Morning bid Europe: Who's the boss?
SPY•Wall Street indexes reached new highs on earnings optimism, but Asian markets lost momentum as oil prices climbed after Houthi attacks on Saudi Arabia. French bonds rallied after Marine Le Pen proposed spending cuts, while markets priced a 20.5% chance of a Fed rate hike in October and an 84.5% chance in December.
1. Markets diverge
Wall Street indexes scaled new heights overnight on earnings optimism, but the momentum faded in Asia as oil prices climbed following attacks by Yemen's Iran-backed Houthis on Saudi Arabia. Euro Stoxx 50 futures fell 0.62%, German DAX futures lost 0.55% and FTSE futures slid 0.25%; S&P 500 e-minis edged up 0.08%.
2. French bonds rally
French government bonds rallied after Marine Le Pen outlined plans to cut spending, following a surge in yields to multi-decade highs. The enthusiasm spread to the euro and other bond markets. US Treasuries rebounded, aided by a solid three-year auction, ahead of a scheduled $39 billion sale of 10-year notes.
3. Fed bets shift
Markets turned their attention to the Federal Reserve's September meeting minutes and policymakers' speeches. The chance of a rate increase of at least 25 basis points in October was 20.5%, down from about 51% a week earlier, while markets priced an 84.5% chance of a hike in December.
