💰A new low for the equity market🔦

Shadowing Friday’s strong job report, major indices extend their fall on Monday as the interest rate narrative dominates the risk-off sentiment. It does not help that geopolitical risk from the Russia-Ukraine war perfumed a new sense of fear of escalation towards nuclear war. 

Specifically, we see the semiconductor hit as ETF SOXX plunged 3%, given AMD signalling a  slowing demand for its products. This spurs the fear of gross margin erosion when the corporate earnings recession story is revived. 

💎Economy wobbling and bank chief sounded cautious🎯

JPM CEO Jamie Dimon said the economy is probably entering a recession next year. While major indices have somewhat factors in some probability of a recession, the magnitude of the decline in economic activity is uncertain. 

Nonetheless, the bad news is good news, given that it enables the Fed to be less aggressive on the rate hike front while allowing some relief to the equity market. 

The UK bond market is in disarray even as the UK central bank announced the expansion of its daily auctions as part of its bond-buying initiative to stabilise the market. Nonetheless, we are still seeing the British Glit yield around 4.47%. The US bond market appeared to be shut for the Columbus Day holiday but is likely to track pressure from the regional market. 

📮What’s on the menu today?📖

It is a light day. We are expecting FOMC member Harker to speak at 11.30 pm. 

This is followed by FOMC member Mester who will speak at midnight.