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Global Growth Concerns Remain as Oil and Bond Yields Decline

US stocks fluctuated, Treasury yields and swap rates rallied, and Chinese equities and oil declined off the back of global growth and inflation concerns.  Chinese stocks declined nearly 3%, their biggest drop since September 15th, a flashback of this summer’s volatility for investors.  Corporate earnings in the US have for the most part been positive, helping to offset concerns about the implications of a slowing Chinese economy, but today’s Japanese trade data reminded investors that global growth still faces significant headwinds.  Japanese exports grew at the slowest pace in over a year, dragged down by shrinking sales to China.  The weak report puts heightened focus on the Bank of Japan leading up to its next meeting on October 30th.

Oil prices hit three-week lows off the back of rising US crude stockpiles.  Inventories rose 8 million barrels last week, more than double the 3.9 million analysts were forecasting.  Separately, the IMF released a report describing how US oil producers aren’t the only ones feeling the pain of lower oil prices.  Saudi Arabia, Bahrain, and Oman may run out of financial assets within five years if oil and spending remain at their current levels.  In the region, only Kuwait, Qatar, and the UAE can hold out for longer.

Data is light today, so markets will focus on headlines, corporate issuance, and the Fed’s Powell.

 

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