Macro Briefing: 3 October 2022

* Brazil’s divisive presidential election goes to second round
* UK Prime Minister Truss makes U-turn on tax cuts after market turmoil
* OPEC+ considers production cut after slide in oil prices
* Ukraine continues to recapture territory
* Some Fed officials starting to question rate-hike policy
* Global natural gas market to remain tight in 2023, predicts IEA
* Credit Suisse shares tumble on concerns of investment bank’s financial health
* Cash no longer trash as investors rediscover appeal of Treasury bills as rates rise
* Consumer spending in US rebounded in August
* US 10-year Treasury yield rose for ninth straight week through Friday:

Global bond market (via Bloomberg Global Aggregate Index) suffers deepest loss since the benchmark’s inception. ““Global bonds have entered the first bear market in a generation,” UBS strategists report in a recent research note sent to clients.

Blowback for US economy from Hurricane Ian will likely be minimal, according to one economist’s analysis. “The storm is devastating for some of the counties in Florida, but the macroeconomic impact is fairly minor,” says Ryan Sweet, head of monetary policy research at Moody’s Analytics. He expects the hurricane’s impact will trim a few tenths of one percentage point off third-quarter economic growth.

Wages are a key indicator to watch in this Friday’s September employment report for evaluating how inflation is evolving. “I don’t see anything in the near-term to give the Fed tons of comfort that inflation is on the trajectory to 2%,” says David Petrosinelli, senior trader with InspireX. “Wages will remain elevated and that will keep the Fed in a pickle.”