US Consumer Sentiment Remains Subdued On Job, Price Concerns

Economic

Summary:

US consumer sentiment was little changed in early October as Americans expect scant improvement in the job market or inflation.

The preliminary October sentiment index edged down to 55 from 55.1 in September, according to the University of Michigan. While the latest figure was the lowest in five months, it was firmer than the median projection in a Bloomberg survey of economists.

Consumers expect prices to rise at an annual rate of 4.6% over the next year, compared with 4.7% a month earlier, according to the data released Friday. They saw costs rising at an annual rate of 3.7% over the next five to 10 years, unchanged from September.

“Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds,” Joanne Hsu, director of the survey, said in a statement. “At this time, consumers do not expect meaningful improvement in these factors.’’

The absence of official data releases because of the government shutdown has reduced visibility into an economy characterized by resilient consumer spending. Still, private-sector economic indicators and surveys indicate the labor market remains soft, while manufacturing and services activity struggle for momentum.

About 63% of respondents said they expect unemployment to rise in the next year, down a touch from the prior month but nearly twice as high as last year. More than two-thirds see inflation exceeding their income growth in the coming year, the report showed.

Buying conditions for durable goods dropped to the lowest level since 2022 on concerns about tariffs.

The survey showed the current conditions gauge rose to 61 this month from 60.4 in September, while the expectations index eased to a five-month low.

A gauge of sentiment among Republicans rose to the highest level since Donald Trump's first presidential term. It also improved among political independents but fell among Democrats.

The survey was conducted Sep. 23 to Oct. 6.

Source: Bloomberg Europe

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Samantha Luan

Economic

Forex

Political

Key points:

● Economists estimate jobless claims increased to 235,000 last week

● More people estimated to have been receiving unemployment checks in the last week of September

● Government shutdown expected to boost claims in the coming weeks

The number of Americans filing new applications for unemployment benefits increased again last week, economists estimated on Thursday, hinting at some early layoffs of contractors related to the U.S. government shutdown.Initial claims for state unemployment benefits rose to a seasonally adjusted 235,000 for the week ending October 4 from 224,000 the prior week, economists at JPMorgan and Goldman Sachs calculated. They made assumptions for Hawaii and Massachusetts, whose data was unavailable.

Citigroup estimated 234,000 claims last week.

Official economic data collection and publication has been suspended because of the government shutdown, now in its second week.States have continued to collect unemployment claims data and submit it to the Labor Department's database, which remains accessible. The shutdown following a lapse in funding has delayed the release of the closely watched employment report for September, crucial for decision-making by the Federal Reserve, businesses and households.

"The increase could be due to government contractors filing for unemployment benefits while temporarily laid off as the government is shut down," said Gisela Young, an economist at Citigroup. "Initial claims also increased during October 2013, the last full government shutdown. We would expect claims to either increase further or stay elevated next week too."

The shutdown has sent hundreds of thousands of U.S. federal workers home, with spillover effects to contractors, thousands of whom have been furloughed. Economists also expected a separate unemployment claims program for federal workers to show a rise in applications. Despite last week's increase, initial claims remained within their recent range.

CLAIMS ARE STILL "REASONABLY" LOW

"Excluding any shutdown noise, claims still look reasonably low," said Abiel Reinhart, an economist at JPMorgan. "Once the government re-opens, claims should quickly reverse any shutdown-related increase."The labor market has been stuck in a "no firing" and "no hiring" mode, with economists saying U.S.tradeand immigration policies, and the growing popularity of artificial intelligence, have reduced demand and labor supply.

Minutes of the U.S. central bank's September 16-17 policy meeting published on Wednesday showed Fed officials described their outlook for the labor market as "uncertain and viewed downside risks to employment as having increased over the intermeeting period." The Fed resumed cutting interest rates last month to support the labor market.

Lackluster hiring has left many people who lose their jobs experiencing long bouts of unemployment and drawing unemployment checks for some time.The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased to a seasonally adjusted 1.927 million during the week ending September 27, from 1.919 million in the prior week, JPMorgan estimated.

Goldman Sachs calculated the so-called continuing claims rose to 1.924 million in the last week of September.

Source: TradingView

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James Whitman

Economic

Cryptocurrency

A group of international banks including Goldman Sachs Group Inc., Deutsche Bank AG, Bank of America Corp. and Banco Santander, have joined forces to explore the issuance of “digital money” on public blockchains, marking the latest push by large financial institutions to examine possible uses for the technology underpinning cryptocurrencies for payments.

The consortium, which also includes BNP Paribas, Citigroup Inc., MUFG Bank Ltd, TD Bank Group and UBS Group AG, will investigate the issuance of “a 1:1 reserve-backed form of digital money that provides a stable payment asset available on public blockchains, focused on G7 currencies”, the banks said in a statement on Friday.

The coalition — which said it is in contact with regulators and supervisors in relevant markets — is evaluating whether the offering could enhance competition and bring some of the benefits of digital assets, the statement said.

The plans come as banks increase their work focused on using blockchain technology for payments. Stablecoins — which are a type of cryptocurrency normally pegged to a traditional asset like the US dollar — have drawn increased interest in particular over the past few months. While they are predominantly used in cryptocurrency markets, some banks and other large fintech firms see them as a faster and cheaper alternative to traditional payment rails.

Activity by large firms has been spurred by new regulation in the US and the European Union, which has offered a clearer regulatory framework that established companies can operate within.

Source: Bloomberg

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Adam

Cryptocurrency

Bitcoin BTC -0.81% price fell near $121,000 on Friday after recording a new all-time high earlier in the week.

According to The Block's bitcoin price page, the world's largest cryptocurrency is down 0.64% in the past day, trading at $121,141. This shows a near 4% decline from its new all-time high of $126,080 recorded on Monday.

"Bitcoin’s pullback after the ATH looks like a pause rather than a pivot," said Justin d'Anethan, analyst and Head of Partnerships at Arctic Digital. "Short-term holders took profits, some leverage longs got liquidated but long-term supply hasn’t moved."

The crypto analyst also pointed out that spot crypto exchange-traded fund flows remain strong and exchange balances are at a six-year low. d'Anethan said that markets are currently moved by macro uncertainty, such as a stronger dollar, sticky yields and the lack of clarity from the Federal Reserve regarding future rate decisions.

The U.S. is also going through an extended period of partial government shutdown, which analysts have previously suggested acts as a tailwind for "hedge" assets such as gold and bitcoin. While Fed Chair Jerome Powell had sent out mixed signals regarding future rate cuts, CME's FedWatch Tool gives a 94.6% chance that the U.S. central bank will lower rates again at the end of the month.

Kronos Research CIO Vincent Liu said that the current market sentiment is "mixed but resilient," with long-term holders continuing to accumulate.

Analysts said the "Uptober" narrative is still intact, given the market structure holding up despite the recent price decline. So far, Bitcoin has gained 6.7% since the beginning of the month.

"Bitcoin has historically gained an average of 22% in October, with Ethereum typically adding around 5%, a pattern that fuels the 'Uptober' thesis," Liu said. "On-chain data shows continued accumulation and resilient positioning, but macro uncertainty means volatility will remain part of the equation."

Arctic's d'Anethan also said that his market predictions for October still lean bullish, but the move may be slower than traders might have expected.

"If we get a soft inflation print or dovish Fed pivot, BTC could break out again," d'Anethan said. "But even without that, the structure is healthy: low leverage, strong spot interest, and plenty of sidelined capital. Uptober doesn’t necessarily need a melt-up to deliver."

Meanwhile, Min Jung, research associate at Presto Research, mentioned that the market currently lacks a dominant headline or narrative.

"For now, traders should keep an eye on broader economic data and policy headlines, as these will likely set the tone for crypto in the near term," Jung said.

Source: theblock

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Michelle

Economic

Forex

Amid a barren landscape of macro data due to the shutdown, the fact that many are strongly focused on the incredibly noisy and historically dismissed University of Michigan sentiment survey for any signals on inflation expectations or job hopes is in itself noteworthy.

So, with a big pinch of salt we dig in and see that the preliminary October headline sentiment index dropped very marginally (but was better than expected - 55.0 vs 54.0 exp vs 55.1 prior) with Current Conditions rising (from 60.4 to 61.0) and Expectations falling (from 51.7 to 51.2)...

Source: Bloomberg

On the inflation side, 1Yr expectations fell to 4.6% from 4.7% (while 5-10Y expectations were flat at 3.7%)...

Source: Bloomberg

On the unemployment side, the balance of respondents who expect a rise in unemployment rose modestly (but remain near multi-year lows)...

Source: Bloomberg

Under the hood, Republicans' confidence is at cycle highs while Democrats' confidence fell to Trump term lows...

Source: Bloomberg

UMich Surveys of Consumers Director, Joanne Hsu, noted that "improvements this month in current personal finances and year-ahead business conditions were offset by declines in expectations for future personal finances as well as current buying conditions for durables. Overall, consumers perceive very few changes in the outlook for the economy from last month. Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds."

Meanwhile, Hsu notes that "interviews reveal little evidence that the ongoing federal government shutdown has moved consumers’ views of the economy thus far."

Source: Zero Hedge

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Commodity

Risk sentiment is up and down this week. After reaching fresh record highs on Wednesday, global stocks fell on Thursday and Asian markets are broadly lower on Friday. The dollar is also giving back gains and is the third worst currency in the G10 FX space, falling for the first time this week. Even gold’s scorching run has come to an end and it is back below $4000 an ounce, in contrast, silver is bucking this trend and is back at the highs of the session after an earlier sell off.

Dip buying?

The question now is, will traders see this as a chance to buy the dip? UK and European futures are little changed so far this morning, and US futures are pointing to a higher open, suggesting that the selloff could be temporary. Aside from the Nikkei, gains for global stock markets have been meagre so far this week, suggesting that the market is readying itself for a pause.

US economic data hope before FOMC

A pause in the risk rally is to be expected, as investors wait for answers to some key questions. 1 who will be the new French Prime Minister, the announcement should come later today? How did the new Japanese PM get on in coalition talks? And, lastly, how is the US economy doing? The BLS reported that some economic data, including CPI, could be released at the end of this month, which means that the Fed might have a chance of viewing the CPI data before their meeting on 28/29th October.

Q3 earnings season gets off to a flying start

Interestingly, while fears mount about the level of tech stock valuations, the top performers on the S&P 500 on Thursday included Delta Airlines and Pepsi, who both reported earnings earlier in the day. Their stock prices both rose by more than 4% yesterday, which suggests that the stock market will react favorably to the Q3 earnings season. This sets the stage for next week, when we start to get key releases from the US banking sector.

Insurance woes

The insurance sector in Europe and the US could be in focus today, as the fallout from First Brand Group’s bankruptcy continues. Allianz, Coface and AIG all have written policies for First Brand’s partners and investors. This leaves the world’s largest insurers exposed to the car parts maker’s supply chain. We need to find out how exposed these companies are to First Brand’s supply chain, and that will determine how big the sell-off in their stock prices will be, however, Jeffries, the US bank, has seen its share price sink by more than 20% this month after it announced a $715mn exposure to the group. We do not think that First Brands bankruptcy will lead to a domino effect, with other companies falling, however, companies with exposure could take a knock later today.

French PM could make or break the bond market

Ahead today, all eyes will be on the French bond market, can yields continue to fall as we hear news of who will be the new PM, or will this be a buy the rumour, sell the fact day? Can gold reclaim the $4,000 level? We think that gold could come under pressure alongside any sell-off in the tech trade, as gold has been partly used as a hedge against lofty stock market valuations, so, as stock prices fall, the need for this hedge is reduced.

In the UK, there are signs that the labour market is stabilizing, with employers scaling back hiring at their softest pace in a year, and also signs that wage growth could be moderating, which is good news for the inflation outlook and the Bank of England.

Ahead today, the focus is likely to be on the US University of Michigan sentiment index that will be released later this afternoon, especially the inflation expectations index.

Source: xtb

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Warren Takunda

Economic

The US Treasury just threw Argentina a rare lifeline, moving to stabilise the country's markets by buying $20 billion (€17.28 bn) worth of Pesos as Buenos Aires battles dwindling dollar reserves.

“The US Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” said US Treasury Secretary Scott Bessent, adding that the Treasury Department held four days of meetings with Argentine Economy Minister Luis Caputo in Washington DC to cement the deal.

The move steadied assets but triggered pushback on Capitol Hill, where critics claimed the US was bailing out the Argentinian economy — something Bessent denied.

Argentina’s libertarian President Javier Milei, a fervent admirer of US President Donald Trump, thanked the Treasury Secretary for his “strong support” and Trump for his “powerful leadership”.

“Together, as the closest of allies, we will make a hemisphere of economic freedom and prosperity,” Milei said in a social media post.

Bessent is coming under fire from US farmers and Democratic lawmakers for supporting an economy that directly competes with American producers in certain sectors.

US farmers are angry about the idea of rescuing Argentina, whose own farmers have benefited from a recent gush of sales of soybeans to China at the expense of their US counterparts. Lawmakers have pushed Trump to explain how this financial help aligns with his “America First” agenda.

After the announcement Thursday, a group of Democratic Senators introduced the “No Argentina Bailout Act”, which would stop the Treasury Department from using its Exchange Stabilisation Fund to assist Argentina.

“It is inexplicable that President Trump is propping up a foreign government, while he shuts down our own," Democratic Senator Elizabeth Warren of Massachusetts said in a statement.

“Trump promised ‘America First,’ but he’s putting himself and his billionaire buddies first and sticking Americans with the bill.”

It doesn't help that repeated bailouts have failed to stabilise the crisis-stricken economy of Argentina. As the International Monetary Fund's biggest debtor, it owes the global lender a staggering $41.8bn (€35.43bn).

Milei, a wild-haired far-right economist, came to office in late 2023 on the bold promise that this time would be different.

He vowed to take a chainsaw to reckless public spending that he inherited from his left-wing predecessor.

But his radical austerity programme has been painful, with no economic revival in sight and Argentinians are losing patience.

Now, Milei faces his greatest test yet as he heads into a midterm congressional election on 26 October that could decide the fate of his free-market experiment.

A disastrous defeat in local elections last month triggered a sudden exodus from Argentine assets as investors fretted over the country's political dysfunction, overvalued peso and rapidly depleting foreign exchange reserves.

The US financial help offers Milei a crucial reprieve. On Thursday, Argentina’s dollar-denominated bonds rose about 10% on Bessent's confirmation of the credit line and the Buenos Aires stock market surged 15%.

Economy Minister Caputo expressed his “deepest gratitude” to Bessent following the announcement.

“Your steadfast commitment has been remarkable,” he wrote.

Bessent made no mention of any economic conditions attached to the swap line for Argentina, leading many observers to criticise the intervention as a pre-election reward for a loyal friend rather than an investment in a strategic partner.