JOLTS Data Sparks Volatility in Financial Markets

In a turbulent day for financial markets, concerns of rising inflation took centre stage as robust JOLTS data and political upheaval in Washington weighed on investor sentiment. The 10-year Treasury yield surged to levels not seen in 16 years, exacerbating market turmoil.

Key Factors for Today

• Hot JOLTS Data Sparks Inflation Concerns, Sending US Stocks into Turmoil
• Nasdaq Drops 1.85% Due to Hotter JOLTS and Congress Turmoil
• Yen Soars as USD/JPY Crosses 150, Amid Suspected BOJ Intervention Rumours
• WTI Prices Recover After 3-Day Losing Streak, Boosted by API Report
• RBNZ Holds Rates Steady, Signalling No Further Hike in November

Market Movers

• August's JOLTS data exceeded expectations at 9.6 million job openings, sparking concerns about wage inflation and a 1.85% Nasdaq drop.
• USD/JPY's surge past 150 prompted speculation of Bank of Japan intervention, with the yen briefly rising 2% before settling at 149.23.
• After a 3-day losing streak, WTI oil rallied on the API's 4.210 million barrel crude drawdown and a decline in Strategic Petroleum Reserves (SPRs).
• The RBNZ kept rates at 5.5%, signalling confidence but not hinting at further hikes, reducing November rate hike expectations.

Economic Calendar

• EA HCOB Services PMI
• ECB President Lagarde Speech
• S&P Global/CPS Services PMI Final
• EA Retail Sales
• ADP Employment Change
• S&P Global Services PMI Final
• ECB Panetta Speech
• SIM Services PMI
• Fed Schmid Speech
• EIA Crude Oil Stocks Change
• Fed Bowman Speech
• ECB Lagarde Speech

The Big News

JOLTS Data Fuels Inflation Fears

JOLTS data for August sent shockwaves through the markets, coming in at a staggering 9.6 million job openings, well above the anticipated 8.2 million. This unexpected surge in job opportunities has heightened concerns about wage inflation, triggering a sharp decline in US stocks. The tech-heavy Nasdaq index took the brunt of the hit, plummeting by 1.85% to 14,560 points, dangerously close to June territory lows.

Congress Turmoil Adds to Uncertainty

Simultaneously, political upheaval gripped Washington as Congress removed its Speaker, Kevin McCarthy. This unprecedented move cast a shadow of uncertainty over progress towards a new budget, following recent efforts to avert a government shutdown. Market participants are closely monitoring the implications of this leadership change for fiscal policy and potential economic ramifications.

Yen's Dramatic Surge and BOJ Speculations

The US dollar reached a fresh 10-month high but saw a rapid reversal as USD/JPY crossed the crucial 150 mark. Traders speculated that the Bank of Japan (BOJ) might intervene to stabilize the currency market, leading to a nearly 2% surge in the Japanese yen against the dollar. The Finance Ministry has remained tight-lipped, with official data expected at month-end. Speculation abounds that the BOJ may be conducting rate checks, possibly signalling an impending intervention.

WTI Prices Recover Amidst API Data

Oil markets experienced a rollercoaster ride as the American Petroleum Institute (API) reported a substantial crude draw of 4.21 million barrels, defying expectations of a modest 92,000 barrel decline. Concurrently, the Department of Energy (DOE) disclosed a 300,000-barrel reduction in Strategic Petroleum Reserves (SPRs) over the past week. Furthermore, Iraq's refutation of Turkey's claims regarding resumed oil exports and the suspension of unauthorised oil flows by the International Chamber of Commerce contributed to oil prices' recovery. After a 3-day losing streak that saw prices dip over 7%, crude oil rebounded from three-week lows, closing in on the $90 threshold.

RBNZ Keeps Rates Steady, Cuts Rate Hike Expectations

The Reserve Bank of New Zealand (RBNZ) opted to maintain its benchmark interest rate at 5.5%. While this decision reaffirmed the bank's confidence in its previous rate hikes, it did not hint at any further increases. Market expectations for a rate hike in November fell from 55% to 45%, causing the New Zealand dollar to dip below 0.59, settling at 0.5870. To regain momentum, bulls must reclaim the 0.5946 level, potentially aiming for the coveted 60-cent handle.