Investors watching China will look for headlines from the weeklong Communist party congress that kicked off with a 2-hour long speech from President XI over the weekend.

The speech did not usher in any dynamic new ideas for China politically or economically, nor was it expected to; it instead provided a framework to understand national priorities and ideological creep.

But ongoing topics of interest will be Taiwan, COVID Zero policy, the response to the US Chip technology ban and how China perceives its position in global policies.

US retail sales came in sluggish, but some argue better than anticipated, while consumer sentiment improved and came in above consensus.


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Fed speaks continued with a hawkish tone; however, Bullard fell short of confirming 75bps for November and December.

The BOE completed its bond-buying program on Friday with no announcement to extend it. BOE Governor Baily commented on Saturday that a more robust response from the central bank might be required due to inflationary pressures.


After tumultuous sessions in the days before, US equities capsized Friday as UMich Survey points to Higher Inflation locking in stark losses of 4-7% across major indices. Sticky high inflation and toppling retail sales suggest “stagflation” will soon, negatively for risk,  enter the market lexicon again.

For traders, it is all about probability and optionality at this stage, with a 75 bp hike in November, a lock. Still, with data in hand from last week, it is not materially strong enough for the Fed to switch December up to a 75 bp. As the minutes noted, the Fed is beginning to think about the lagged effects of tightening currently in the system. And there is just the beginning of the ‘lagged policy effect’ creeping into commentary from the Fed’s George and Daly. On Friday, both are talking up more rate hikes. But both also point to the ambiguity of the outlook.

In their Friday commentary, Daly and Kansas City Federal Reserve President Esther George said that even the most hawkish on the committee are potentially seeing an end. The MOVE index can only settle when the Fed settles, and VIX only when MOVE eases. This is critical to all markets.

Still, for investors, it would not take much more than other strong payrolls print in a few weeks to believe that 75 bp really could be on.


Oil fell Friday on the gnarly combination of higher inflation and lower retail sales, which raises stagflation concerns.

Asia oil traders are eyeing the 20th National Congress of the Chinese Communist Party on Oct. 16, the outcome of which matters for the political and economic outlook of the country. PBoC could cut rates given the low inflation, but fiscal is the key.

Beijing should provide more economic stimulus, focusing on supporting consumption rather than investing. Oil should run with that.

Cross-asset correlations are so tight that broader risk sentiment should influence inter-day oil sentiment. So, Oil participants will be keeping an eye on the US dollar.

The global financial and economic system is becoming increasingly fragile; for investors, there ultimately remains only one natural safe haven: the US dollar.


GBP opened at 1.1175 in Wellington and has gone one way higher to 1.1274. No news was out, as far as I know. Bids have been steady around 1.1240-50, so time will tell if there is anything related to the Truss saga other than tax walk back. Liquidity is non-existent in Asia, so that is not helping, especially if the street went home Friday with short cable risk.

Position for more spinning in circles as there could be  sentiment U-turns upon U-turns as traders reprice the impact of the BoE stepping back from their short-term commitment to buy UK debt to prevent panic sales. And there is no better turn than a U-turn for speculators.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT