1. Japan Holds Off on Rate Hikes But the Risk Isn’t Going Away
There are reports out this morning that Japan won’t be raising rates in October.
But keep in mind, yields on Japanese bonds have skyrocketed recently. The 10-year yield is still above 3%, and the Japanese yen is hovering around 160 against the U.S. dollar.
Will there be intervention?
Japan remains one of the risks that continues to be ignored by everybody, and there’s a big carry trade behind it. Higher oil hurt it too.
2. Earnings Season Is Here… Guidance Is Everything
Earnings season has begun, and during earnings season, your stock-specific risk goes up. Know what you own and why you own it. Guidance matters a lot more than what has already happened.
Keep in mind, rates are higher than they’ve been in years. Those who are leveraged or looking to refinance will have to justify a lot, and they could be the hardest hit. Higher rates could eat into their profits.
We’ll be watching banks and leveraged companies like utilities. At the same time, we know AI is all about debt at the moment, and the cost of raising money is going up. That will be worth watching as well.
3. Gold Stuck in a $100 Sandwich 😊
Gold continues to be under pressure, having a hard time getting above $4,200. It’s sandwiched between $4,100 and $4,200 for now. Any move above or below this range will tell us the near-term direction at least.
With yields and the U.S. dollar remaining elevated, gold will continue to face pressure.
If gold breaks below $4,000, some technical selling could come in, potentially taking gold toward $3,300 to $3,500.
For gold to move higher, it’s going to be a battle. But it’s not impossible.
Silver is fighting to hold the $60 level. The next support for silver is around $52 to $53. A break below that could take it to $45 to $47 very quickly. Silver chart also looks pretty damaged.
4. Yemen Hits Saudi Arabia as Middle East Tensions Escalate
There’s been a significant escalation in the Middle East, with Yemen now directly attacking Saudi Arabia. Last week, we saw oil tankers getting attacked.
At the same time, even with President Trump making a deal with Russia, there are still questions about whether it will hold.
The oil market is highly reactive to headlines and very choppy. Allocation continues to be key here.
But fundamental problems are starting to show in the oil market that could keep prices higher for longer. Even if the war stopped today, it would still take a while for oil to get back to normal.
5. Bitcoin Holds Its Ground + Inflation Data
Bitcoin continues to find a lot of support around its 50-day moving average. A break below that level could bring in sellers. The $82,000 to $83,000 area represents a retest of the breakout that happened in September.
Tomorrow, we get U.S. CPI, and that’s going to be worth watching very closely.
Then, on Thursday, we get PPI and U.S. retail sales, which are also worth watching closely.
Very little has been done over the past few months to calm inflation, and lots of headlines about struggling consumer.