News

You could sense this coming yesterday.

I wrote at the close that the failure to retake the pre-tariff high was a warning sign and now the sellers are hitting the market hard. The S&P 500 is down 1%.

One of the catalysts was Zions Bankcorp taking a write down on what the company called a fraudulent loan (shares down 13%). That adds further fuel to the fire of private equity worries after the bankruptcy of First Brands. Reuters writes more here. That has broader banking stocks lagging.

Consumer facing names are also struggling with WMT off by 2.9% after a recent run-up.

What next? We might have to test the tariff lows and hope they hold.

This article was written by Adam Button at investinglive.com.

Standard Chartered says reserve managers are buying the US dollar when it weakens and selling on rallies.

• Dollar reserves and Bloomberg Dollar Index have moved opposite in 17 of 20 quarters, per IMF data.

• In Q2 2025, reserves rose as the dollar fell; in Q4 2024, reserves fell as the dollar rallied.

• The behaviour reflects cautious and opportunistic management by central banks.

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Global reserve managers appear to be taking a countercyclical approach to the U.S. dollar, buying when it weakens and trimming holdings when it strengthens, according to Standard Chartered.

In a note citing IMF data, StahChart said dollar reserves and the Bloomberg Dollar Index have moved in opposite directions in 17 of the past 20 quarters, suggesting that official managers use currency swings to rebalance portfolios rather than reinforce market trends.

Pointed to the second quarter of 2025,

• the dollar fell 6.6%
• but official reserves rose by $50 billion

likely because central banks avoided adding to selling pressure. Conversely, in the fourth quarter of 2024, when the dollar gained 7.1%, reserves dropped by $154 billion as managers took profits on strength.

StanChart said the pattern reflects a mix of “caution, opportunism, and size”, noting that official institutions remain important stabilising forces in global currency markets.

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This article was written by Eamonn Sheridan at investinglive.com.

Japan Foreign Investment in Japan Stocks: ¥1885B (October 10) vs previous ¥2479.9B

Shares of regional banks and investment bank Jefferies tumbled on Thursday as fears mounted around some bad loans lurking in the U.S.

Kashkari says the economy may be stronger than expected, with limited risk of major slowdown (earlier headline post).

• Sees labour-market weakness as a bigger risk than renewed inflation.

• Supports two more rate cuts as insurance, not because of immediate weakness.

• Inflation may stay near 3%, but unlikely to surge higher.

• Warns the shutdown is blurring real-time readings of the economy.

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Minneapolis Fed President Neel Kashkari said he doubts the U.S. economy is decelerating as sharply as many believe, suggesting growth remains firmer than commonly assumed even as policymakers weigh additional rate cuts. Kashkari backed the Fed’s September quarter-point rate cut.

Speaking at a town hall in Rapid City, South Dakota, Kashkari said the risk of a labour-market downturn is greater than the risk of another inflation surge, but overall he sees both as unlikely

• “If I had to guess which mistake we’re making, I think we’re more likely overestimating the degree of slowdown”

• said he still expects two more cuts by year-end, describing them as insurance against unlikely downside scenarios rather than a response to clear weakness
• recalled that similar pre-emptive easing last year helped sustain an unexpectedly resilient labour market.

On inflation, Kashkari said it was improbable that price growth would re-accelerate to 4–5%, arguing that current tariff effects are limited. Instead, he warned inflation may linger around 3% for an extended period — above the Fed’s 2% target, but not dangerously high.

Kashkari also cautioned that the ongoing U.S. government shutdown is making it harder to gauge economic conditions, noting that while policymakers can rely on private data and anecdotal evidence, “the longer it goes on, the less confident I am that we’re reading the economy correctly.”

This article was written by Eamonn Sheridan at investinglive.com.

GBP/USD stepped into a second straight winning session on Thursday, around three-tenths of one percent and bringing Cable’s two-day recovery to a little over one percent, bottom-to-top.

JPMorgan and Goldman estimate jobless claims fell to ~217k despite data gaps from the shutdown.

• Both layoffs and hiring remain subdued, keeping the labour market stable but stagnant.

• Small-business hiring continues to slow, according to Bank of America data.

• Continuing claims are steady near 1.9 m, consistent with a 4.3% jobless rate.

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Info via Reuters reporting.

JPMorgan and Goldman Sachs estimate that U.S. weekly jobless claims declined to 217,000 in the week ending October 11, down from 235,000 a week earlier, suggesting that layoffs remain limited even as hiring slows.

The estimates were compiled using partial state data because the ongoing U.S. government shutdown, now in its third week, has halted official data releases. Economists used historical seasonal adjustments to approximate missing figures from several states, including Arizona, Massachusetts, Nevada, and Tennessee.

Goldman said its model produced a range between 211,000 and 225,000, depending on assumptions for the unavailable states, while JPMorgan’s Abiel Reinhart noted that the figures “look quite decent,” indicating continued labour-market stability.

Economists describe the current backdrop as a “no-hire, no-fire” environment: job losses are minimal, but new hiring is also limited. A Bank of America Institute survey found that small-business hiring activity has slowed, with fewer new business applications listing planned wages — a sign of weakening job creation.

Continuing claims, which track people still receiving unemployment benefits, were estimated at roughly 1.9 million, little changed from the previous week. The unemployment rate, last reported at 4.3%, remains near a four-year high.

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This article was written by Eamonn Sheridan at investinglive.com.

S&P Global projected that US President Donald Trump’s tariffs will cost global businesses upward of $1.2 trillion in 2025, with about two-thirds of that cost being passed onto consumers.

Westpac says the US dollar’s gains are not growth-driven, given shutdown risks to consumption and investment.

• Europe and Asia ex-Japan are showing continued resilience, contrary to the dollar’s appreciation.

• Japan’s leadership change may bring looser policy and a weaker yen, supporting USD/JPY.

• China’s renminbi is seen as Asia’s relative outperformer amid steady growth and expected stimulus.

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The US dollar’s rise this month is not being driven by stronger growth expectations at home but by relative developments abroad, according to a new Westpac analysis.

The bank said the prolonged US government shutdown is likely to dampen household consumption and business investment, undermining the case for domestic-led currency gains. Instead, global policy shifts and relative performance across regions appear to be doing the heavy lifting for the greenback.

Westpac noted that Europe and Asia (excluding Japan) have both shown resilient activity and diminishing downside risks, a backdrop that would typically weaken the dollar rather than support it.

However, Japan remains an exception. The appointment of Sanae Takaichi as Prime Minister, if it comes, is widely seen as paving the way for easier monetary policy and a softer yen, indirectly underpinning the dollar’s strength.

In contrast, Westpac highlighted China’s renminbi as the best-positioned Asian currency, saying the country has managed 2025’s uncertainty relatively well and is expected to step up economic support measures in coming months.

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Westpac’s analysis suggests the greenback’s rally may be more about relative policy expectations than fundamentals, with Japan’s dovish tilt offsetting resilience in Europe and Asia. The call implies limited near-term downside for USD/JPY but room for CNY outperformance if Chinese stimulus accelerates.

This article was written by Eamonn Sheridan at investinglive.com.

European Central Bank (ECB) policymaker and Central Bank of Malta Governor Edward Scicluna said late Thursday that the central bank must not rush further interest-rate cuts.