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[Quick Facts]

1. Israel is ready for the Gaza ground offensive.

2. U.S. PMI hits a 6-month high in October.

3. Eurozone PMI nears a three-year low in October, raising recession fears.

4. Andurand: Saudi Arabia won't ease output cuts until oil prices hit $110.

5. The BOJ is considering adjusting the YCC to deal with market shocks.

6. A 97% probability of the Fed leaving rates unchanged in November.

[News Details]

Israel is ready for the Gaza ground offensive

The Israel Defense Forces' (IDF) Chief of Staff Herzi Halevi said on the 24th that Israeli ground forces are "very well prepared" to launch a ground offensive in the Gaza Strip, according to Israeli media reports. The IDF is ready for the ground offensive and has developed a comprehensive plan to achieve the goal, and we will make a decision with the political echelon regarding the shape and timing of the next stage," said Halevi during a press conference held near the border with Gaza. He said that there are "tactical and even strategic considerations" delaying the ground offensive, but they enable the IDF to better prepare.

U.S. PMI hits a 6-month high in October

The U.S. composite purchasing managers' index (PMI) reached 51 in October, up from 50.2 in September and higher than economists' expectations of 50, hitting a six-month high, according to S&P Global. "The U.S. economy is generating growth, but it still must digest the 'last mile' of policy tightening in our view," said Analyst Don Rissmiller at Strategas. "We would be more convinced that the growth we are seeing was high-quality or sustainable growth if the labor market was re-balanced (with labor demand equal to supply). Until then, the risk remains that continued restrictive monetary policy becomes too restrictive."

Eurozone PMI nears a three-year low in October, raising recession fears

Eurozone business activity took a surprise turn for the worse this month as demand slumped, hinting that the Eurozone economy may slip into recession, the latest data showed. The preliminary composite PMI for the Eurozone fell from 47.2 to 46.5 in October, the lowest level since November 2020. This is also the lowest level since March 2013 after excluding the COVID-19 pandemic period. The manufacturing PMI fell from 43.4 to 43, the lowest level since May 2020. It's the 16th month that the index has been below the 50 threshold level.

Andurand: Saudi Arabia won't ease output cuts until oil prices hit $110

The Future Investment Initiative (FII), also known as "Davos in the Desert," had a conference in Riyadh, Saudi Arabia on Tuesday, local time. Excellent oil trader Pierre Andurand was invited to participate in the conference, and he expressed his view of strongly being bullish on crude oil. Andurand said that as crude inventories fall in the coming months, the market would "pray" for more supply at some point and the Saudis would decide when and at what price it would add supply. In his view the supply adjustment will not happen until oil prices reach $110 per barrel, so there is still room for oil prices to go up. Saudi Energy Minister Abdulaziz bin Salman said on Tuesday that his country's strategy for managing the energy market "is working" and the Saudis must "ensure a less volatile oil market, which will contribute to the growth and prosperity of the global economy".

The BOJ is considering adjusting the YCC to deal with market shocks

Bank of Japan (BOJ) officials will likely keep a close eye on bond yield movements until a decision is made on whether to adjust the Yield Curve Control (YCC) at next week's policy meeting, according to people familiar with the matter. Officials see the possibility of adjusting the 10-year bond yield cap, as well as other options. Some officials argued that it would be better to preemptively adjust the policy than to wait until the YCC is hit by a market shock that forces the central bank to engage in large-scale bond purchases. However, many of them said that any decision at the October meeting would have to be made very cautiously, as the BOJ's action could push yields higher, and there is a risk that once the momentum in U.S. Treasury yields wanes, Japanese bond yields could reverse their trend and fall even without an adjustment to the YCC.

A 97% probability of the Fed leaving rates unchanged in November

According to the CME FedWatch tool, there is a 97.0% probability that the Federal Reserve will leave interest rates unchanged in November in the range of 5.25%-5.50%, and a 3.0% probability of raising interest rates by 25 basis points to the range of 5.50%-5.75%. There is a 75.6% probability of keeping rates unchanged through December, a 23.7% probability of a 25 basis point hike in total, and 0.7% for a total of 50 basis point hike.

[Focus of the Day]

UTC+8 16:00 Germany IFO Business Climate Index (Oct)

UTC+8 16:00 Germany IFO Business Climate Index (Oct)

UTC+8 22:00 U.S. Annual Total New Home Sales (Sept)

UTC+8 22:00 The Bank of Canada announces its interest rate decision

UTC+8 22:30 U.S. EIA Crude Stocks for Week to October 20

UTC+8 23:00 The Governor and Senior Deputy Governor of the Bank of Canada hold a monetary policy press conference

UTC+8 01:00 Next Day: European Central Bank President Christine Lagarde speaks

UTC+8 04:35 Next Day: Federal Reserve Chairman Jerome Powell delivers a welcome address