Markets Daily
Risk aversion weighed on US equities and bond yields on Friday, in a session with little data. The US dollar was muted, AUD edging back up to 0.6315. Today’s global calendar is very light.
Friday
Japan September CPI was close to expectations as usual, easing to 3.0%yr overall, 2.8%yr ex-fresh food (the BoJ target rate) and 4.2%yr ex-fresh food and energy. AUD/USD slipped about 20 pips to 0.6310 in quiet trade. Equities remained underwater, the ASX 200 one of the weakest in the region, -1.2% to be -2.1% on the week.
Currencies/Macro
The US dollar was mixed against major currencies on Friday, closing with small net changes. USD/JPY was held eerily under 150.00 (testing 149.99) and eased back to just below 148.90, with 150 widely viewed as high risk for official intervention. Still, the pair flickered up to 150.14 in early Monday trade.
EUR/USD chopped up about 15 pips to 1.0600. GBP/USD unwound post-retail sales losses to trade at 1.2160 (+0.1%). AUD/USD dipped to a low of 0.6297 in the London morning but then trimmed losses to 0.6315 (-0.2%) in NY trade, despite US equity weakness. NZD/USD fell -0.4% to 0.5825, leaving AUD/NZD 20 pips higher at 1.0840.
Canadian August headline retail sales at -0.1%m/m were in line with expectations but ex-auto sales proved to be slightly firmer at +0.1%m/m (est. -0.1%m/m). The flash September read was for unchanged sales.
UK September retail sales were soft. Headline sales volumes fell -0.9%m/m (est. -0.4%m/m) and ex-auto fuel fell -0.1%m/m and -1.2%y/y (est. -04%m/m and -0.3%y/y). The ONS reported that ex-food fell a sharp -1.9%m/m and online sales fell -2.2%m/m with a clear indication that rising cost-of-living concerns were impacting sales with volumes continuing a steady slide.
UK September public sector net borrowing (PSNB) at GBP13.5bn was less than expected (est. GBP17.5bn).
Fed’s Bostic and Harker both underscored their bias for the FOMC to keep policy on hold. Harker highlighted his views with anecdotes of inflation easing and the economy softening faster than thought. The FOMC is now in a media blackout period ahead of
BoE Governor Bailey insisted that there was more work to do against sticky inflation and wages growth which remained too high.
Interest rates
US 2-year Treasury yields extended Thursday’s decline, from 5.16% to 5.07%. The 10-year Treasury note yield fell from 4.99% to 4.91%. 10yr Bund yields closed -3.5%bps at 2.895%, 2yr -8bps at 3.125%. UK Gilt yields garnered headlines as 30yrs hit a multi-decade high of 5.16% before sliding back to 5.11% (+4bps). !0yr yields closed -2bps at 4.65% and 2yr -10bps at 4.884%.
Australian 3-year bond futures rallied about 2bp in Friday offshore trade, the implied yield down to 4.22%. Pricing for the RBA’s November meeting closed Friday at 40% chance of a hike, more than fully priced by March 2024.
Credit spreads were mixed with Main extending the weakness seen on Thursday to close 2.5bp wider at 89.5, and while CDX was little changed to close the week at 81.5, this remained a ~5bp move on the week and currently sits around series wides. Primary activity was quiet on Friday after a week that was dominated by large cap and regional banks supply post earnings with JPM, WFC, GS, PNC, BNY and USB selling ~USD24bn between them.
Commodities
Crude markets finished the week on a slightly softer note as Israel appeared to agree to hold off attacks under pressure from the US and there were signs of aid beginning to move through the Rafah crossing. The December WTI contract was last down 29c at $88.08 Friday while the December Brent contract was down 22c at $92.16. JP Morgan noted that “there are tangible signs that demand has begun to erode” and there’s only a “limited risk of future supply losses”. The bank noted that the current $7 premium was “appropriate” because “even if the fighting spreads beyond Israel and the Palestinian territories, it is unlikely to result in a prolonged oil spike”. OilChem noted that China’s gasoline stockpiles rose to the highest since May while daily crude processing rates hit the highest on record at 15.54mbpd in September according to Bloomberg calculations. The monthly volume was up 12%yy at 63.62mt. The US Energy Department said it would aim to buy up to 6mb of sour crude at or below $79 with bids due by October 24 and November 1 and delivery in December and January. The IEA will publish its latest World Energy Outlook on Tuesday and Singapore International Energy Week kicks off today. US natural gas fell 10% last week, hitting lows back to the beginning of the month as EIA storage data showed a larger than expected inventory build.
Metals marked time into the end of the week even as Chinese property woes continued and the stronger US$ and higher yields capped sentiment. Copper closed the week down 0.7% Friday at $7,940 though zinc managed a 1% rise to $2,438. The IAI reported global aluminium production rose 2.7%yy to 5.87mt in September following the 3.1% rise in Chinese aluminium production (and the second highest monthly production on record) announced earlier in the week. Gold surged to all but touch $2,000 with a high at $1,997, up 2.5% on the week.
Iron ore markets lurched lower into the end of the week after China reported steel production in October on Wednesday which showed a sharp drop, coming in at just 82.11mt, -5.6%yy and the lowest on a seasonally adjusted basis in 9 months as smaller mills showed signs of going into maintenance. The November SGX contract is down $2.35 from the same time Friday at $113.40 while the 62% Mysteel index is down $4.55 at $115.30. A default by Country Garden was reported as “all but official” by Bloomberg with the 2024 and 2031 US$ bonds being quoted at just 5c in the dollar. The Hang Seng Property and Construction index fell 3.8% last week, hitting fresh lows back to 2009 on Thursday.
Day ahead
New Zealand markets are closed for a holiday.
Eurozone: The downtrend in consumer confidence will likely persist in October, though inflation’s downtrend should provide support in time (market f/c: –18.5). US: The Chicago Fed activity index suggests that growth is currently tracking a modestly below-trend pace through Q3.
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
Related articles
Aussie bulls press the advantage
Browse topics
Disclaimer
©2025 Westpac Banking Corporation ABN 33 007 457 141 (including where acting under any of its Westpac, St George, Bank of Melbourne or BankSA brands, collectively, “Westpac”). References to the “Westpac Group” are to Westpac and its subsidiaries and includes the directors, employees and representatives of Westpac and its subsidiaries.
Things you should know
We respect your privacy: You can view our privacy statement at Westpac.com.au. Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and make improvements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, including potentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other reading material which may be suitable for you.
This information, unless specifically indicated otherwise, is under copyright of the Westpac Group. None of the material, nor its contents, nor any copy of it, may be altered in any way, transmitted to, copied of distributed to any other party without the prior written permission of the Westpac Group.
Disclaimer
This information has been prepared by the Westpac and is intended for information purposes only. It is not intended to reflect any recommendation or financial advice and investment decisions should not be based on it. This information does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter into a legally binding contract. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision. This information may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure this information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of this information, or otherwise endorses it in any way. Except where contrary to law, Westpac Group intend by this notice to exclude liability for this information. This information is subject to change without notice and none of Westpac or its related entities is under any obligation to update this information or correct any inaccuracy which may become apparent at a later date. This information may contain or incorporate by reference forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Past performance is not a reliable indicator of future performance, nor are forecasts of future performance. Whilst every effort has been taken to ensure that the assumptions on which any forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from any forecasts.
Conflicts of Interest: In the normal course of offering banking products and services to its clients, the Westpac Group may act in several capacities (including issuer, market maker, underwriter, distributor, swap counterparty and calculation agent) simultaneously with respect to a financial instrument, giving rise to potential conflicts of interest which may impact the performance of a financial instrument. The Westpac Group may at any time transact or hold a position (including hedging and trading positions) for its own account or the account of a client in any financial instrument which may impact the performance of that financial instrument.
Author(s) disclaimer and declaration: The author(s) confirms that (a) no part of his/her compensation was, is, or will be, directly or indirectly, related to any views or (if applicable) recommendations expressed in this material; (b) this material accurately reflects his/her personal views about the financial products, companies or issuers (if applicable) and is based on sources reasonably believed to be reliable and accurate; (c) to the best of the author’s knowledge, they are not in receipt of inside information and this material does not contain inside information; and (d) no other part of the Westpac Group has made any attempt to influence this material.
Further important information regarding sustainability-related content: This material may contain statements relating to environmental, social and governance (ESG) topics. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics, modelling, data, scenarios, reporting and analysis on which the statements rely. In particular, these areas are rapidly evolving and maturing, and there are variations in approaches and common standards and practice, as well as uncertainty around future related policy and legislation. Some material may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. There is a risk that the analysis, estimates, judgements, assumptions, views, models, scenarios or projections used may turn out to be incorrect. These risks may cause actual outcomes to differ materially from those expressed or implied. The ESG-related statements in this material do not constitute advice, nor are they guarantees or predictions of future performance, and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of the statements). You should seek your own independent advice.
Additional country disclosures:
Australia: Westpac holds an Australian Financial Services Licence (No. 233714). You can access Westpac’s Financial Services Guide here or request a copy from your Westpac point of contact. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice.
New Zealand: In New Zealand, Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac (NZ division) or Westpac New Zealand Limited (company number 1763882), the New Zealand incorporated subsidiary of Westpac ("WNZL"). Any product or service made available by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz .
Singapore: This material has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (as defined in the applicable Singapore laws and regulations) only. Recipients of this material in Singapore should contact Westpac Singapore Branch in respect of any matters arising from, or in connection with, this material. Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore.
U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. The services and products referenced above are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’). In accordance with APRA's Prudential Standard 222 'Association with Related Entities', Westpac does not stand behind WCM other than as provided for in certain legal agreements between Westpac and WCM andobligations of WCM do not represent liabilities of Westpac. This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the contents of this communication. Transactions by U.S. customers of any securities referenced herein should be effected through WCM. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone regarding any security mentioned herein, please contact WCM on +1 212 389 1269. Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related derivative instruments.
The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated person of WCM or any other U.S. broker-dealer under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by Westpac and/or its affiliates.
UK and EU: The London branch of Westpac is authorised in the United Kingdom by the Prudential Regulation Authority (PRA) and is subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA (Financial Services Register number: 124586). The London branch of Westpac is registered at Companies House as a branch established in the United Kingdom (Branch No. BR000106). Details about the extent of the regulation of Westpac’s London branch by the PRA are available from us on request.
Westpac Europe GmbH (“WEG”) is authorised in Germany by the Federal Financial Supervision Authority (‘BaFin’) and subject to its regulation. WEG’s supervisory authorities are BaFin and the German Federal Bank (‘Deutsche Bundesbank’). WEG is registered with the commercial register (‘Handelsregister’) of the local court of Frankfurt am Main under registration number HRB 118483. In accordance with APRA’s Prudential Standard 222 ‘Association with Related Entities’, Westpac does not stand behind WEG other than as provided for in certain legal agreements (a risk transfer, sub-participation and collateral agreement) between Westpac and WEG and obligations of WEG do not represent liabilities of Westpac.
This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This communication is not being made to or distributed to, and must not be passed on to, the general public in the United Kingdom. Rather, this communication is being made only to and is directed at (a) those persons falling within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b) those persons falling within the definition of high net worth companies, unincorporated associations etc. (set out in Article 49(2)of the Order; (c) other persons to whom it may lawfully be communicated in accordance with the Order or (d) any persons to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and “professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. Westpac expressly prohibits you from passing on the information in this communication to any third party.
This communication contains general commentary, research, and market colour. The communication does not constitute investment advice. The material may contain an ‘investment recommendation’ and/or ‘information recommending or suggesting an investment’, both as defined in Regulation (EU) No 596/2014 (including as applicable in the United Kingdom) (“MAR”). In accordance with the relevant provisions of MAR, reasonable care has been taken to ensure that the material has been objectively presented and that interests or conflicts of interest of the sender concerning the financial instruments to which that information relates have been disclosed.
Investment recommendations must be read alongside the specific disclosure which accompanies them and the general disclosure which can be found here. Such disclosure fulfils certain additional information requirements of MAR and associated delegated legislation and by accepting this communication you acknowledge that you are aware of the existence of such additional disclosure and its contents.
To the extent this communication comprises an investment recommendation it is classified as non-independent research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and therefore constitutes a marketing communication. Further, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research.