This week’s economic calendar slows a bit following a busy week capped off by the September employment report. Based upon weak NFP of Sep, lower core PCE and Fed vice chair’s guidance last week, we have pushed back our Oct hike to Dec. In US macro data this week, we have Fed minutes, ISM services & trade balance. In UST dated supply, we have $58 BN of 3 year auction on Tuesday, $39 BN of 10 year auction on Wednesday & $22 BN of 30 year auction on Thursday. The highlight of Fed speak last week is dovish comments from two core members of the FOMC. New York Fed President Williams pushed back against an October hike, saying that with the hike in September, "there is no need for urgency." Vice Chair Jefferson also argued that it may "take some time" for the Fed to assess the evolving macroeconomic environment. He does not appear inclined to hike at the October meeting. Middle east conflict continues unabated and we expect a final resolution only after the 3rd Nov US mid-term elections. In RoW events this week, we have Canadian labor data, Euro area sentix, German industrial production & German factors orders. Also French budget proposals last week seem to have ignited a large rally in OATs with the 10yr OAT-Bund spread widening last week to around 140bp. This can easily move to 175 bps if worries on French budget proposals persist.
