Key Events This Week
The U.S. government shutdown farce is set to continue, and a "data vacuum" is coming.
The U.S. government shutdown crisis continues as House Republican leadership decided not to return to Washington next week, attempting to force Senate Democrats to accept the Republican version of the temporary spending bill. This escalation in strategy indicates that the government shutdown may last longer, further affecting the release of key economic data.
Reports that may be postponed next week include trade balance, initial jobless claims, and inventory data. If the Republican and Democratic parties can reach a bipartisan agreement on a temporary funding bill next week, the employment report for September is likely to be released next Friday.
In addition to employment data, the shutdown will also affect the collection and release of other important economic data, including the September CPI data originally scheduled for release in two weeks. The government shutdown in 2013 lasted for 16 days, resulting in the postponement of the release of various economic data over the following two months.
However, even in the absence of employment data, as long as the government shutdown continues, bets on interest rate cuts may increase, because if there is a significant rise in temporary layoffs of federal employees and the shutdown of government departments leads to a loss in economic output, the Federal Reserve will be more likely to lower borrowing costs.
In terms of other data, the preliminary consumer confidence survey from the University of Michigan, scheduled for release on Friday, will be quite important, especially its inflation expectations component. It will also be a busy week for Treasury auctions. The congressional deadlock may harm demand for U.S. Treasuries, coupled with the possibility of soaring consumer inflation expectations, which could lead to higher U.S. Treasury yields in the coming week.
The U.S. government shutdown has triggered "devaluation" trades, driving a rebound in global risk assets.
The world's largest cryptocurrency$Bitcoin (BTC.CC)$ On Sunday (October 5), during the Asian trading session, Bitcoin surpassed the previous record set on August 14. This rise was supported by gains in U.S. equities and inflows into Bitcoin-related exchange-traded funds. The shutdown of the U.S. government, which began on Wednesday, became a key driver for Bitcoin’s price breakout. Investors, after lawmakers failed to reach an agreement on federal funding, flocked to decentralized assets as a safe haven.
Apart from Bitcoin, U.S. stocks also hit record highs on Friday, $S&P 500 Index (.SPX.US)$ and $Nasdaq Composite Index (.IXIC.US)$ rising 0.5% and 0.27%, respectively. $XAU/USD (XAUUSD.CFD)$ This week, the index gained over 2%, marking its seventh consecutive weekly increase.
Joshua Lim, Co-Head of Market at cryptocurrency brokerage FalconX, stated: 'Many assets, including equities, gold, and even collectibles like Pokémon cards, are hitting all-time highs. It is not surprising that Bitcoin benefits from the narrative of a weakening U.S. dollar.' Geoff Kendrick, Head of Global Digital Asset Research at Standard Chartered, said: 'This shutdown is significant.' He noted that Bitcoin now exhibits a higher correlation with traditional risk assets and is expected to continue rising during this period.
Significant divergence among Fed hawks and doves as Powell is set to speak.
Based on the statements from officials this week, there remains a divergence within the Federal Reserve regarding the relationship between a slowing job market and the risks of rising inflation. Some members, including Esther George, President of the Kansas City Fed, and Austan Goolsbee, President of the Chicago Fed, believe that before rushing to further cuts, it would be prudent to implement one rate cut as a risk management measure. On Friday, Goolsbee stated he was cautious about cutting rates too quickly, given that threats to both inflation and employment are increasing, saying, "I'm a little concerned about cutting too far ahead, just hoping that inflation will disappear."
On the other hand, Federal Reserve Governor Michelle Bowman remarked last week that the Fed is likely behind the curve in addressing what she described as a 'deteriorating job market,' while Governor Christopher Waller has called for five more rate cuts this year and another significant reduction at the next meeting.
Next week, investors will closely monitor the release of the minutes from the Federal Reserve's September meeting, scheduled for Thursday. Any additional insights into officials' stances on interest rate cuts could prompt reactions.
Federal Reserve Chair Jerome Powell will deliver opening remarks via a pre-recorded video at a community banking conference hosted by the Federal Reserve Board on Thursday. Additionally, the market will pay attention to comments from other Fed officials, including Raphael Bostic, Michelle Bowman, Christopher Waller, Neel Kashkari, Michael Barr, and Adrien Auclert, all of whom are scheduled to speak.
Preview of OpenAI Developer Day: Focus on Consumer-Oriented AI Product Launches
OpenAI is set to host its Developer Day on October 6, with the market widely anticipating the launch of new consumer-grade AI agent products and potentially an AI browser that could challenge Google Chrome’s dominance. These potential releases mark a significant transition for OpenAI from relying solely on ChatGPT subscriptions to developing a diversified product portfolio.
In its latest research report, UBS Group noted that OpenAI is seeking to achieve substantial growth from its current revenue base of $13 billion, with an ambitious goal of reaching $200 billion by 2030. To achieve this target, the company must develop new growth drivers beyond its core ChatGPT business.
Through extensive industry research, analysts at the bank predict that the upcoming OpenAI Developer Day on October 6 will primarily focus on the release of consumer-grade AI products. In addition to the already launched instant checkout feature and personalized AI agent ChatGPT Pulse, travel booking agents are considered one of the key areas of focus.
Market Holiday Reminder
Due to the Mid-Autumn Festival and National Day holidays, the Shanghai and Shenzhen A-share markets will remain closed and will resume trading on Thursday, October 9.
The Hong Kong stock market will be closed on October 7 (the day after the Mid-Autumn Festival), while trading will proceed as usual on other dates. The Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect services will resume normal operations starting from October 9 (Thursday).
October 6, Monday
Keywords: U.S. Global Supply Chain Pressure Index, Constellation Brands performance
On Monday, in terms of economic data, investors may focus on the U.S. Global Supply Chain Pressure Index.
Regarding market closures, the A-share market will be closed due to the National Day holiday, with both directions of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect suspended.
In terms of earnings reports, Buffett's holdings $Constellation Brands (STZ.US)$ will release their results after market close.
October 7, Tuesday
Keywords: Speeches by Fed officials, New York Fed’s 1-year inflation expectation, Hong Kong and A-share market closures
On Tuesday, in terms of economic data, investors can pay attention to the 1-year inflation expectations from the New York Federal Reserve.
In terms of financial events, many Federal Reserve officials will be speaking tonight, including Bostic, Mester, and Kashkari.
In terms of market closure, the Hong Kong stock market is closed the day after the Mid-Autumn Festival, the A-shares are closed due to the National Day holiday, and the Shanghai-Hong Kong Stock Connect is closed in both directions.
October 8, Wednesday
Keywords: US EIA Crude Oil Data
On Wednesday, in terms of economic data, attention can be paid to the relevant crude oil data from the U.S. EIA.
In terms of financial events, the Federal Reserve will release the minutes of its monetary policy meeting at 2 AM the next day.
Regarding new stocks, Hong Kong stocks $CF PHARMTECH (02652.HK)$Today is上市.
In terms of market closures, A-share markets are closed for the National Day holiday, and both the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect are suspended.
Thursday, October 9
Keywords: Federal Reserve releases minutes of monetary policy meeting, Powell records speech, U.S. 10-year Treasury auction
On Thursday, in terms of economic data, attention can be paid to the U.S. monthly wholesale sales and the weekly EIA natural gas inventory.
Regarding financial events, at 2:30 AM, the Federal Reserve will release the minutes of its monetary policy meeting; in the evening, Federal Reserve Chair Powell will deliver an opening speech (pre-recorded) at a community banking conference hosted by the Federal Reserve Board, and Federal Reserve Governor Bowman will give a speech. The following morning, Federal Reserve Governor Barr and FOMC voter Kashkari, President of the Minneapolis Federal Reserve, will speak at an event.
Regarding earnings, U.S. stocks $PepsiCo (PEP.US)$、 $Delta Air Lines (DAL.US)$ Earnings will be released pre-market. $Levi Strauss & Co. (LEVI.US)$ 、 $Applied Digital (APLD.US)$Earnings will be released after the market close.
Friday, October 10
Keywords: Initial estimate of U.S. one-year inflation expectations
On Friday, in terms of economic data, investors may focus on the preliminary reading of the University of Michigan's Consumer Sentiment Index and the initial estimate of U.S. one-year inflation expectations.
In terms of financial events, at 21:45 in the evening, Goolsbee, a voting member of the 2025 FOMC and President of the Chicago Federal Reserve, will deliver the opening remarks and host a discussion at a community banking conference.
Regarding new stocks, Hong Kong stocks $GOLDEN LEAF INT (08549.HK)$ 、 $ZHIDA TECH (02650.HK)$Today is the listing.
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In the new week, I wish fellow investors successful investments!
Editor/Rocky
