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Below is the daily global market update 28 October 2021 By Team Kristal.AI

Risk Off

The move overnight was pretty strong with SPX coming off record highs. While the headline number on the day was only -0.44%, 10 out of 11 sectors flashed red with only Consumer Discretionary managing a small gain of 0.22%. 84% of the index constituents were down on the day on moderate volumes (44th percentile of the 1Y range). The yield curve moved in lock step with equities as the 30Y yield came off around 10 bps to below 2% now and 2s10s flattening by another 10 bps as the 2Y moved above the 50 bps level. Bitcoin also fell below the 60k mark with Ethereum trading a little below 4k now.

Higher than expected US weekly inventories and Iran potentially re-joining nuclear deal talks soon saw Crude fall over 2% on the day. The Brent-WTI spread bounced back to above USD 2 per bbl for now. Commodities were broadly lower with Gold the only metal closing in green - staying put below the 1800 lvl though. Grains were up on the day too. We didn't see a broad move higher in FX vol though, where the USD was marginally lower and all ccys within their daily ranges.

Central banks in Canada and Brazil injected some excitement overnight as well. In Canada, the bond purchase program was halted (not expected) and officials indicated a potential lift-off on rates by April 2022 - the CAD gained and the 2Y yield is now up over 65 bps from the start of Sep. Brazil hiked by 150 bps to combat rising inflation (particularly petrol prices) bringing its total hikes from March to 575 bps, with another 150 bp hike expected in December. Ahead today, we have rate decisions from the BoJ and ECB, where no change is expected and overtures around growth/inflation will be scrutinized. The US Q3 GDP and Core PCE readings will be closely watched as well.”

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