Global markets today showed a mixed performance as the US 10-year Treasury yield briefly spiked to 5% before settling around 4.85%. Despite shifts in yields and oil prices, global equities decreased with the Dow falling by 0.6%, S&P 500 by 0.2%, Nasdaq slightly up by 0.3%, and Russell 2000 down by 0.9%. The US bond market is caught between a "higher for longer" scenario and a potential recession, influenced by the Federal Reserve's monthly QT program and a significant US budget deficit.
Asian equity markets were mostly down, with Japan's PMI data indicating its first decline since December 2022. Today's key data releases include October's PMI data from the euro area and the US, and the ECB bank lending survey, all suggesting a continued economic slowdown. Both manufacturing and services PMI in the US are expected to decrease.
The euro reached monthly highs due to USD weakening while Scandi currencies struggled. The EUR/GBP remains slightly above the 0.87 mark. Risk assets saw a slight recovery as Itraxx Main tightened to 87bp and Xover tightened to 463.5bp.
However, the Q3 earnings season started sluggishly with only 43% of the EuroStoxx600 index beating expectations. Riksbank governor Erik Thedéen will discuss the bank's financial position and long-term capital requirements due to significant losses on the bond portfolio.
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