not sure the rate decrease was warranted at this time.
  Inflation has not been cooled far enough to say it will not come back,
  forcing rates even much higher in the future. If this happens the
  Federal Reserve will most certainly cause a recession.
• We are beginning to see an increase in the number of loan
  inquiries from commercial property owners who have bank loans with
  balloon maturities that the banks have previously been willing to roll
  over but are now unwilling. Historically, banks have been willing to
  extend maturities once or twice if a balance for a loan underwritten in a
  much lower interest rate environment cannot be refinanced in a higher
  interest rate environment absent a material paydown in the loan balance.
  We are also beginning to see commercial real estate investment brokers
  presenting sales packages on behalf of banks for real estate owned
  property. Most long-term lenders have not materially reduced their
  quoted interest rates in the past three weeks.
• We see a decrease in our costs due to a drop in our funding costs.
• The geopolitical environment has created unstable economic
  conditions, making a forecast hard to predict. The best tactic at the
  moment is to squat and wait. Consumers are suffering from the high cost
  of food products and the price jump in insurance premiums.

Securities, commodity contracts and other financial investments and related activities

• We have not seen any change in current market conditions from
  September to October. We remain hopeful that we will eventually be able
  to resume business once we have more rate cuts, which will help improve
  financing costs for new development.
• Ag sector income is up slightly. Retail sales are flat, tourism is down slightly.
• We’re seeing general slowdown as we approach the election. Probably normal.
• Demand remains stable. Reduction in the federal funds rate by
  50 basis points has improved business outlook, confidence and
  profitability.

Real estate

• It has been flat across the board.
• Buyers do not like uncertainty. Two wars going on is a concern for where to invest money.
• Folks are just grinding it out right now, not spending more
  than they have to, looking forward to additional rate decreases, hoping
  expectations don’t have to be lowered any further, and anxious to see
  what our next president will do.
• Capital markets conditions are improving for real estate dealmaking, and we expect 2025 to be an improvement over 2024.

Insurance carriers and related activities

• We’ll reassess next month after the election.

Texas Retail Outlook Survey

Electronics and appliance stores

• People with money are still sitting on the sidelines. People without money are suffering.
• Presidential election will cause some concern.

Motor vehicle and parts dealers

• Trends are very concerning. Operating profits are down 20 percent. Gross revenue declined, and expenses are up significantly.
• Consumer traffic for higher cost products is decreasing. Our
  business is caught in the middle of inflated pricing, stubbornly high
  interest rates and high monthly payments.

Merchant wholesalers, nondurable goods

• The election will bring change to the marketplace, no matter the
  outcome. If policies move toward a more protectionist bend (import
  tariffs), we could experience some blowback on our exports. If the
  dollar strengthens, we will see our customers trim their orders or order
  frequency. A weak dollar is good for our export business.

Nonstore retailers

• Hiring new truck drivers is the biggest problem our company
  faces. Our employees are aging, and we are worried for the future
  because we can’t find any qualified truck drivers. Part of the problem
  is the labor pool. One guy who applied had 20 jobs in 10 years. Also, it
  is competition with high oilfield salaries.

Food services and drinking places

• Lack of business travel to downtowns and general low office
  occupancy continue to impact revenue. Cost of goods sold and labor costs
  remain high. Insurance and other operating costs are increasing. This
  is one of the toughest markets we have endured in 45 years of
  operations.
• The election is impacting the outlook for the remainder of this year and next.
• Although we are concerned about the outcome of U.S. elections, we
  are hopeful the swing either way will not create more uncertainly in the
  economy. Election and tax policy are going to be key in determining
  future plans.

This article was written by Adam Button at www.forexlive.com.

The final Q3 tracker is out from the Atlanta Fed and it’s a sizeable downgrade to 2.8% from 3.3%. The official report is due out tomorrow.

“After this morning’s Advance Economic Indicators release from the US
Census Bureau, the nowcast of the contribution of net exports to
third-quarter real GDP growth fell from 0.04 percentage points to -0.38
percentage points,” the report said.

The consensus for tomorrow’s GDP report is 3.0%.

This article was written by Adam Button at www.forexlive.com.

• Prior was 98.7 (revised to 99.2)
• Present Situation Index 138.0 vs. 124.3 prior
• Expectations Index 89.1 vs 81.7 prior

This number isn’t as good as it looks as it surprisingly fell to 98.7 compared to 104.0 expected in the prior report.

That said, it was the strongest gain since March 2021 and there is also this:

“The proportion of consumers anticipating a recession over the next 12
months dropped to its lowest level since the question was first asked in
July 2022, as did the percentage of consumers believing the economy was
already in recession. Consumers’ assessments of their Family’s Current
Financial Situation were unchanged, but optimism for the next six months
reached a series high.”

These numbers tend to be strongly correlated with politics and gasoline prices but that sounds like real optimism.

This article was written by Adam Button at www.forexlive.com.

• Prior month 8.040M revised lower to 7.861M
• Job openings 7.443M vs 8.000M estimate. Lowest since January 2021
• Vacancy rate 4.5% versus 4.7% last month (revised from 4.8%)
• Quits rate 1.9% versus 2.0% (revised from 1.9%) last month
• Separations rate x.x% versus 3.1% last month

Details:

• Job openings are down 1.9 million over the year
• Job openings rate is at 4.5%

• Job openings decreased in:
  • Health care and social assistance: -178,000
  • State and local government, excluding education: -79,000
  • Federal government: -28,000
• Job openings increased in:
  • Finance and insurance: +85,000

• Hires: STEADY

  • Number and rate of hires remained steady at 5.6 million and 3.5%, respectively.

• Separations: STEADY but still down on the year.

  • Total Separations

    • Unchanged at 5.2 million in September; down by 326,000 over the year.
    • Total separations rate steady at 3.3%.

  • Quits: STEADY, but down on the year

    • Remained at 3.1 million; down by 525,000 over the year.
    • Quits rate unchanged at 1.9%.
    • Decreases observed in professional and business services (-94,000).
    • Increases seen in:
      • State and local government, excluding education: +22,000
      • Real estate and rental and leasing: +18,000

  • Layoffs and Discharges: STEADY, but up on the year

    • Stable at 1.8 million; increased by 238,000 over the year.
    • Layoffs and discharges rate rose to 1.2%.
    • Increases in durable goods manufacturing: +46,000
    • Decreases in state and local government, excluding education: -20,000

  • Other Separations

    • Little change, remaining at 292,000 in September.

The revisions from last month showed openings higher, hires up to, but seperations including quit and layoff were up. Mixed.

• Job openings for August revised down by 179,000 to 7.9 million
• Hires revised up by 118,000 to 5.4 million
• Total separations revised up by 171,000 to 5.2 million
  • Quits revised up by 94,000 to 3.2 million
  • Layoffs and discharges revised up by 60,000 to 1.7 million

This article was written by Greg Michalowski at www.forexlive.com.

htThe JOLTs job opening data will be released at the top of the hour. The expectations are for 8.000M which is a touch lower than the 8.040M last month. For your guide, the expectation of last month was for 7.660M. So the openings were much stronger than expectations last month and are expected to be steady this month.

Below are the numbers from last month for comparison:

• Prior month 7.673M revised to 7.711M
• Job openings 8.040M.
• Vacancy rate 4.8% versus 4.6% last month
• Quits rate 1.9% versus 2.0% last month (revised from 2.1%)
• Separations rate 3.1% versus 3.2% last month

US consumer confidence for October will also be released with expectations for 99.5 versus 98.7 last month. The range has been from about 98 to 115 since the pandemic. The current levels are near the low.

This article was written by Greg Michalowski at www.forexlive.com.

Yields continue to move higher as markets adjust to the potential for a Trump Presidency next week, and it is making the stocks pause. The futures are currently implying:

• Dow industrial average, -188 points
• S&P index, -12.0 point
• NASDAQ index, -6.25 points

Looking at the US yield curve:

• 2 year yield 4.170%, +3.0 basis points
• 5-year yield 4.163%, +4.9 basis points
• 10 year yield 4.328%, +5.0 basis points
• 30 year yield 4.569%, +3.9 basis points

a snapshot of the earnings this morning showed:

• Sysco Corp (SYY) Q1 2025: EPS 1.09 (exp. 1.13) – Missed, Revenue 20.48bn (exp. 20.47bn) – Met
• Corning Inc (GLW) Q3 2024: EPS 0.54 (exp. 0.52) – Beat, Revenue 3.73bn (exp. 3.72bn) – Beat
• PayPal Holdings Inc (PYPL) Q3 2024: EPS 1.20 (exp. 1.07) – Beat, Revenue 7.85bn (exp. 7.88bn) – Met
• Nokian Tyres (TYRES FH) Q3: EPS -0.03 (exp. -0.08) – Beat, Revenue 313mn (exp. 337mn) – Missed
• Phillips 66 (PSX) Q3 2024: EPS 2.04 (exp. 1.68) – Beat, Revenue 34.44bn (exp. N/A)
• SoFi (SOFI) Q3 2024: EPS 0.06 (exp. 0.04) – Beat, Revenue 0.68bn (exp. 0.68bn) – Met
• JetBlue Airways Corp (JBLU) Q3 2024: EPS -0.16 (exp. -0.26) – Beat, Revenue 2.36bn (exp. 2.34bn) – Beat
• McDonald’s Corp (MCD) Q3 2024: EPS 3.23 (exp. 3.20) – Beat, Revenue 6.87bn (exp. 6.82bn) – Beat
• Pfizer Inc (PFE) Q3 2024: EPS 1.06 (exp. 0.62) – Beat, Revenue 17.7bn (exp. 14.95bn) – Beat
• Royal Caribbean Cruises Ltd (RCL) Q3 2024: EPS 4.20 (exp. 5.03) – Missed, Revenue 4.9bn (exp. 4.9bn) – Met

Looking ahead, the good stuff starts to show up after the close with AMD, Alphabet, Chipotle all releasing. Tomorrow, Microsoft and Meta report and on Thursday Amazon and Apple report.

Below is the schedule of releases for the rest of the week

After Close today:

• AMD
• Alphabet
• Snap Inc.
• Chipotle
• Visa
• First Solar

WednesdayBefore Open:

• Lilly
• Caterpillar
• Humana

After Close:

• Microsoft
• Meta
• Coinbase
• Robinhood

ThursdayBefore Open:

• Uber
• Peloton
• Merck
• ConocoPhillips
• SiriusXM
• Altria
• Mastercard

After Close:

• Amazon
• Apple
• Intel

FridayBefore Open:

• FuboTV
• Chevron
• ExxonMobil
• Wayfair

This article was written by Greg Michalowski at www.forexlive.com.

• Prior month 0.3%
• Case Schiller month-on-month home price index +0.4% versus 0.2% estimate
• Not seasonally adjusted month-on-month -0.3% vs 0.0% last month
• YoY NSA +5.2% versus +5.1% estimate. Prior month 5.9%

In a separate report from the Office of Federal housing,

• Monthly home prices for the month of August rose 0.3% versus 0.2% (revised) last month
• Home Prices YoY or .2% versus 4.7% last month
• Home price index 427.0 vs 425.8 last month

This article was written by Greg Michalowski at www.forexlive.com.