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Below is the daily global market update 22 October 2021 By Team Kristal.AI

“Mixed Bag

Equities turned lower across Asia and Europe yesterday with Japan leading the way - down 1.9%. SPX still kept chugging higher though adding another 0.3% to move up past the 4500 level. Unlike the previous session, it wasn't a very strong day with only 55% of the constituents gaining . The Consumer Discretionary sector led gains and Tech was up as well (despite the mega-cap troubles) but Energy saw a 1.8% decline after a pullback in Crude, Natural Gas and Coal (which fell 8+%). We're back in record high territory for the SPX and the strong earnings season so far seems to be providing good support.

The US dollar was bid with yields higher and the curve flatter. The 5Y moved up the most with the 10Y yield now just shy of the 1.7% level. Inflation expectations continue to rise with the 5Y breakeven yield above 2.9% as the spread vs the 10Y breakeven widens to 27 bps now from the usual 15-20 bps. The taper timeline appears in tact with the weekly US jobless numbers coming in better than expectations and staying in their steady downtrend for now.

The Turkish central bank came in with a 2% cut yesterday which cause the Lira to sell off to 9.5 lvls now vs the USD. The move wasn't unexpected after the 1% cut in the last meeting and the subsequent removal of members who voiced opposition to it. The magnitude of the cut may have caught some off guard, but this brings it in line with the core CPI metric newly adopted by the TCMB (headline CPI is higher)

HY spreads continued to tighten in the US but China HY was down 1.1% on the day. On the positive side, there was an announcement made that Evergrande will make a USD 83.5 mn coupon payment due tomorrow but details were scant. They missed the coupon due 23 Sep, which triggered a 30 day grace period. Should the payment not be made, the offshore creditors will have the option to force default on the company, for which there seems limited appetite at the moment. Equities in the mainland were up yesterday despite the HY stress but HK saw some pullback after a strong week.

Ahead today, we have a central bank decision from Russia and Fed speak from Powell, Williams and Daly, which could see more details emerge on the taper.”

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