Market Outlook - The equity rally has been a global affair with participation driven by different dynamics [2] - Global growth is showing positive progression in most key markets, indicating a global reflation and reaceleration [6] - Expectation is to see diversification away from the dollar in terms of reserve positions and central banks over the next couple of years [10] - A correction of 10% pullback is expected over the next 12 months, empirically from these types of levels [14] Earnings and Investment - Earnings continue to come through, underpinning the market progression [3] - Constructive view on earnings continuing through the back end of this year and into next year [4] - Hyperscaler capex is seeing roughly a 50% increase this year, with $350 billion invested in that space and expected to be close to $1 trillion over the next three years [7] - Corporate fundamentals are gaining positive momentum as people get the pass-through of growth [9] Fiscal Policy and Corporate Strategy - There is material change on the fiscal side, with Germany now talking about expansion instead of consolidation [8] - US larger cap companies are showing pricing power to pass through tariff implications to the underlying consumer, keeping margins relatively healthy [12] - Multiples and valuations don't give significant cause for concern, with MAG7 trading in the high 20s and the broad market in the low 20s [14]

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Dollar Doubts Are Showing Up in the Corporate Bond Market https://t.co/WLHZ2o6rtk ...

The proportion of dollars in the coffers of foreign central banks hit its lowest mark since 1995, a shift driven by a steep decline in the currency rather than a reduction in holdings https://t.co/BlglNqDknO ...

Core Insights - Treasury yields are on track for a third consecutive quarterly decline as markets anticipate a potential U.S. government shutdown [1] - The dollar is expected to end the third quarter higher, despite recent weaknesses [1] - Declining oil prices, influenced by OPEC+ increasing production, are easing inflation concerns, which may be impacting yields and the dollar [1] Interest Rate Expectations - Investors are pricing in 93% odds of a second 25-basis-point interest rate cut by the Federal Reserve this month, an increase from 90% the previous day [2]

Core Viewpoint - Stock futures experienced an increase due to ongoing optimism surrounding major technology companies and expectations of interest rate cuts by the Federal Reserve [1] Group 1 - The rise in stock futures reflects positive market sentiment towards big tech companies [1] - Anticipation of Federal Reserve rate cuts is contributing to the bullish outlook in the market [1]

Core Points - Trump is organizing urgent discussions with congressional leaders to address critical issues before a deadline [1] Group 1 - The talks are scheduled for Monday and aim to resolve pressing legislative matters [1] - Congressional leaders are expected to participate in these discussions to negotiate key policies [1] - The outcome of these talks could significantly impact upcoming legislative actions and government operations [1]

Group 1 - The final Q2 GDP showed one of the largest upward revisions in recent years, indicating the strongest growth in nearly two years, primarily driven by consumer spending [1][3] - The contraction in the first quarter was attributed to higher imports as companies stockpiled goods ahead of new tariffs, but the positive Q2 results were not solely due to a decline in imports [2][3] - Personal consumption expenditure rose by 2.5% in Q2, significantly higher than the second estimate of 1.6%, suggesting that concerns about a downturn in the USA may be premature [3] Group 2 - Initial jobless claims on 25 September were significantly lower than consensus, indicating a potentially stronger job market than previously perceived [4] - The likelihood of a Fed rate cut on 29 October remains high at around 85%, but the probability of cuts at future meetings has decreased by over 20% compared to the previous week [5] - The euro-dollar has declined recently as sentiment on the dollar improved, supported by the upward revision to GDP and lower initial jobless claims [7]

Core Points - The dollar index (DXY00) fell by -0.08% as T-note yields decreased following dovish comments from Fed Governor Michelle Bowman, indicating a need for decisive action to lower interest rates due to a weakening labor market [1] - The US Q2 current account deficit was reported at -$251.3 billion, which was smaller than the expected deficit of -$256.6 billion, providing initial support for the dollar [2][3] - Concerns over Fed independence and potential political interference are leading to fears that foreign investors may sell dollar assets [3] Economic Indicators - The US September S&P manufacturing PMI fell by -1.0 to 52.0, which was weaker than the expected 52.2 [4] - The Richmond Fed manufacturing sentiment survey unexpectedly dropped by -10 to -17, contrasting with expectations of an increase to -5 [4] - Fed Chair Powell noted that near-term inflation risks are tilted to the upside while employment risks are to the downside, indicating a challenging economic environment [4] Federal Reserve Commentary - Chicago Fed President Austan Goolsbee stated that the Fed is currently mildly restrictive, with the neutral policy rate estimated to be 100-125 basis points below the current rate [5] - Fed Governor Michelle Bowman emphasized the need for the FOMC to act decisively in response to deteriorating labor market conditions [5] - Markets are pricing in a 91% chance of a -25 basis point rate cut at the upcoming FOMC meeting on October 28-29 [5]

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