Treasuries’ October Gains At Risk From CPI ‘Tipping Point’

China needs a bolder spending package to mend the finances of households and companies, according to a central bank adviser, as signs of resilience in the economy mask the damage wrought by the trade war with the US.While booming exports supported economic output in the third quarter, indicators ranging from inflation to private investment and unemployment all point to sluggish confidence in the face of tariff uncertainties, said Huang Yiping, a member of the monetary policy committee at the People's Bank of China.

"What we really need is for the government, including the central bank, to do something major — to repair the balance sheets of households, enterprises, local governments and maybe also the financial institutions," he said in an interview on the sidelines of the Bund Summit in Shanghai.The assessment calls into doubt the ability of the world's second-biggest economy to remain mostly immune to the trade war without a larger dose of stimulus.Top officials appeared mindful of the challenges facing China at a four-day meeting of the Communist Party's Central Committee this week. While focused on laying out longer-term plans, a communique released Thursday reiterated a call to stabilize employment, enterprises, markets and expectations.

Huang, who's also an economics professor at Peking University, called for aggressive fiscal easing so the central government can provide local authorities with more money to spend as they see fit.Fewer restraints on spending would mark a break from the approach favored by Beijing. Many public bonds, for example, come with strict strings attached — such as having to generate profits from projects — causing fiscal largess to be idled and restricting expenditure in areas like infrastructure and public services.

China reported solid economic growth last quarter, putting it on track to reaching the official target of around 5% this year.

But the expansion has become more lopsided. Consumption is slowing on the back of the fading impact of the government's trade-in subsidies while industrial production picks up thanks to the strength of exports.Deflation across the economy extended into the 10th straight quarter, as a consequence of weak domestic demand still held back by slumping housing prices.Huang reiterated a call for the government to stabilize the property market, once a mainstay of the economy that's needed to help restore consumer confidence.

Higher household incomes and confidence are key to boosting consumption in a more sustainable way, since subsidies for consumers can only have a temporary impact, according to Huang.When it comes to monetary policy, Huang sounded more cautious, saying it can play a role but warning there's no room for aggressive easing in the short term.In addition, China needs to steer local governments away from being held responsible for promoting growth as in the past, he said. Beijing is trying to rein in excessive local subsidies that fueled a glut of production capacity in industries such as electric vehicles.

Local officials should be assessed more on the basis of indicators such as employment and household income, rather than just the rate of economic growth alone, Huang added."Local governments directly engaging in economic activities — that's a transitional period," he said. Going forward, "what the local government should focus on is really narrowly defined government activity."

Source: Bloomberg Europe

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As the state of Alabama prepared to execute a death row inmate on Thursday with nitrogen gas, the U.S. Supreme Court's three liberal justices in a spirited dissent urged the public to watch the seconds on their smartphone clocks tick all the way to four minutes."Imagine for that entire time, you are suffocating," wrote the three judges, led by Sonia Sotomayor. "You are strapped to a gurney with a mask on your face pumping your lungs with nitrogen gas. Your mind knows that the gas will kill you. But your body keeps telling you to breathe.

"That is what awaits Anthony Boyd tonight," Sotomayor wrote, in a dissent joined by Elena Kagan and Ketanji Brown Jackson, stating that the novel execution method amounts to cruel and unusual punishment in violation of the U.S. Constitution's Eighth Amendment.

BOYD SOUGHT FIRING SQUAD

The Supreme Court's conservative majority had denied a petition by Boyd, who has spent three decades on death row over his role in a 1993 murder, to stop his execution by nitrogen asphyxiation and instead kill him by firing squad.Support for the death penalty in the U.S. is near a 50-year low around 53%, according to a 2024 Gallup poll.

Capital punishment is currently permissible in 27 of the 50 states, and last year four states - Alabama, Texas, Missouri and Oklahoma - carried out about three quarters of the country's 25 executions, according to the Death Penalty Information Center.The Court's six conservatives did not explain their reasoning for denying Boyd's petition.In rejecting his challenge to nitrogen gas execution, U.S. District Judge Emily Marks wrote in an October 9 decision that psychological and emotional pain were unavoidable consequences of capital punishment no matter the method."Every person condemned to die likely experiences feelings of angst, anxiety, stress, or panic," Marks wrote.

BOYD WAS CONVICTED OF 1993 KILLING, MAINTAINED HIS INNOCENCE

Boyd, 54, was pronounced dead at 6:33 p.m. (2333 GMT), according to the Alabama Department of Corrections.He had been convicted of killing Gregory Huguley in 1993 over a $200 cocaine debt. Prosecutors said Boyd taped Huguley's legs while others poured gasoline on him and set him on fire.

Boyd has maintained his innocence.

According to local media, Boyd smiled and gave a thumbs up upon entering the execution chamber. "I didn't kill anybody," he reportedly said, when asked if he had any last words.Alabama Attorney General Steve Marshall said Boyd had not presented evidence that the jury wrongfully convicted him, and said Boyd "sought to delay justice through endless litigation.""Gregory Huguley was never afforded the chance to delay his own brutal and untimely death," Marshall said in a statement.

ALABAMA BOTCHED PRIOR EXECUTIONS

Alabama carried out the first execution by nitrogen gas asphyxiation in January 2024, after the Supreme Court declined to stop the state from using the new method to kill convicted murderer Kenneth Smith.State authorities had touted asphyxiation as a simpler alternative to lethal injections, for which prison systems had struggled to secure the necessary drugs. The state's executioners had also repeatedly struggled to insert intravenous lines during previous botched executions, including a prior unsuccessful attempt to kill Smith.Witnesses to Smith's execution said he shook his head and writhed for two minutes, and could be seen breathing deeply for several minutes before his breathing slowed and became imperceptible.Sotomayor wrote that many of the six people who have been executed by nitrogen gas since then in Alabama and Louisiana had similarly harrowing experiences.

Sotomayor wrote that Marks' analysis was "blind to the reality of what will happen to Boyd in this execution chamber.""When the gas starts flowing, he will immediately convulse. He will gasp for air. And he will thrash violently against the restraints holding him in place as he experiences this intense psychological torment," Sotomayor wrote."Boyd asks for the barest form of mercy: to die by firing squad," Sotomayor wrote. "The Constitution would grant him that grace. My colleagues do not."

Source: TradingView

South Korea's economy grew at a modest pace last quarter, supported by strong exports and a pickup in household consumption as government measures helped stimulate demand, a Reuters poll suggested.Asia's fourth-largest economy was projected to have expanded a seasonally adjusted 0.9% in the July-September quarter after posting upbeat growth in the second quarter, according to the median forecast of 12 economists.On a year-on-year basis, gross domestic product (GDP) was forecast to have grown 1.5% following a 0.6% expansion in the April-June period, based on the median estimate from 18 economists polled October 20-23.

"The overall gist is domestic demand is gradually improving, with consumption slowly recovering and better-than-expected turnout in export growth thanks to strong chips demand. This is despite construction investment still in free fall," Kelvin Lam, senior economist at Pantheon Macroeconomics, said.Exports grew 12.6% in September - the fastest pace in over a year - despite a hit from U.S. tariffs of 15%, driven by strong demand for chips used in artificial intelligence.

The government approved a 31.8 trillion won supplementary budget in early July to support domestic demand.

On Thursday, the Bank of Korea held interest rates steady at 2.50% to contain risks in the housing market and support the weakening currency. But its dovish tone pushed the won to a six-month low against the U.S. dollar.While a majority of economists in a separate Reuters poll expected a cut to come next month, some are now forecasting a delay until January 2026."Four board members remained willing to cut interest rates in the next three months, down from five in August. Indeed, a rate cut in November now appears unlikely given the bank's desire to wait to see the impact of the property curbs announced last week," Shivaan Tandon, Asia economist at Capital Economics, said.

Amid domestic concerns, the trade deal between Seoul and Washington is yet to be formalised, as South Korean officials have openly resisted U.S. demands for an upfront investment of $350 billion and called for safeguards to prevent potential currency market disruptions.

"We're going to see that deal coming in. The question is how to finance it. It is impossible to commit $350 billion in cash upfront because it is about 80% of the country's FX reserves," Pantheon's Lam added.Stephen Lee, chief economist at Meritz Securities, was optimistic about the trade deal, saying: "What both sides seem to be agreeing on from the working level is they extend the investment horizon, allow some cash flow repatriation in the early stage and increase the portion of loans and guarantees."

Source: Investing

U.S. crude futures eased in early trade on Friday, trimming part of the previous day's surge but remaining on track for a weekly gain, as fresh U.S. sanctions on Russia's two biggest oil companies over thewar in Ukrainefuelled supply concerns.

Brent crude futuresfell 17 cents, or 0.3%, to $65.82 by 0024 GMT. U.S. West Texas Intermediate crude futureswere up 17 cents, or 0.3%, at $61.62.

Both benchmarks jumped more than 5% on Thursday and were set for about a 7% weekly gain, the biggest since mid-June.

Russian President Vladimir Putin remained defiant on Thursday after U.S. President Donald Trump hit Russia's Rosneftand Lukoilwith sanctions to pressure the Kremlin leader to end the war in Ukraine. Rosneft and Lukoil together account for more than 5% of global oil output.

The U.S. sanctions prompted Chinese state oil majors to suspend Russian oil purchases in the short term, trade sources told Reuters. Refiners in India, the largest buyer of seaborne Russian oil, are set to sharply cut their crude imports, according to industry sources.

"Buying driven by supply tightness concerns over U.S. sanctions on Russia has subsided," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

"With OPEC holding spare capacity, a one-sided rally is unlikely," he said, predicting that WTI is expected to trade within about $5 above or below $65.

Kuwait's oil minister said that the Organization of the Petroleum Exporting Countries would be ready to offset any shortage in the market by rolling back output cuts.

The U.S. said it was prepared to take further action, while Putin derided the sanctions as an unfriendly act, saying they would not significantly affect the Russian economy and talked up Russia's importance to the global market.

European Union countries also approved a 19th package of sanctions on Moscow that included a ban on Russian liquefied natural gas imports, while Britain hit Rosneft and Lukoil with sanctions last week.

Russia was the world's second-biggest crude oil producer in 2024 after the U.S., according to U.S. energy data.

Investors are also focusing on a planned meeting between Trump and Chinese President Xi Jinping next week.

Trade tensions between Washington and Beijing have been escalating, marked by tit-for-tat retaliatory measures announced by both sides. Confirmation that the two leaders would meet next week appeared to ease those tensions.

Source: Reuters

Japan's manufacturing sector contracted in October at the fastest pace in 19 months due to a sharper decline in new orders, a private-sector survey showed on Friday.

The S&P Global flash Japan Manufacturing Purchasing Managers' Index (PMI) fell to 48.3 in October from a final reading of 48.5 in September, hitting the lowest since March 2024. It has remained below the 50.0 threshold that separates growth from contraction for four straight months.

Among the sub-indexes, the decrease in factory output slowed from September, but new orders shrank at a faster rate, highlighting sluggish demand for manufacturers.

October's drop in new export orders, however, was the slowest since March. Data showed Japan's exports rose in September for the first time in five months.

The outlook for output also recovered to a three-month high, the PMI data showed.

"Manufacturers were more upbeat about the year ahead than service providers, with many hoping that a recovery in global economic conditions, new product releases and stronger demand for electronics in particular will help to boost output," said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

The broader picture for Japan's corporate activity remains challenging, as service sector growth also slowed, with the flash Japan services PMI dropping to 52.4 in October from 53.3 in September.

The composite PMI, which combines both manufacturing and services, fell to 50.9 in October from 51.3 in September, marking the slowest growth in five months.

Inflationary pressures continued to build, with both input and output costs rising at faster rates than in September on a composite basis. Companies often linked the price increases to "higher employment, raw material and fuel costs, alongside a weak yen," Fiddes said.

Source: Investing

Source: Bloomberg Europe