Cheaper Oil Can’t Rewrite October’s Inflation

Brent fell to $96.55 ahead of New York’s open, while China reported that October factory selling prices rose 5.7% from a year earlier and consumer prices rose just 0.7%. Tuesday’s U.S. inflation report also looks back at October, so the first place I’d check for relief from cheaper oil is November’s supplier quote.

 

 

 

Ionfi Morning Treasury Pulse™

 

 

Oil traders spent the night weighing two accounts of the talks with Iran. President Trump played down the likelihood of fresh strikes as long as negotiations made progress, while Tehran said the talks had yet to deliver any. Brent fell 1.80%, and WTI traded at $89.55 a barrel. China’s overnight figures showed why a drop in crude can take time to reach buyers. Factory-gate inflation accelerated from 5.0% in September to 5.7% in October, while consumer inflation slowed from 0.9% to 0.7%. Higher energy costs had reached industrial producers at a time when weak demand made it difficult to pass those increases along. Those are the conditions under which manufacturers are now pricing their November orders. 

 

The same timing matters for Tuesday’s U.S. CPI release. Friday’s employment report showed that employers added 165,000 jobs in October. Between Friday morning and Monday’s premarket, the 2-year Treasury yield rose three basis points to 4.52%, while the 30-year fell three to 5.26%. A CFO watching only the 10-year would have missed both moves. The 10-year note, carrying a 4.63% coupon, traded at 98.20 to yield 4.86%, and the 30-year bond traded at 98.00. Dow futures gained 450 points and S&P 500 futures rose 0.49%, while Nasdaq-100 futures added just 0.24% as Nvidia fell roughly 4.5% in early trading amid a board inquiry. Gold reached $4,105.70 an ounce, while Bitcoin traded at $73,999 and Ether at $2,104.05, both lower over 24 hours. In currencies, the euro reached $1.1193 and sterling $1.3420, while the dollar bought 157.96 yen and 0.8183 Swiss francs. 

 

At our 6:12 a.m. ET market cutoff, the Mexican peso was near 18.58 per dollar ahead of Mexico’s October inflation and auto export reports. October’s inflation reading gives Banxico a baseline for judging price pressures entering November, when it cut its policy rate to 6.25%. For banks lending to auto suppliers, I’d give the export figures equal attention. Domestic light-vehicle sales rose 3.1% from a year earlier. Did overseas shipments grow as well, and which manufacturers accounted for the change? A lender whose customers depend on one or two assembly plants has good reason to look beyond the national total. In Brazil, Tuesday’s central-bank minutes and Thursday’s inflation reading will help borrowers judge how long to budget for a Selic rate of 13.75%. 

 

 

Ionfi Market Snapshot & Signal Grid™

 

 

Today’s Market Theme

 

The gap between 2-year and 30-year Treasury yields narrowed from 80 to 74 basis points between Friday’s and Monday’s premarket readings. A treasury desk pricing short-term funding saw its benchmark move in the opposite direction from the long bond. 

 

Market levels reflect observations taken at different times through approximately 6:12 a.m. ET. Futures changes are measured against prior settlement. Digital-asset changes cover 24 hours. 

 

U.S. Equity Futures

The VIX stood at 23.62 at 5:50 a.m. ET, down 7.9% from Friday’s close of 25.64. 

 

Global Equities

 

U.S. Treasuries

At the short end, the 3-month bill yielded 4.09%, the 6-month 4.25% and the 12-month 4.31%. Extending from three months to one year added 22 basis points of annualized yield. 

 

Energy & Precious Metals

 

Major Currencies

 

Mexico & Latin America

 

Digital Assets

 

 

Ionfi | CIO — What to Watch Into the Close™

 

• Treasury demand at 1:00 p.m. ET. Compare the yield on today’s $58 billion three-year auction with where the note traded immediately before bidding closed. A higher auction yield would show buyers wanted more compensation heading into Tuesday’s 8:30 a.m. ET CPI release. 

• Mexico’s export orders. Compare October vehicle shipments with the year-earlier period, then look at which manufacturers drove the change. That breakdown is more useful than the headline for assessing a supplier’s likely dollar collections. 

• Argentina’s payment window. For an obligation due before Thursday, confirm whether the beneficiary can receive a transfer from funds already onshore. If a fresh U.S. wire is required, get the value date from the correspondent before making a delivery commitment. 

 

Which Payment Has the Least Room for Delay?

 

Start with the date your beneficiary needs usable funds. Bring Ionfi the currency pair, amount and required delivery date so we can review the spot FX and cross-border payment options available through our partners. 

 

Built by Bankers, Designed for Compliance, Powered for Speed™  

 

 

 

Important Information. This Pulse provides general market commentary. Market levels are indicative, may be delayed and may differ from executable quotes. Nothing in this publication constitutes investment, legal or tax advice or an offer to transact. FX and digital assets involve risk. Service availability, pricing and settlement depend on eligibility, compliance review, partner availability and applicable terms.